Diocese attorneys optimistic about deal By Elizabeth Hardin-Burrola Gallup Independent correspondent religion@gallupindependent.com Nov. 12, 2015 ALBUQUERQUE – With U.S. Bankruptcy Judge David T. Thuma publicly weighing the options in the Diocese of Gallup’s Chapter 11 case, the diocese is headed back to mediation talks for the third time in six months. But predictions about the possible success of that mediation vary greatly depending on which party is making the prediction. In a status conference Tuesday, attorneys for the Gallup Diocese and its insurance companies expressed optimism that a successful resolution might be obtained during the mediation talks scheduled to take place in Phoenix Dec. 3-4. However, attorneys representing clergy sex abuse claimants expressed skepticism about the chances for success. That skepticism appears centered on continued disputes over insurance coverage. Startling defense “It’s not resolved, but there is progress being made and certainly the goal is to put forth a package to the claimants that gives an opportunity to bring some peace and some resolution to those claims, sooner rather than later,” Thomas D. Walker, an attorney for the diocese, told Thuma. Attorney Edward A. Mazel represents the New Mexico Property and Casualty Insurance Guaranty Association. The association provides claims coverage to the Gallup Diocese for the four liability insurance policies the diocese reportedly had from 1965 to 1977 with the Home Insurance Company, which is now insolvent. According to Mazel, copies of three of those policies have not been located. Although Mazel said he was also optimistic about the progress of negotiations between the parties, he submitted a statement to the court Monday that outlined a number of legal defenses that might be asserted if disputes about how much money the insurance companies should contribute can’t be resolved in mediation. Mazel introduced a particularly startling defense based on a Home Insurance Company policy that “specifically excludes coverage for bodily injury that is either expected or intended by the insured.” Citing a clergy sex abuse lawsuit that stated the Diocese of Gallup “knew or should have known” one particular priest perpetrator had a propensity to sexually abuse children, Mazel asserted there would be no insurance coverage for the Gallup Diocese “because the injury would be expected or intended as a result” of the priest’s alleged misconduct. ‘List of horrors’' Ilan D. Scharf, an attorney for the Official Committee of Unsecured Creditors, which represents the interests of clergy sex abuse claimants, took issue with Mazel’s “list of horrors” of insurance company defenses. Scharf said he was concerned that Mazel’s statement was a signal that the insurance companies were “drawing lines in the sand” and hardening their positions before the mediation talks. “We’d agree that a negotiated settlement is in everybody’s best interest,” Scharf said, “but it also has to be the appropriate negotiated settlement, not just negotiated settlement for its own sake.” Texas attorney Donald Kidd, who along with attorney Richard Fass represents more than a dozen abuse claimants, said the two previous mediation sessions and subsequent discussions with the Diocese of Gallup and its insurance companies haven’t given him any optimism. “That has not manifested itself in any type of offer that is close to what the value of the claims are,” Kidd said. He complained that money that might be currently offered by the New Mexico Property and Casualty Insurance Guaranty Association or Catholic Mutual is “burdened by the millions of dollars of attorneys’ fees and expenses” for the Diocese of Gallup, and he described a current offer by Catholic Mutual as “paltry.” Kidd recently filed a motion for relief from the automatic stay in bankruptcy court that prevents litigation against the Gallup Diocese from moving forward. Phoenix attorney Robert E. Pastor, who represents 18 abuse claimants, had filed earlier motions for relief from the automatic stay and requested two cases be remanded back to state court in Arizona where they could proceed to trial. In his motion, Kidd requested the automatic stay be lifted on behalf of 15 claimants, six of whom claim they were sexually abused by John Boland, a former longtime Gallup priest who is believed to be currently living in Ireland. One of Pastor’s automatic stay motions concerns another living priest, Raul Sanchez, a former diocesan chancellor whom Pastor describes as being a fugitive in Mexico. ‘Last best hope’ Although attorneys for the Diocese of Gallup and the insurance companies requested Thuma postpone any court decisions or actions until after the mediation Dec. 3-4, Pastor urged the judge to stop further delays in the case. “What I would ask the court do is to put a backstop on this, hold their feet to the fire,” Pastor argued. “We need resolution. We don’t need another mediation where we hear the same things that we heard on day one, day two, day three and day four.” Thuma, however, agreed to put everything on hold until after the mediation, an event he referred to as “our last best hope to settle.” In his order, Thuma outlined what will take place if the mediation talks fail. Responses to Kidd’s motion will then be due Dec. 14, and a preliminary hearing on the matter will be held on Dec. 16. Also during that hearing, a status conference on Pastor’s stay relief motions will be held. In addition, Thuma, who frequently verbalizes his own indecision about the case, stated he will seek input from the various attorneys about how the case should proceed if mediation fails, including whether the automatic stay should be lifted, for what claims the stay should be lifted, and whether legal action over insurance coverage should occur.

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