Archdiocese of Portland, Ore., Says It Will File for Bankruptcy Because of Abuse Lawsuits

Associated Press, carried in Boston Herald
July 6, 2004

PORTLAND, Ore. - The Portland Archdiocese said Tuesday that it will file for bankruptcy, becoming the first Roman Catholic diocese in the nation to seek bankruptcy court relief in the face of accusations of sexual abuse.

The Chapter 11 bankruptcy action, planned for Tuesday afternoon, puts an immediate halt to a priest abuse case scheduled to begin in Portland on Tuesday. It involves the Rev. Maurice Grammond, who was accused of molesting more than 50 boys in the 1980s.

Plaintiffs in two lawsuits involving Grammond have sought a total of more than $160 million.

The archdiocese and its insurers already have paid more than $53 million to settle more than 130 claims by people who say they were abused by priests.

Dozens of other claims are pending, and at Tuesday's news conference, church officials said they "could not afford what the plaintiffs are asking."

"The pot of gold is pretty much empty right now," Archbishop John Vlazny said.

James Devereaux, one of the plaintiffs in the lawsuit that had been scheduled to go to trial Tuesday, vowed that in spite of the announcement, "We will continue our fight to finally get the archdiocese to accept the sin of its crimes."

No other U.S. diocese has ever declared bankruptcy, according to Fred J. Naffziger, a business law professor at Indiana University.

Tom Stilley, the attorney handling the archdiocese's bankruptcy filing, also said it was the first such case, but said other dioceses are considering the same step. Chapter 11 bankruptcy frees an organization from the threat of creditors' lawsuits while it reorganizes.

The Archdiocese of Boston, which was flooded with civil lawsuits after the clergy sex abuse crisis erupted there, considered bankruptcy, but opted to sell church real estate worth millions to settle the claims. The Diocese of Tucson, Ariz., last month said it was considering filing for bankruptcy to resolve pending lawsuits.

In the 1990s, the Archdiocese of Santa Fe, N.M., was brought to the brink of bankruptcy, and had to borrow from parish savings accounts to pay millions of dollars in abuse cases.

Only a handful of priest abuse lawsuits have actually gone to trial in the United States; most settle beforehand in an effort to avoid a public airing of testimony.

In the case involving Grammond, Vlazny said, the diocese made "every effort to settle the cases fairly. I am committed to just compensation. These (plaintiffs') demands go beyond compensation. With 60 other claims pending, I cannot in justice and prudence pay the demands of these two plaintiffs."

Grammond died in 2002. In a deposition taken before his death, Grammond said, "I'd say these children abused me. They'd dive in my lap to get sexual excitement."