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	Too Early for Parishes to Tell What Bankruptcy Filing Might Meani By Gary Warth North County Times [California] February 24, 2007 http://www.nctimes.com/articles/2007/02/25/news/top_stories/20_38_402_24_07.txt While San Diego-area Catholics were surprised to hear last weekend that their diocese was considering filing for Chapter 11 bankruptcy protection, officials say it's still too early to tell how such proceedings might affect their parishes. Bishop Robert Brom last week wrote in a statement to parishes that while the Diocese of San Diego is continuing to seek just settlements with plaintiffs in sexual-abuse cases, "good stewardship demands that the settlements not cripple the ability of the Church to accomplish its mission and ministries." Protecting that mission may force the diocese to file a Chapter 11 reorganization in bankruptcy court, Brom wrote. San Diego would be the fifth diocese in the nation to file for bankruptcy protection because of lawsuits seeking damages from sexual abuse. So far, the diocese has reached settlements with 43 people, but 143 lawsuits are still unresolved. Plaintiffs in other priest-abuse cases in California have been awarded between $1 million and $1.6 million each, according to attorneys representing more than two dozen people in lawsuits against the San Diego diocese. The prospect of bankruptcy prompted harsh comments from some attorneys who saw the bishop's statement as an attempt to persuade victims to accept smaller settlements or as a way to keep the lawsuits out of court altogether. 'Take your lumps' Attorneys Irwin Zalkin and Michael Zimmer, who are representing plaintiffs in the San Diego lawsuits, wrote in a press release last week: "After five years of dealing with Bishop Brom and his team of lawyers, it has become very apparent that Bishop Brom is more concerned with preserving the secrecy and cover up of the truth of what was done to children of his diocese over the last 40 years or more than he is over the well being of and reconciliation with those injured souls." Orange County-based attorney John Manly, who represents a number of plaintiffs in the San Diego cases, said he finds it "despicable" that the diocese is threatening bankruptcy. "This is an organization that protected child molesters for 40 years," Manly said. "You shouldn't be able to file bankruptcy. You should have to take your lumps." Manly also represented clients in Orange County, where about 90 suits were settled for a total of $100 million about two years ago. Settlements in San Diego could bring even more money for individual victims because the accusations are so "horrible," he said. "We are talking rape on a daily basis for years in some instances," he said. Manly said the attorney for the San Diego Diocese told county Judge John Einhorn last week that they planned to file bankruptcy as soon as Tuesday. Similar lawsuits have led to dioceses filing for bankruptcy protection in Davenport, Iowa; Spokane, Wash.; Tucson, Ariz.; and Portland, Ore. Tucson, which filed in 2004, is the only one of the four to have emerged from bankruptcy so far. Despite filing for bankruptcy protection, the dioceses still faced millions of dollars in settlements. Judgments could force property sales The civil lawsuits do not target churches themselves but seek damages against the dioceses as the authorities that were responsible for the clergy who committed the offenses. Judgments against the dioceses could trickle down to churches, however, in the form of lost programs and shared expenses. And although it has not happened yet, a judgment also could force a diocese to sell off property, including actual churches. Individual parishes may be considered their own corporations, protecting them from lawsuits against their dioceses, or they may be owned by their bishops, making them vulnerable to a bankruptcy settlement. Rod Valdivia, chancellor of the San Diego Diocese, explained in an e-mail that the diocese does not own most church buildings or schools. "The vast majority of property is actually that of parishes and Catholic schools, and under Church Law, they are the rightful owners," he wrote. The San Diego diocese, which covers San Diego and Imperial counties, has 98 churches, runs 50 schools and has nearly 1 million parishioners. Valdivia also wrote that the diocese is preparing a report on its property and assets, which will be published after a settlement is reached or will become part of the reorganization proceedings if bankruptcy is declared. Besides losing property, a bankrupt diocese probably would have less money to provide services to parishes. In San Diego, Valdivia wrote, the diocese's support functions include certification and training for religious education teachers, youth ministries and training programs for liturgical ministers. The diocese also provides administrative support such as centralized payroll services, employee benefits, and the formation and education of clergy, he wrote. In San Diego, where the first trial is scheduled to begin Wednesday, the effects of an as-yet-unknown settlement are uncertain. According to the law firm Zalkin & Zimmer, which is representing plaintiffs in the case, the San Diego Diocese is one of the richest in the nation, with more than $600 million in real estate, based on tax assessor's values. In bankruptcy settlements at other dioceses, funds have come from insurance companies, the sale of diocesan property and money pooled from parishes. Dioceses cut services In Spokane, the diocese declared bankruptcy in 2004 after facing a $48 million judgment against it. Most of the settlement money will come from insurance, but parishes have agreed to contribute $10 million. The diocese itself will pay $12 million, with some of that coming from the sales of property that includes the bishop's house and the Catholic Pastoral Center. The Rev. Steve Dublinski, the vicar general at Spokane, said the diocese could emerge from bankruptcy in April. "The diocese has been significantly reduced," he said about the effects of the bankruptcy. "We no longer have a parish services office or a director for youth ministry for the diocese." The diocese also closed its prayer service office and made other cuts. Larger parishes that were more self-sufficient did not feel the effects as strongly as smaller churches that relied on the diocese for support of educational programs and other services, he said. In Iowa, the Catholic Diocese of Davenport has no plans to sell churches, but is preparing to sell the bishop's house as well as a single-family house and a 25-acre farm. A shared judgment In Tucson, a $22.5 million judgment was shared by parishes that contributed about $2 million. An additional $15 million came from insurance and about $5 million came from the sale of diocese property The question of whether parish property should be included was never addressed, partly because all sides wanted to expedite the resolution, said Fred Allison, director of communications for the diocese. According to a synopsis of the Tucson proceedings written by Judge James Marlar, the court wanted to avoid what it had seen happening in the Portland case, where proceedings were focusing on property ownership. Bankruptcy proceedings are continuing in that diocese, and a spokesman there said a gag order prohibited him from talking about the case. Allison said a fight over whether parish property could be included in the settlement would have almost certainly led the case to be appealed, possibly as high as the Supreme Court, delaying a resolution for years. Besides helping the diocese pay for the settlement, Allison said the bankruptcy did not have much effect on parishes themselves. The Rev. Dom Pinti of St. George Parish in Apache Junction, Ariz., within the Tucson diocese, agreed. "Nothing changed in the parishes," he said. "All the services remained the same, and no cuts were made. That was important." St. George Parish contributed $87,000 toward the settlement. Pinti said the church had time to budget for the expense, so it was absorbed without much disruption. Staff writer Teri Figueroa contributed to this article. Contact staff writer Gary Warth at (760) 740-5410 or gwarth@nctimes.com.
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