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Judge orders church to determine worth of assets

Associated Press, USA
Aug. 4, 2004
William McCall • Thursday August 5, 2004

PORTLAND, Ore. (AP) The first Roman Catholic archdiocese in the nation to file for bankruptcy argued Wednesday that 80 claims of sex abuse by priests should be moved to another court to decide just how much victims are owed.

But U.S. Bankruptcy Judge Elizabeth Perris ruled the Archdiocese of Portland still must determine how much it is worth, no matter which federal judge hears the case.

Attorneys for alleged victims estimate the total assets of the archdiocese to be worth roughly $500 million $100 million in cash and investments, and $400 million in property.

The archdiocese sought Chapter 11 bankruptcy protection on July 6, setting the stage for what could become the first ruling in U.S. history on how far the courts can go to ensure the Catholic Church pays damages for sex abuse by its priests.

But on Wednesday, attorneys for the archdiocese said they plan to shift jurisdiction away from Perris and ask that another federal judge with authority over both criminal and civil cases decide each abuse claim to help settle the bankruptcy claim.

Alleged victims have filed about 60 abuse claims and another 20 are pending, according to estimates by Perris and the attorneys for both sides.

Thomas Stilley, one of the archdiocese attorneys, said moving the cases to U.S. District Court would allow the most efficient resolution of all claims, including consolidation of legal issues, estimation of the size of the claims and trials of any cases that cannot be settled.

“The question is whether these are personal injury tort claims” instead of creditor claims by the alleged victims in bankruptcy court, Stilley said.

Albert Kennedy, an attorney for the victims, pointed out that the archdiocese chose to file bankruptcy and now appeared to be changing its legal strategy by heading to another court.

“We didn’t choose this forum, the debtor (church) chose this forum,” Kennedy said. “If this court doesn’t have jurisdiction, I don’t know why they filed here.”

Perris said it may not matter because “I think we all recognize this case is destined for the appellate courts.”

But in the meantime, she set a number of deadlines for the initial steps in a Chapter 11 reorganization case, including a proposed Nov. 4 deadline to file any additional claims.

The complication, attorneys for both sides agreed, is the issue of who was responsible for supervising the priests.

“The problem is the debtor (church) is kind of one step removed from the act,” Stilley said.

Other difficult issues include whether the church is aggressively pursuing insurance claims to help pay the $53 million in settlements already reached.

Attorneys for some of the insurance companies involved in the case estimated that insurance has paid $25 million and another $17 million is owed.

Michael Morey, an attorney for some of the victims, said after the hearing the estimate means the archdiocese has paid only about $10 million so far to settle the vast majority of cases during the past five years.

“I think the archdiocese wants to collect the insurance money, and it certainly seems they could be more aggressive in doing that, but I’m not quite sure about the reason,” Morey said.

Kennedy, however, suggested in court that the archdiocese did not want the insurance companies to dig too deeply into how closely the priests were supervised.

“The question is, what did you know, when did you know it, and what did you do about it?” Kennedy said, but the church has “done everything to prevent discovery into those facts.”

In other comments during the 2-hour hearing, Stilley said legal fees could cost the church $4 million alone and the case could take up to 18 years to decide, with appeals.

Kennedy also argued that federal courts were not bound by church canon law that says the archdiocese does not own parish property church buildings and the land around them because they belong to the members of the individual parish.

The issue of ownership could be the key to deciding who controls the estimated $400 million in church real estate for the Archdiocese of Portland.

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