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	1st Diocese Hearing Airs Battle Ahead By Bruce V. Bigelow Union-Tribune [San Diego CA] March 2, 2007 http://www.signonsandiego.com/news/metro/20070302-9999-1m2diocese.html Signs of the battle to come surfaced yesterday in the first bankruptcy hearing to be held since the Roman Catholic Diocese of San Diego sought Chapter 11 protection from clerical sexual abuse lawsuits. At the outset of the hearing, federal bankruptcy Judge Louise DeCarl Adler said the day's "nuts and bolts" proceedings would be administrative. But in arguments that lasted more than two hours, lawyers highlighted a variety of thorny questions and pinpointed an intractable chicken-or-egg issue at the core of the dispute. Adler said the intent of the reorganization is to fairly compensate the people who say they are the victims of sexual abuse without destroying the diocese's ability to continue to provide services. "Solving this problem in Chapter 11 is going to be a journey, and how long that journey lasts is not entirely up to me," the judge added, suggesting that aggressive litigation would prolong a resolution. Lawyers handling about 150 lawsuits alleging sexual abuse of children by 60 priests told Adler they had been in mediation and litigation for four years before the diocese filed for bankruptcy protection Tuesday night. "We've got a significant number of people who have been waiting a long time to get these cases resolved," said Raymond P. Boucher, who said he represents about one-third of the abuse cases. The bankruptcy filing halted those suits. At the judge's urging, both sides said they would be willing to enter mediation in an effort to reach agreement on some of the toughest issues. One battle that already was looming focuses on how much real estate the diocese owns, and how much it is worth. In financial statements and other documents, the diocese said it owns only a fraction of the assets. Altogether, it claimed $156 million in assets and about $100 million in debts and other liabilities. Lawyers for the diocese contend that it does not "own" much of the real estate, bank accounts and other assets it holds for 98 parishes, 16 missions, 43 elementary schools and three high schools. Therefore those assets cannot be tapped to settle abuse claims. But lawyers handling the abuse cases argued that such distinctions are not meaningful. Diocese lawyers complicated their argument yesterday by disclosing that many parishes, schools and other entities used the diocese's taxpayer identification number to open their bank accounts. There are more than 700 parish accounts. "At some point, a question before this court is whether or not these are diocese monies," the judge said. Later, Adler again raised the need to find a speedy resolution – and she asked lawyers to suggest ways the proceedings could be expedited. Del Mar lawyer Irwin Zalkin, who represents about two dozen sexual abuse plaintiffs, urged the judge to avoid "putting off a fight" over determining what real estate the diocese owns and what it is worth. But Susan Boswell, a diocese lawyer, said such an approach would be putting the cart before the horse. She said the way to streamline the case would be to first determine the value of the pedophile claims.
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