Plaintiffs to Church: Pay in Full

By Steve Woodward
The Oregonian [Portland OR]
February 14, 2006

Priest sex-abuse plaintiffs on Monday asked the U.S. Bankruptcy Court to force the Archdiocese of Portland to pay all their claims without limit -- a figure that past verdicts indicate could be as high as $245 million for about 110 men and women with pending accusations.

The committee that represents the plaintiffs, however, says the actual figure is expected to be much lower than $245 million and can be funded without having to sell any churches, schools or cemeteries.

Instead, the plaintiffs contend that the initial payments would come mostly from the archdiocese's bank accounts and its insurance companies. Moreover, many plaintiffs are expected to settle for lower amounts rather than go to trial.

The plaintiffs' proposal is the heart of a plan to reorganize the archdiocese, pay off creditors and allow the church to emerge from bankruptcy. In July 2004, the archdiocese became the first and largest Catholic diocese to file for Chapter 11 reorganization in the face of multimillion-dollar sex-abuse lawsuits.

Under bankruptcy proceedings, both the creditors and the debtor have the opportunity to make recommendations on how the debtor should use the assets to pay the bills.

The sex-abuse plaintiffs' plan challenges the archdiocese's own plan on a key point: What happens to claims after the church emerges from bankruptcy? Under the archdiocese's plan, the church would have no responsibility to pay claims in full if they exceeded the money set aside in a claims fund. Moreover, punitive damages would not be allowed.

Under the claimants' plan, the claims fund would be open-ended, paying any and all claims as they were settled, arbitrated or decided in jury trials. That includes punitive damages.

In addition, the independent claims fund would be allowed to foreclose on any archdiocesan property -- including parish churches and schools -- if the archdiocese failed to pay claims in full.

Albert N. Kennedy, the lawyer for the claimants' committee, said Monday that he doesn't think there will be any need for foreclosures.

"If the debtor believes what it's been saying about the projected liability," he said, referring to the church's assurance that claims won't exceed about $50 million, "there's no reason for this case not to be concluded in the next four to five months and to get the archdiocese out of bankruptcy."

Despite Kennedy's assertions, the archdiocese countered Monday in a statement that churches and schools might have to be sold.

The claimants' committee plan, the statement said, "provides for the possible sale of all parish churches and schools to pay claims without considering what effect that would have on the parishioners' rights to practice their religion as guaranteed by the First Amendment to the United States Constitution and the Religious Freedom Restoration Act."

The claimants' plan, in contrast, contends that the archdiocese has enough assets to set up an initial $66 million claims fund and still be left with $100 million in cash and $400 million in real estate, including $50 million worth of property not being used for a church or a school.

The claimants' plan gives them additional leverage in behind-the-scenes negotiations that have been conducted intermittently with archdiocesan lawyers and officials. In another Roman Catholic bankruptcy earlier this month, the Diocese of Spokane reached a settlement with 75 people who have accused priests of abuse, offering them $45.7 million.

In addition to money, the Spokane victims received non-economic concessions from the diocese, including the ability to address parishes, space in the diocesan newspaper to write about their experiences, and assurances from the diocese that it will refrain from calling them "alleged" victims.

In Portland, a looming sex-abuse jury trial involving $125 million in punitive damages was a key reason the archdiocese sought bankruptcy. That case failed to settle during mandatory mediations last year and is pending.

Last month, U.S. Bankruptcy Judge Elizabeth L. Perris gave the go-ahead for more than 100 sex-abuse case to proceed to trial in state courts. Additional cases, which seek punitive damages, will be tried in U.S. District Court.

The plaintiffs are offering their plan as an alternative to the archdiocese's own plan. The church's plan asks Perris to approve a $42 million fund to pay all current claims, as well as $8 million for claims that might be filed in the future. The archdiocese says those amounts, based on settled claims from past years, should be enough to pay all allowed claims.

A hearing on the archdiocese's reorganization plan is set for today in U.S. Bankruptcy Court in Portland.

Steve Woodward: 503-294-5134;


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