| Bishop Accountability
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Dallas Resources – January–February
1998 By Ed Housewright If the judgment is upheld, "the auditors and our advisors have warned us there is substantial doubt about the diocese's ability to continue as a going concern," according to a written statement from Bishop Charles V. Grahmann. The financial figures, to be published in Friday's Texas Catholic , were released to answer "claims that the Diocese has millions of dollars available to settle litigation related to the Rudy Kos matter," a church news release said. The diocese has "substantially less" than $ 1 million in cash and about $ 6 million in land and accounts receivable, said Michael Weis , the diocese's chief financial officer. Its liabilities total $ 3.2 million, according to an audited financial statement for the fiscal year ending June 30 that was just completed, he said. The attorneys for the 11 plaintiffs who sued the diocese and suspended priest Rudolph "Rudy" Kos rejected the diocese's financial figures, audited by KPMG Peat Marwick LLP , as an attempt to avoid responsibility for the judgment. "I think it's baloney," attorney Windle Turley said of the financial statement. Sylvia Demarest, the plaintiffs' other attorney, said she thought the diocese had enough money to pay the judgment without affecting parishes or schools. Neither she nor Mr. Turley said they could estimate the diocese's assets. "They have all the money in the world to fund all of these lawyers," Ms. Demarest said. "I think the diocese has been playing with these numbers for a long time. They represent some bean counter's attempt to make the diocese look as poor as possible." In calculating the diocese's assets, officials didn't include the value of parish property, schools, Catholic Charities, the Texas Catholic newspaper and the diocesan cemeteries. That property is held in the name of the bishop, but only for the benefit of the parishes, Mr. Weis said. The plaintiffs' attorneys have long contended that parish properties are part of diocese assets. "We've looked at that quite thoroughly," Ms. Demarest said. "They are completely wrong on that score." Mr. Turley said, "I guarantee if one of those churches decided to close its doors and sell the property, whatever receipts came from that go straight back to the diocese." The plaintiffs' attorneys said negotiations with the diocese to reach a settlement on the judgment have not been going well. "They haven't gotten started yet," Mr. Turley said. In his statement, Bishop Grahmann said he had told church lawyers to "aggressively pursue settlement." State District Judge Anne Ashby has not entered a judgment to make the verdict official. "All we can tell you is we are in settlement discussions," Mr. Weis said. "They are confidential." The diocese has sued two insurers to try to force them to pay the judgment if appeals are unsuccessful. The plaintiffs allege that Mr. Kos sexually abused them at churches in Dallas, Ennis and Irving from 1982 to 1991. They sought $ 146.5 million. Since the verdict July 24, the diocese has sold five undeveloped tracts of land in Garland, Mesquite and Plano for a total of $ 1.65 million, Mr. Weis said. It may have to sell more, and bankruptcy is a possibility if the judgment is upheld, he said. "What happens then is uncharteed territory," said Lisa LeMaster, who has been retained as a diocese spokeswoman. "That's not a place any diocese has ever been before." Ms. LeMaster said some parishioners had asked church officials to release financial figures in the wake of the Kos verdict. The figures, the most detailed ever released to parishioners, are part of an "overall accountability effort" by the bishop, she said. "I hope they parishioners greet it, not as good news, but as factual and thorough," Ms. LeMaster said. "This is an attempt to address the myths and misinformation out there even among our own parishioners. People tend to forget the purpose of the diocese is to manage and coordinate services for people who need it most. "It's not to build up wealth. Sometimes that is lost sight of." Besides cash and property, the diocese also has $ 16.6 million donated by thousands of Catholics to fund specific projects and ministries, Mr. Weis said. That money can't legally be used to pay any litigation costs, he said. Neither can money raised during the annual Catholic Community Appeal drive, he said. In the current campaign, $ 3.5 million has been pledged, compared with $ 3.6 million at this time last year, Mr. Weis said. Donors have been assured that CCA money will not be used for lawsuit-related expenses, Ms. LeMaster said. "There's been an effort to communicate that, and there has been some confusion," she said. In his statement, Bishop Grahmann told parishioners, "I deeply appreciate your prayers and support during this very difficult time for everyone in the Diocese. With the grace and guidance of Our Lord, we will find a just solution to these problems." He also issued another apology for Mr. Kos' abuse. "We all agree that Rudy Kos has done great damage to his victims and to our church, and for that we are truly sorry," he said. Judge OK’s Most of Kos Case Award By Brooks Egerton and Ed Housewright State District Judge Anne Ashby approved almost all of the landmark sexual-abuse judgment against the