Gallup Diocese Mediation Talks Grind to a Halt Again

By Olivier Uyttebrouck
Albuquerque Journal
August 15, 2015

http://www.abqjournal.com/628693/news/gallup-diocese-mediation-talks-grind-to-a-halt-again.html

A second round of court-ordered mediation talks this week in the Diocese of Gallup Chapter 11 bankruptcy case ended in deadlock, again over the issue of money, attorneys said in a hearing Friday in Albuquerque.

With the second anniversary of the bankruptcy case looming in September, an attorney warned that “the limited resources of the diocese will quickly be consumed” if the case isn’t resolved soon.

“If I could manufacture money, I could get this case resolved tomorrow,” Susan Boswell, a Tucson attorney representing the diocese, told U.S. Bankruptcy Court Judge David Thuma.

The Diocese of Gallup became the ninth Roman Catholic diocese to file for bankruptcy in 2013 in response to a growing number of lawsuits by people alleging that as children they had been sexually abused by clergy. Legal and professional costs in the case have mounted to more than $2.6 million through June 30.

The purpose of the bankruptcy case will have failed “if we end up with no money for the abuse survivors,” Thuma warned attorneys.

James Stang, a Los Angeles attorney representing 57 alleged victims of sexual abuse, questioned whether the diocese is as strapped for cash as its attorneys claim.

“Whether or not the resources will be overwhelmed depends on what the resources are,” Stang told the judge. After the hearing, Stang said that properties owned by the diocese have yet to be sold or assessed, leaving questions about the diocese’s assets.

Attorneys representing 13 alleged abuse victims have asked Thuma to allow trials to proceed in three civil cases filed in Arizona before the bankruptcy was filed. Thuma said he likely will schedule a hearing in October to consider the request.

Meanwhile, attorneys revealed that a dispute has arisen between insurance companies.

David Spector, a Chicago attorney for the Catholic Mutual Relief Society of America, a insurance company that insured the diocese from 1977 to 1990, told Thuma that he plans to file a lawsuit against New Mexico Property and Casualty Guaranty Fund to resolve a dispute over claims coverage.

The Guaranty Association, created by state law to cover insurance policies issued by defunct companies, is responsible for policies issued by the Home Insurance Co., which insured the diocese from 1965 to 1977, but went into receivership in 2003.

Edward Mazel, an Albuquerque attorney for the Guaranty Association, said he would prefer to resolve the dispute through mediation.