BUFFALO (NY)
Buffalo News [Buffalo NY]
October 1, 2024
By Jay Tokasz
Some Child Victims Act plaintiffs will be allowed to resume their lawsuits against Catholic parishes and schools in the Buffalo Diocese.
Chief Judge Carl L. Bucki of U.S. Bankruptcy Court for the Western District of New York has denied the diocese’s request to keep in place a temporary stay that since 2020 has blocked all lawsuits against parishes and other Catholic entities from moving forward in New York state courts.
The ruling does not impact a separate stay that applies to the Buffalo Diocese, which under Chapter 11 rules is automatically protected from state court litigation as it works through the bankruptcy process.
Bucki previously approved the diocese’s last seven requests for the temporary stay.
The diocese’s lawyers maintained that the stay was necessary so that the diocese would not be distracted in its mediated negotiations for a bankruptcy court settlement with an estimated 900 claimants who accused priests and other employees of abuse.
But in his latest decision, the judge noted that the Supreme Court’s ruling in June on a case known as Purdue Pharma had changed the dynamics for the Buffalo Diocese case.
In Purdue Pharma, the Supreme Court determined that bankruptcy courts do not have the authority to approve a Chapter 11 reorganization plan that includes a release of liability for non-debtor entities unless all claimants agree to the releases.
Bucki said in his decision that he does not “foresee the likely development of a fully consensual plan” for the diocese, given a reported breakdown in mediated negotiations and persistent opposition of several abuse claimants to any waiver of claims.
The court, added Bucki, had granted the stays in the past to allow the parties to negotiate a plan that would include a channeling injunction releasing parishes from liability, in exchange for a contribution to the settlement.
But with the Supreme Court ruling, such a plan now would not be allowed, unless all claimants agreed to it, he said.
“Nothing in the Supreme Court’s decision expressly prohibits a temporary stay of litigation against parishes and affiliates. However, the outcome in Purdue Pharma strikes the rationale for any further such injunction,” Bucki wrote.
Child Victims Act cases naming parishes and schools as defendants remain subject to the automatic stay if the parishes and schools are joint defendants with the diocese – although the plaintiffs in those cases may be allowed to proceed if they sever the diocese from their state court lawsuits.
Also, if the diocese’s insurance is impacted by a Child Victims Act case, the automatic stay may still apply.
It is not clear how many of the lawsuits against parishes and schools can move forward under Bucki’s decision.
In separate motions filed recently, lawyers representing 17 plaintiffs with CVA lawsuits have asked Bucki to clear away any stays on those cases.
Bucki will consider those motions at a hearing Oct. 10.
Diocese spokesman Joseph Martone released a statement Tuesday afternoon stating that an “independent evaluation on a case-by-case basis” will be needed to determine in which cases the automatic stay applies.
“While the full impact of this ruling is not yet clear, it now appears that certain resources that would otherwise have been devoted to funding a settlement trust will now unfortunately be dissipated as costs of litigation,” the statement said. “We are disappointed by the court’s decision, as we believe – and as has been illustrated elsewhere – that good faith mediation is the best way forward and will provide a more equitable result for all survivors.