Legal dispute stalls diocese’s exit from bankruptcy
By Elizabeth Hardin-Burrola
November 16, 2016
GALLUP – Although the Diocese of Gallup’s Chapter 11 plan of reorganization was confirmed in June, its formal exit from U.S. Bankruptcy Court is being stalled because of a legal dispute between two other parties.
As a result of the dispute, the Gallup Diocese marked yet another anniversary in the bankruptcy court system Saturday. The diocese filed its Chapter 11 petition three years ago on Nov. 12, 2013.
The two parties in the dispute are the Sisters of the Blessed Sacrament, the Pennsylvania religious order that founded St. Michael Indian School in St. Michaels, Arizona, and Phoenix attorney Robert E. Pastor, who filed a civil lawsuit in Arizona on behalf of a Navajo woman who claims she was sexually abused as a child at St. Michael Indian School by Brother Mark Schornack, a Franciscan friar. Schornack died in 2012.
The Diocese of Gallup, the Franciscans and St. Michael Mission Church have already entered into a settlement agreement with another Navajo woman for the abuse she was subjected to by Schornack at the St. Michael Parish. That settlement agreement was part of the diocese’s bankruptcy case and confirmation of its Chapter 11 reorganization. As a result, the Diocese of Gallup, the Franciscans and St. Michael’s Church are protected parties and not named as defendants in Pastor’s lawsuit.
However, the Sisters of the Blessed Sacrament and St. Michael Indian School did not contribute any funds to the Diocese of Gallup’s settlement; therefore, they are not protected parties under the terms of the Chapter 11 plan of reorganization.
The dispute centers on a claim the Sisters of the Blessed Sacrament filed against the Diocese of Gallup on May 9, 2016, related to Pastor’s lawsuit. In documents and brief court hearings, attorneys for the diocese have stated they are “sympathetic to the plight” of the Sisters of the Blessed Sacrament, but they are asking U.S. Bankruptcy Court Judge David T. Thuma to disallow the religious order’s claim.
Thuma has scheduled a final hearing on the matter Dec. 12. The deadline for Pastor to file a response with the court is Nov. 28, and the deadline for attorneys for the Sisters of the Blessed Sacrament to file a reply is Dec. 9