Judge Orders Parties in Diocese Bankruptcy Case into Mediation

Gallup Independent
April 28, 2015

http://gallupindependent.com/

U.S. Bankruptcy Court Judge David T. Thuma Monday ordered into mediation 10 parties to the Diocese of Gallup bankruptcy reorganization.

Retired bankruptcy Judge Randall J. Newsome, who has offered to mediate at no fee, will set the time and location of the mediation but it will begin no later than July 15, the order said.

The parties ordered to participate are the diocese, the unsecured creditors committee, New Mexico Property and Casualty Insurance Guaranty Association, The Catholic Mutual Relief Society of America, The Catholic Relief Insurance Company of America, Province of St. John The Baptist of the Order of Friars Minor (Franciscans), Sacred Heart Cathedral in Gallup, St. John the Baptist in St. Johns, Catholic Peoples Foundation (a diocese fund-raising arm), and St. Bonaventure Indian Mission and School.

The order also provides that results of the mediation will be nonbinding unless the parties agree otherwise, communications during the mediation will be confidential, and none of the parties can compel the mediator to testify or be deposed. Thuma also ordered the parties to cooperate in discovery and depositions before mediation.

Thuma had asked Susan Boswell, attorney for the diocese, to prepare an order during a hearing a week earlier. Attorneys for insurers criticized her draft for departing from the court’s own standard mediation orders. Boswell said she included language about a binding agreement because “I don’t want to see people backpedaling on the settlement.”

David Spector, attorney for The Catholic Mutual Relief Society of America and The Catholic Relief Insurance Company of America (Catholic Mutual), objected to “imposing plenipotentiary powers on the mediator,” which allows him to enter any order, and added that mediations work best when the mediator tries to bring parties together without acting as judge.

Edward Mazel, attorney for New Mexico Property and Casualty, agreed.

Jim Stang, attorney for the unsecured creditors’ committee and the representative of sex abuse claimants, said, “We feel very strongly that you should order the parties to mediate as of a certain date. Given the number of parties and the level of communication or noncommunication, we need an order.”

Spector argued that he had to find an appropriate attorney to take depositions from 15 claimants and then to depose those claimants. Said Stang, “Catholic Mutual has been the insurer in more sex abuse cases than any other insurer. They should be able to find an attorney (quickly) to take depositions.”

Spector proposed that mediation begin in September. Stang responded, “Waiting until September is just torture. That’s the way it will feel to my folks.”

After Boswell and the insurance lawyers snipped at each other about what information was provided when and who requested what, Stang said, “Sometimes you’ve just gotta pick up the phone.”

Thuma said he had worked on the form proposed by Boswell. He said he didn’t believe that deposing 15 claimants would take all summer. He said the parties should be willing to cooperate in discovery and ready to mediate, and if not, he would settle disputes.