Catholic Diocese of Dallas on Friday, setting the stage for last-ditch settlement talks and a possible bankruptcy filing. In a letter to attorneys, she said that her decision in the case of suspended priest Rudolph "Rudy" Kos resulted from "exhaustive review" of post-trial motions. She added: "The unusually able briefs of counsel satisfy the court that legal and factual issues necessary for its decision have been explored to the outer limits of the state of the art." Judge Ashby's decision comes nearly six months after a jury made the largest clergy sexual abuse award in history - $ 119.6 million to 11 plaintiffs who alleged that Mr. Kos molested altar boys for more than a decade and that the diocese covered it up. "Getting this judgment approved is the single most important thing that could happen as far as resolving this case," said Sylvia Demarest, one of two plaintiffs' attorneys. "Hopefully this will advance settlement discussions." Plaintiffs' attorney Windle Turley likewise praised the judge's action, saying that it increases pressure on the defendants to negotiate. "It removes some of the denial the diocese and their attorneys have been under, their fantasy that perhaps this wouldn't come about," he said. "It's no longer a question. It's a reality." Mr. Turley said he expects the final judgment to be about $ 180 million, including interest. Through spokeswoman Lisa LeMaster, Bishop Charles V. Grahmann declined to comment Friday. The diocese's lead attorney, George Bramblett, said he was disappointed by the ruling, which reduced the jury award by about $ 2 million. But he said he remains optimistic that a deal can be worked out to end the Kos case and two others in which the diocese is accused of concealing pedophilia by priests. Both the diocese and its insurers have offered to contribute substantially to a settlement, Mr. Bramblett said. Previously, he said, insurance companies had offered little help. "We've made enormous progress" in recent negotiations, Mr. Bramblett said. "What makes it difficult is the number is so big." Attorneys in the case declined to give specifics on settlement offers. If a deal isn't reached soon, the attorneys say, post-trial motions would continue for a few months. If those efforts were exhausted, the diocese would have to post a bond for 110 percent of the judgment in order to send the case to appeals court. And if that "astronomical" bond isn't filed, Ms. Demarest said, "we're going to start seizing assets." Mr. Bramblett said the nine-county diocese will fight to save its properties. It could decide soon whether to file for bankruptcy, he said - a move that would protect assets from creditors but also damage the diocese's credit rating and subject its finances to federal court scrutiny. "If we're going to have a train wreck, we're going to have a train wreck," Mr. Bramblett said. Ms. Demarest denounced the diocese's assertion, made in a news release and financial report released Thursday, that it is running out of money. The diocese's chief financial officer said the diocese has "substantially less" than $ 1 million in cash and about $ 6 million in land and accounts receivable. Its liabilities total $ 3.2 million, officials said. The figures excluded the assets of parishes, missions, chapels, schools, Catholic Charities, the Texas Catholic newspaper and diocesan cemeteries, the diocese said. The numbers also didn't include the assets of the Catholic Foundation, which says it is legally independent of the church. Ms. Demarest argues otherwise and estimates that the diocese is worth "in excess of half a billion dollars." Mr. Bramblett insists that the financial report properly accounts for all assets that are subject to collection. "There is a legal and canon-law distinction" between those assets and the rest, he said, even though most of the excluded assets are held in the name of Bishop Grahmann. The approximately $ 2 million reduction in the judgment came from the roughly $ 17 million award to Pat and Nancy Lemberger. Mr. Kos contributed to the suicide of their son Jay, jurors concluded. Mr. Turley said he recommended the reduction because "there was just a little tiny bit in there the law did not support." Mr. Lemberger said he wasn't concerned about the cut. "Money," he said, "has never been the issue. We went into this to help the boys and make damn sure this doesn't happen again." He said the diocese has been paying for his counseling since September, but, "I'm still very angry. I can't get over that." The therapist "asked me the other day, Can you forgive the diocese?' I said, I don't think so.' "There's no forgiveness there now - and not for a long, long time, until they can prove they cleaned up their place. My hard feelings are more toward the diocese than Rudy, because they covered it up. Rudy is a very sick individual." Mr. Kos did not offer a defense during the trial and was found liable at its outset last spring. He has since been jailed in Dallas County on criminal charges involving the civil plaintiffs, which he denies. Trial is set for March. Ms. LeMaster said diocesan leaders and attorneys plan intense discussions before Tuesday - the deadline Judge Ashby set for submission of terms to be used in the final, formal judgment. [Photo caption: Anne Ashby . . . judge delivers her decision about six months after the jury trial.]
