Diocese of San Diego Eyeing Bankruptcy

By Mark Sauer and Sandi Dolbee
Union-Tribune [San Diego CA]
February 18, 2007

Faced with claims that could exceed $200 million, the Roman Catholic Diocese of San Diego may be on the verge of declaring bankruptcy rather than proceed to trial on about 150 lawsuits alleging sexual abuse by priests.

In a letter to parishoners attending Mass Saturday and Sunday, Bishop Robert Brom said if abuse victims cannot be fairly compensated through ongoing settlement negotiations without "jeopardizing our overall mission, ... the diocese may be forced to file a Chapter 11 reorganization in bankruptcy court."

If the San Diego diocese follows through, it would become the fifth in the nation to seek bankruptcy protection out of 196 diocese that have had clergy sexual abuse allegations made against them. The diocese includes a million Cathoics in San Diego and Imperial counties.

The bishop's "pastoral statement" expressed concern for the suffering of abuse victims: "I am profoundly sorry for this betrayal of trust in your lives. On behalf of those who caused you pain, and in the name of the church, I beg your forgiveness."

It also commiserated with the priests in the diocese. "While only a few among us have been guilty of abuse, all of us have suffered the shame."

But it was the bishop's bankruptcy suggestion that shocked and surprised parishioners who picked up the letter with their regular weekly bulletin.

"I can't believe that it would come to such a horrible thing," said Kathy Rolls, 61, standing outside St. Patrick's in North Park after Sunday Mass.

Emilio Reyes, 76, said filing for bankruptcy would be "real bad." But he's confident that if it happens, the diocese would bounce back.

While priests said they knew nothing more than what they read in the letter, Brom is expected to elaborate on his comments in a meeting on Monday. The meeting of the nearly 300 priests in the diocese is part of a regularly scheduled pre-Lent gathering.

An attorney representing many San Diego plaintiffs said the diocese has more than ample assets and insurance to settle the clergy-abuse claims and characterized bankruptcy as "a desperate maneuver."

"This would be a bad-faith bankruptcy," attorney Irwin Zalkin said. "They would not file for bankruptcy because they are insolvent, but because it would place an automatic stay on the upcoming trials.

"It is a last, desperate move to stop these cases, to not let the truth get out. But if they think it will cause us to back off, or to reduce what we think these victims are entitled to, that's not going to happen."

The abuse incidents, outlined in graphic detail in legal papers, date back decades. Most of the 150 lawsuits alleging abuse by 60 priests were filed in 2003 after the California legislature lifted for one year the legal statute of limitations, allowing the clergy cases to be filed.

The first San Diego case set for trial on Feb. 28 was brought by Nicki Rister, a Colorado woman who accuses the Rev. Patrick O'Keeffe of coaxing her into having sex in his parish office in 1972. She was 17 at the time.

The prospect of further delay, Rister said, "really irritates me. This case really needs to go to court."

Three other trials are scheduled to follow in San Diego Superior Court. Unlike the Rister/O'Keeffe case, these lawsuits involve multiple victims and allegations that pedophile priests were systematically moved from parish to parish by diocese officials more concerned with hushing up scandal than protecting children.

Fred J. Naffziger, professor of business law at Indiana University South Bend, has studied Catholic bankruptcy filings elsewhere in the country and is not a fan of the action. "I think it's a tremendous waste of assets going out in litigation expenses," he said.

The Portland archdiocese, for example, has spent an estimated $14 million to $16 million in attorney fees, according to Naffziger, which "could have gone for much greater needs."

However, Naffziger acknowledged that filing for bankruptcy does have its benefits because it immediatly stops all other litigation. "Everything comes to an absolute halt while the bankruptcy court has control of things."

Among the regions that have filed for bankruptcy is Spokane, which is headed by Bishop William Skylstad, who also is the president of the U.S. Conference of Catholic Bishops. A spokeswoman for the organization dismissed questions about whether this may become a national strategy for a church mired in potentially crippling settlements over decades-old allegations of priest abuse.

"It's a last resort," Sister Mary Ann Walsh said.


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