St. Paul Archdiocese bankruptcy judge orders mediation

By Elizabeth Mohr
Pioneer Press
January 21, 2015

http://www.twincities.com/crime/ci_27364710/st-paul-archdiocese-bankruptcy-judge-orders-mediation

The full moon is seen behind the Cathedral of St. Paul as it leaves a total eclipse about 6:30 a.m. Oct. 8, 2014.

Days into the bankruptcy proceedings for the Roman Catholic Archdiocese of St. Paul and Minneapolis, a federal bankruptcy judge has ordered the parties to mediation.

Judge Robert Kressel said at a hearing Tuesday in Minneapolis that he wanted to get the case moving and avoid high costs.

"The history, other than with one notable exception, is these cases -- and by these I mean diocesan cases -- end up in a settlement," Kressel said. "I'm hopeful and confident that's going to happen here.

"But the question becomes: Is that three or four years from now, with $17 million in fees, or is it six months from now, with a fraction of that? I assume that's a goal we all share."

The archdiocese filed for Chapter 11 bankruptcy protection Friday, a move it said was the best option to address all claims of sexual abuse at once "fairly and with finality."

Church officials had said they were considering bankruptcy after news of a $9.1 million operating deficit for fiscal year 2014 and amid expectations of more lawsuits over alleged clergy sexual abuse -- more than two dozen have been filed, and the church has received notice of at least 100 more claims.

Bankruptcy protection puts current lawsuits against the archdiocese on hold, but allows additional victims to file claims while the bankruptcy case is active.

Kressel ordered the archdiocese, its insurers and its creditors, including victims, to begin mediation talks with former U. S. Magistrate Judge Arthur Boylan. In 2001, Boylan mediated and helped settle the NFL player lockout.

The archdiocese's insurance companies have disputed the level of coverage available for victim settlements, and the church filed a federal lawsuit against several insurers in November. Kressel suspended the proceedings in that case and ordered the parties to participate in mediation as part of the bankruptcy proceedings. He said he would like to lessen the amount of litigation and fighting involved.

"I'd like to get this done," Kressel said. "I'd like to get a plan confirmed. I'd like to get a system in place for compensating victims that is fair and meaningful."

Some victims' advocates have accused church officials of using bankruptcy as a maneuver to avoid trial, where depositions, documents and testimony might disclose details about abuse and its cover-up.

But Archbishop John Nienstedt said Friday that the church wasn't trying to sidestep its obligation to victims. Instead, he said, bankruptcy would allow the church to address all claims collectively and to equitably address compensation.

Attorney Jeff Anderson, who represents many victims who have filed claims against the archdiocese, has said church officials have been willing to work collaboratively to find a fair resolution. Anderson said he doesn't oppose the bankruptcy.

"We are delighted we have the opportunity to get to the negotiation table early before huge attorney's fees deplete the archdiocese's assets and there will be ample funds for survivors with full participation from the archdiocese and the insurance companies involved," Anderson said in a statement regarding Tuesday's mediation order.

"Judge Kressel's order creates the opportunity to ensure a fair and speedy resolution of all current and future claims under the Child Victims Act."

Minnesota's Child Victims Act in 2013 extended the statute of limitations for claims of past sexual abuse to be filed. The window closes in May 2016.

Since the law took effect, 25 lawsuits have been filed; two have been settled.

Three suits were scheduled to go to trial next Monday. Those proceedings were stayed, and their claims, along with any new ones, will be incorporated into the bankruptcy case.