By Associated Press In a letter to attorneys, Judge Anne Ashby said she went through "exhaustive review" of post-trial motions before making her decision in the case of suspended priest Rudolph "Rudy" Kos. Ashby's decision Friday came nearly six months after a jury made the largest clergy sexual abuse award in history - $119.6 million to 11 plaintiffs who alleged Kos molested altar boys for more than a decade and that the diocese covered it up. "Getting this judgment approved is the single most important thing that could happen as far as resolving this case," Sylvia Demarest, one of two plaintiffs' attorneys, told The Dallas Morning News. "Hopefully this will advance settlement discussions." Plaintiffs' attorney Windle Turley said he expects the final judgment to be about $180 million, including interest dating to early 1994. Through spokeswoman Lisa LeMaster, Bishop Charles V. Grahmann declined to comment Friday. The diocese's lead attorney, George Bramblett, said he was disappointed by the ruling, which reduced the jury award by about $2 million. But he said he remains optimistic that a deal can be worked out to end the Kos case and two others in which the diocese is accused of concealing pedophilia by priests. Bramblett said the nine-county diocese will fight to save its properties. It could decide soon whether to file for bankruptcy - a move that would protect assets from creditors but also damage the diocese's credit rating and subject its finances to federal court scrutiny. "If we're going to have a train wreck, we're going to have a train wreck," Bramblett said. On Thursday, the diocese released a financial report saying it has "substantially less" than $1 million in cash and about $6 million in land and accounts receivable. Its liabilities total $3.2 million, the diocese said. The figures excluded the assets of parishes, missions, chapels, schools, Catholic Charities, the Texas Catholic newspaper and diocesan cemeteries. The figures also excluded the assets of the Catholic Foundation, which says it is independent of the church. Ms. Demarest has argued otherwise and estimates the diocese is worth "in excess of half a billion dollars." Attorneys have declined to give specifics of settlement offers. Ms. LeMaster said diocesan leaders and attorneys plan intense discussions before the Tuesday deadline Ashby set for the parties to submit terms for a final, formal judgment. The approximately $2 million reduction in the judgment came from the
roughly $17 million award to Pat and Nancy Lemberger. Kos contributed
to the suicide of their son Jay, jurors concluded. Pat Lemberger said the diocese has been paying for his counseling since September, but added, "I'm still very angry. I can't get over that." The therapist "asked me the other day, `Can you forgive the diocese?' I said, `I don't think so.' "There's no forgiveness there now - and not for a long, long time, until they can prove they cleaned up their place. My hard feelings are more toward the diocese than Rudy, because they covered it up. Rudy is a very sick individual." Judge Signs Kos Judgment, Orders Mediation By Ed Housewright The signing of the judgment came six days after she told attorneys for the diocese and the 11 plaintiffs that she intended to uphold all but about $ 2 million of the jury's record $ 119.6 million award July 24. The $ 154.3 million represents the slightly lowered amount plus interest calculated back to 1993 when the first sexual-abuse lawsuit was filed against the diocese. The diocese now has 30 days to file a motion for a new trial with Judge Ashby. If she denies the motion, the diocese intends to appeal the verdict all the way to the U.S. Supreme Court if a settlement with the plaintiffs' attorneys can't be reached, said George Bramblett, a diocese attorney. Also Thursday, Judge Ashby ordered both sides into mediation. "I have instructed our attorneys to focus all their energies toward settlement of this case," Bishop Charles V. Grahmann said in a written statement. "The enormity of this judgment could place the diocese at the brink of financial ruin. . . . We also will continue to examine every option, including the possibility of seeking relief in the bankruptcy courts as a last resort." The plaintiffs' lawyers said they were pleased that the judgment had been entered. "There's no question in my mind at all but that both the jury's verdict and Judge Ashby's rulings and actions in the case will be upheld on appeal," said Windle Turley, who represents eight of the plaintiffs. "The jury found against the diocese in so many different ways, and the law is pretty clear on all the issues involved." He said he thought the diocese was "wasting its time and money on an appeal." The other plaintiffs' attorney, Sylvia Demarest, agreed. "I'm very confident that this is a bulletproof verdict, and we will be vindicated on appeal," she said. "I'm very hopeful this will give us the opportunity to engage in meaningful negotiations with the diocese with the view of settling this matter to the satisfaction with my clients and allow them to get on with their lives. "I've communicated the fact that the judgment has been signed to my clients, and they're extremely ecstatic." She continued to maintain that the diocese has the money to pay the judgment, although Mr. Bramblett repeated that it does not. Interest on the $ 154.3 million judgment will accumulate at the rate of 10 percent a year. "It's impossible to step up and pay it," Mr. Bramblett said. "We need the plaintiffs to cooperate with us and come to the table in the spirit of compromise." He said he thought the signing of the judgment causes "everyone to be more serious" about settlement. Ms. Demarest said she's seen "movement on the part of the insurance carriers and movement on the part of the diocese" toward settlement. "I'm encouraged," she said. "But we've got a long way to go." The plaintiffs alleged that Mr. Kos sexually abused them for more than
