Bankruptcy’s future claims rep resigns

By Elizabeth Hardin-Burrola
Gallup Independent correspondent
February 10, 2016

ALBUQUERQUE – The Diocese of Gallup’s bankruptcy case is moving forward again, but without its future claims representative.

On Tuesday, about 40 minutes before U.S. Bankruptcy Judge David T. Thuma began another continued status hearing, attorneys for the Gallup Diocese filed a motion requesting Thuma authorize the resignation of Michael P. Murphy, the current future claims representative, also referred to as the unknown claims representative. Thuma was also asked to approve Michael R. Hogan, a retired U.S. District Court judge, as Murphy’s replacement.

“There’s been quite a bit of discussion this week with respect to the unknown claims representative,” diocesan attorney Thomas Walker told Thuma. “Mr. Murphy decided to resign.”

No explanation was given for Murphy’s resignation, either in the motion or in the court hearing, nor did Thuma request the information.

Attorneys for the Gallup Diocese nominated Murphy for the position in February 2015. As the appointed future claims representative, Murphy was an independent fiduciary authorized to act on behalf of any future abuse claimants.

Catholic Mutual conflict

In recent weeks, however, Murphy came into conflict with attorneys for Catholic Mutual, which provides liability coverage for the diocese. According to statements made in court last week, Catholic Mutual had agreed to finance the future claims fund.

Catholic Mutual and Murphy disagreed over how much of an inquiry Murphy could conduct into Catholic Mutual’s financial condition. David Spector, an attorney for Catholic Mutual, vehemently objected to the scope of Murphy’s possible inquiry. According to Spector, Murphy would only be allowed to view a financial balance sheet, and Murphy would first have to sign an “ironclad protective order” that would protect the confidential nature of Catholic Mutual’s financial information. Spector threatened to withdraw financing for the future claims fund if Murphy wouldn’t agree to those conditions.

Thuma then brokered a tentative compromise whereby Murphy agreed to cooperate with Catholic Mutual by signing the protective order and then reviewing the financial balance sheet. If the balance sheet convinced Murphy of Catholic Mutual’s financial well-being, he would give the court a “thumbs up” and not request any further financial information. If Murphy believed the balance sheet provided inadequate information, Murphy would give the court a “thumbs down,” and the dispute was likely to resume.

Whether Murphy ever reviewed Catholic Mutual’s balance sheet or even signed the protective order was not discussed during Tuesday’s court hearing. Instead, the diocese’s motion extended “appreciation and gratitude” to Murphy “for his service in this matter” and moved on to request approval for Hogan’s employment.

‘Perfect substitute’

Hogan served as a U.S. District Court judge for the District of Oregon from 1991 to 2012, and he previously served as a U.S. magistrate judge and a U.S. bankruptcy judge. After his retirement in 2012, Hogan established a mediation firm.

According to Hogan’s statement submitted to the court, he is currently serving as the future claims representative in the Diocese of Helena’s bankruptcy case and as the future claims adjudicator in the Diocese of Spokane’s case. Prior to that, Hogan mediated several dozen future claim matters pending against the Diocese of Spokane, and he was also involved in resolving a number of tort claims against the Archdiocese of Portland.

Susan Boswell, the diocese’s lead bankruptcy attorney, called Hogan “a perfect substitute” and said he comes to the Gallup bankruptcy case “with a greater level of information than perhaps somebody else might have,” allowing the case to proceed without losing much time.

Hogan has been in the news recently for his role in sentencing Oregon ranchers Dwight Hammond Jr. and his son Steven for less than the mandatory minimum time after they were convicted of committing arson on public land. An armed group of anti- government protesters took over the Malheur National Wildlife Refuge in January after the federal government won its appeal of Hogan’s sentences and the Hammonds were ordered back to prison.

In the Diocese of Gallup bankruptcy, Hogan is requesting to be compensated at the rate of $550 per hour plus expenses. In addition, he is asking the diocese to reimburse him for reasonable out-of-pocket expenses.

Murphy’s agreement had called for him to receive a flat fee of $50,000 plus expenses, payable upon the effective date of any plan of reorganization.

Objections to Hogan’s employment must be filed by Thursday. If no objections are filed, the next continued status hearing will be held Feb. 19.




















Any original material on these pages is copyright © 2004. Reproduce freely with attribution.