Bankruptcy Filing Halts Sexual Abuse Trial

By Matthew Hay Brown
Baltimore Sun
October 20, 2009,0,2569930.story

Bishop W. Francis Malooly arrives for a news conference where he explains that in bankruptcy the Diocese of Wilmington can assure fair treatment of all victims of its priests' alleged sexual abuse. More than two dozen parishes have been named as co-defendants.

Diocese for Eastern Shore, Del. seeks bankruptcy protection

Facing hundreds of millions of dollars in potential liability for sex abuse claims, the diocese that ministers to Eastern Shore Catholics filed for federal bankruptcy-law protection hours before the civil trial of a former priest was to have started Monday.

Bishop W. Francis Malooly described the Chapter 11 petition filed late Sunday as a difficult but necessary step that would enable the Diocese of Wilmington, Del., to "fairly compensate all victims through a single process established by the bankruptcy court."

But Wilmington attorney Thomas S. Neuberger, who is representing 88 plaintiffs in lawsuits against the diocese, its parishes and priests, called it "a desperate effort to hide the truth from the public and conceal thousands of pages of scandalous documents from the public."

The move delays the first in the string of trials that await Francis DeLuca, the former Delaware priest who was defrocked last year after he pleaded guilty in 2007 to multiple counts of molesting a teenage grandnephew in New York.

DeLuca, named in at least 20 lawsuits, is one of several priests from the Wilmington diocese targeted by more than 140 individuals during a two-year window in which the Delaware state legislature permitted victims to file claims over alleged abuse that might have occurred decades ago.

More than two dozen parishes have been named as co-defendants. They include at least three in Maryland: St. Mary Refuge of Sinners in Cambridge, St. Francis de Sales in Salisbury and St. Dennis in Galena.

Malooly, who was an auxiliary bishop in the Archdiocese of Baltimore before he was named last year to head the Wilmington diocese, said filing for bankruptcy was "a painful decision, one that I had hoped and prayed I would never have to make," but said it "offers the best opportunity, given finite resources, to provide the fairest possible treatment of all victims of sexual abuse by priests of our diocese."

Malooly said he was concerned that the eight cases that were set to begin with the first trial of DeLuca on Monday could have left the diocese with "inadequate resources to fairly compensate" more than 130 claimants. In bankruptcy protection, the diocese could coordinate its response to all the lawsuits.

"The Chapter 11 filing is in no way intended to dodge responsibility for past criminal misconduct by clergy - or for mistakes made by diocesan authorities," Malooly said. "Nor does the bankruptcy process enable the diocese to avoid or minimize its responsibility to victims of abuse. Instead, the Chapter 11 filing will enable the diocese to meet its obligations head-on and fulfill its responsibility to all victims."

Neuberger sees another motive. He said at least six plaintiffs are near death, with one cancer victim not expected to live another 60 days.

"Their deaths will prevent the success of their claims since they will not be alive to testify in court," he said. "So in the end, this delaying tactic really is also about keeping more money in the treasure chests of the diocese and away from those survivors who had their lives and faith destroyed by despicable acts of rape and abuse."

He said he would file a motion to preserve the testimony of plaintiffs with cancer or heart disease.

The Wilmington diocese, which ministers to 233,000 Catholics, including 34,000 on the Eastern Shore, becomes the first diocese on the East Coast and the seventh in the United States to seek bankruptcy protection in the face of sex abuse claims. A diocesan spokesman said "parishes, schools and other ministries would continue uninterrupted for the foreseeable future."

"We are morally obligated to try our best to see that the spiritual, educational and charitable efforts of the diocese continue," spokesman Bob Krebs said.

Of the other dioceses to file a Chapter 11 petition, those in Davenport, Iowa, Fairbanks, Alaska, Portland, Ore., Spokane, Wash., and Tucson, Ariz., have been granted protection. The petition of San Diego was dismissed.

On Monday, Neuberger quoted Judge Louise DeCarl Adler in the San Diego case warning other dioceses against attempting to use Chapter 11 "as an easy vehicle to deal with the claims of abuse victims."

"The church needs to look within itself," Adler said. "It needs to ask whether its core mission to educate children, to tend to the spiritual needs of the community, and to bring some healing to those abuse victims requires it to retain nonessential assets such as parking lots, apartment buildings, houses bequeathed to it, parish churches no longer viable, vacant land. ... Before a diocese - any diocese - resorts to a Chapter 11 filing, it should be making a good faith honest effort to assess whether that is necessary.

"Chapter 11 is not supposed to be a vehicle or a method to hammer down the claims of the abused."

The Wilmington diocese faces a flood of litigation unleashed by the Delaware Child Victims Act of 2007, which opened the two-year window during which individuals could file claims no matter how long ago the abuse was alleged to have occurred. The window closed in July.

In Maryland, where Archdiocese of Baltimore officials said earlier this decade that 83 priests or men in religious orders had been accused of abuse since the 1930s, repeated attempts to enact similar legislation have been unsuccessful. Without such a law, an archdiocesan spokesman said, a bankruptcy filing here is unlikely.

"It's not something that's in our foreseeable future," spokesman Sean Caine said. "Should Maryland change the law the way Delaware did, and allow civil lawsuits and decades-old claims or cases, it would have a financially devastating impact on the church and all private institutions. Whether or not that would include bankruptcy, it's hard to say. But obviously it's a concern that requires that we actively oppose a law change."



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