a decade at churches in Dallas, Irving and Ennis and that the diocese
covered it up. Catholic Church Orders Volunteer Reinstated to Post By Brooks Egerton A Catholic parishioner has been ordered reinstated to a volunteer leadership post from which she was removed for publicly suggesting that Bishop Charles V. Grahmann be replaced, her pastor said Sunday. "The decision is revoked," said the Rev. Don Fischer, of St. Joseph Catholic Church in Richardson. "It's a bad decision, and the people who made it were wrong." Diane Daniels, who is married to St. Joseph's lone deacon and deeply involved in church work, told parishioner Susan Ahern last week that she could no longer help coordinate volunteers for the adult religious education program. Ms. Daniels, who also works as director of the Catholic Diocese of Dallas' marriage ministry, could not be reached for comment Sunday. She said in an interview last week that she had acted against Ms. Ahern on behalf of a team, whose members she would not name. She would not comment further except to say that Ms. Ahern had offered to resign when she wrote a letter about Bishop Grahmann that was published Nov. 30 in The Dallas Morning News . "We basically took her up on it," Ms. Daniels said. Ms. Ahern said she never offered to quit. Ms. Daniels, she said, told her that she was firing her on behalf of top parish officials and an unnamed diocesan manager. Those officials and diocesan spokeswoman Lisa LeMaster said Ms. Daniels had no such authority. "This is not even on the radar screen" at diocese headquarters, Ms. LeMaster said. Monsignor Fischer said Ms. Daniels may have gotten support for her position - from other volunteer leaders and his assistant pastor, the Rev. Clifford Smith - by presenting the issue as whether to accept Ms. Ahern's resignation. "She acted way too much on her own," the monsignor said. He said he was still studying the situation and hadn't determined what further action to take, if any. In her letter, Ms. Ahern talked about the need for healing in the wake of the huge molestation-conspiracy judgment against the diocese and suspended priest Rudolph "Rudy" Kos. She also praised Bishop Grahmann's understanding of Hispanic parishioners and asked: "So why not place him in a position in the church that would utilize his strength? . . . Why not give us a new bishop . . . to help foster healing and assist in the payment of the judgment as an offering of atonement?" Before the letter was published, Ms. Ahern said, she showed it to Deacon Jim Daniels. "He said, You're allowed to have your own opinion,' " she said. "He also told me he believed I was right and we should get a new bishop." Mr. Daniels could not be reached for comment, but Monsignor Fischer and Father Smith - like many other priests interviewed in recent months - also expressed hope that the diocese will get new leadership. "We all hope that," Monsignor Fischer said. Bronson Havard, a spokesman for Bishop Grahmann, declined to comment. Ms. Ahern, who attends Mass daily, said Ms. Daniels and anyone else who supported firing her should be punished "so that this doesn't happen to anyone else." It wasn't clear Sunday whether Ms. Ahern would be willing to return to her leadership role. But she said she was determined to continue her individual sponsorship of a Richland College student who is becoming a member of St. Joseph. The student, 20-year-old Regan Foster, called Ms. Ahern "pretty much a role model for me." She said she wasn't sure whether she agreed with Ms. Ahern's opinion on the bishop, "but that's not really the point. The point is whether she has the right to express it." [Photo caption: Don Fischer . . . "The decision is revoked. . . . The people who made it were wrong." ] Abuse Suits Involving 2 Ex-Priests Settled By Ed Housewright Three of the four cases involved Robert Peebles Jr., who has admitted in a sworn deposition and medical records that he sexually abused seven to 16 boys in five assignments from 1979 to 1986. The fourth case involved William Hughes, who was accused of sexually abusing a 13-year-old girl in 1983 and 1984 while he was an assistant pastor at St. Luke Catholic Church in Irving. Bishop Charles V. Grahmann said the diocese continues to try to reach a settlement with plaintiffs of the $ 154.3 million judgment against the diocese and Mr. Kos. He is accused of sexually abusing boys from 1981 to 1992 at churches in Dallas, Irving and Ennis. "It's time for all of us to heal and go forward," the bishop said in a written statement. "This has been a difficult time for everyone involved and an important step has been made today in resolving a painful chapter in the history of our diocese." The diocese's share of the $ 5 million settlement, reached Tuesday during