Diocese of Duluth, Abuse Victims to Enter Mediation in July

By Tom Corrigan
Wall Street Journal
May 26, 2016

http://blogs.wsj.com/bankruptcy/2016/05/26/diocese-of-duluth-abuse-victims-to-enter-mediation-in-july/

This photo shows the Cathedral of Our Lady of the Rosary in Duluth, Minn., Monday, Dec. 7, 2015. A bankruptcy judge ordered the diocese into mediation with abuse victims. PHOTO: ASSOCIATED PRESS

A bankruptcy judge ordered the Roman Catholic Diocese of Duluth, Minn., and lawyers for more than 100 clergy sexual abuse victims to a three-day mediation session in July.

Court papers filed this week show that Judge Gregg Zive, a Nevada bankruptcy judge, will serve as the mediator at a conference slated to begin July 19, at the U.S. Bankruptcy Court in Minneapolis.

The Diocese of Duluth, which is home to more than 55,000 parishioners, filed for bankruptcy in December after a jury awarded more than $8 million to a man who said he was sexually abused in the late 1970s by a priest working in the diocese. The diocese has said it knew nothing about the abuse and couldn’t have prevented it.

At the time it sought chapter 11 protection, the diocese faced about 18 individual abuse claims, but the number has since grown to about 110 as of Monday, according to court records. Victims’ lawyers have said they expected more claims to come in before the deadline ran out Wednesday.

Mediation has been a successful tool in some prior Catholic diocese bankruptcies, offering all sides a confidential forum to reach a settlement that ends the bankruptcy, compensates victims and protects the church from future litigation. For example, the Diocese of Helena, Mont., won court approval last year of a payment plan that was a product of mediation.

But the Duluth diocese’s much larger neighbor, the Archdiocese of St. Paul and Minneapolis, has not been so fortunate.

A legal battle erupted in the Twin Cities Monday, following failed mediation talks with abuse victims. As The Wall Street Journal reported, lawyers representing about 450 victims claim the archdiocese has significantly underreported its assets—to the tune of $1.7 billion—in an attempt to shield them from victims’ claims. In bankruptcy court papers filed this week, the archdiocese valued its total assets at about $49 million, excluding its parishes, schools and charitable foundations.

The bankruptcy could devolve into years-long legal battle that ultimately lands in front of the Supreme Court, lawyers familiar with the case say.

The two church bankruptcies in Minnesota are linked to the state’s Child Victims Act, which lifted the statute of limitations for sexual-abuse cases in the state for three years, leading a flood of lawsuits against the church. That window closed Wednesday. Judge Robert Kressel is overseeing both cases.

Nationwide, 15 Catholic dioceses and religious orders have filed for bankruptcy to address claims of past sexual abuse.