court-ordered mediation in the Kos case, is $ 1.1 million, said diocese spokeswoman Lisa LeMaster. It will come from the sale of undetermined real estate, she said. The rest of the settlement amount will be paid by insurance companies representing the diocese and by other defendants. Mr. Peebles and Mr. Hughes, who were defendants in the lawsuits, could not be reached for comment. The two of them and Mr. Kos all briefly worked together in 1981 and 1982 at All Saints Catholic Church in North Dallas. Sylvia Demarest, the attorney who represented the Peebles and Hughes plaintiffs, said she thought she had strong cases. But she said she decided to settle partly to avoid a lengthy trial, which might not have begun until next year. "I think it was a fair settlement for everybody involved," said Ms. Demarest, who also represented three of the 11 Kos plaintiffs. "These cases have been hard-fought for a long time. Hopefully, now that the diocese has this behind them they can concentrate on trying to resolve the Kos case." She said that trying the Peebles and Hughes cases would have been difficult because diocese lawyers had already seen some of her evidence during the Kos trial last summer. "I always felt at the Kos trial that the diocese never knew what hit them in terms of the evidence," Ms. Demarest said. "They had already seen that now . That's a big deal. It was going to be a different kind of trial." In contrast to the total $ 5 million offered to the five Peebles and Hughes plaintiffs in the four cases, she said the diocese offered a total of less than $ 500,000 to the 11 Kos plaintiffs before trial. One of the cases against Mr. Peeples was filed by two plaintiffs. "When you've got a reasonable amount of money on the table, then the decision about how much to risk is a decision I felt I needed to leave to my clients," Ms. Demarest said. "They're very pleased to have this behind them. "You don't know what you would have gotten at trial." Three of the five Peebles and Hughes plaintiffs received more than $ 1 million each under the settlement, Ms. Demarest said. The other two received about $ 375,000 each. The plaintiff who received the largest amount was sexually assaulted in 1984 at age 14 by Mr. Peebles after he became an Army chaplain at Fort Benning in Georgia. The man, whose younger brother was a Kos plaintiff, said he was violently sexually assaulted for several hours after Mr. Peebles gave him more than a six-pack of beer to drink. He said he has had nightmares continually since the incident and has physical scars from the attack. Mr. Peebles, his confirmation adviser at All Saints, had invited him to the Army base to take a tour and go fishing. "I will never forget the details of that evening," said the man, who asked not to be identified. "It was horrific. There will never be a monetary amount that could compensate me or any other victims for what happened." He said he had originally wanted the case to go to trial but decided to settle to try to get on with his life. "I wanted the public to know and hear . . . that this is not just one priest, not just Kos," the man said. The mother of the girl who was allegedly abused by Mr. Hughes testified during the Kos trial that church officials never reported the abuse to police and quietly transferred Mr. Hughes to another church. She said she discovered the abuse in 1984 when she found more than 100 letters from Mr. Hughes to her daughter. "We trusted this young man and had no idea he was molesting our daughter," the woman testified last summer. "We were in a state of shock." Besides Mr. Peebles, another defendant in the case was the Military Vicariate, USA , which oversees chaplains. John Palter, a Dallas lawyer for the military vicariate, would not say how much it paid toward the settlement. "These cases involved sensitive personal issues, as well as somewhat complex legal issues," Mr. Palter said. "I think the military vicariate hopes, with the resolution of these issues, that both the plaintiffs and the respective defendants can move on." Dr. Ray McNamara, a Dallas psychologist who treated Mr. Peebles and the boy he is accused of abusing at the Army base, was another defendant. The boy's parents contended that Dr. McNamara acted inappropriately because he didn't reveal that he had worked with the diocese. Dr. McNamara's attorney, Lancaster Smith Jr., would not disclose how much the doctor's insurance company paid toward the settlement. Mr. Smith denied that Dr. McNamara did anything wrong. "I think it is good for all the parties that we were able to put the case behind us," Mr. Smith said. One of the diocese's insurers, Lloyd's of London, paid about $ 1 million of the settlement, said its lawyer, Jim Cowles. A lawyer for the other insurer, Interstate Fire & Casualty Co., would not say how much it contributed. Both lawyers said their companies believe the diocese's policies do not cover clergy sexual abuse. But Mr. Cowles said "there is nothing absolute in this business." "We're tickled to death that they're settling," he said. "I think it's great for everybody." The diocese sued Lloyd's of London and Interstate less than 24 hours after the Kos verdict on July 24 to try to get them to pay the jury award. The two companies are part of the ongoing settlement talks in the Kos case. |
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