In Minnesota, Catholic Charities sues near-bankrupt diocese

St. Cloud, Minn., Jul 12, 2018 / 05:00 am

The fate of a children's home is the subject of a lawsuit against the Diocese of St. Cloud, Minn., by the diocese's Catholic Charities affiliate, which fears the diocese's planned bankruptcy could disrupt services at the facility.
 
"We continue to support the mission of Catholic Charities, and we know they continue to support the mission and ministries of the diocese," Joseph Towalski, director of the Office of Communications at the Diocese of St. Cloud, told CNA July 11. "We believe the complaint will be properly resolved through the judicial process."
 
Towalski said the complaint is under review by legal counsel and the diocese would not comment on it at this time.
 
After 74 claims related to clergy sex abuse were made, the diocese made a Feb. 28 announcement that it would seek bankruptcy protection, the Minneapolis Star-Tribune reports.
 
The complaint concerns ownership of St. Cloud Children's Home and surrounding properties. The children's home facilities include several cottages, classrooms, a chapel, an administrative building, a heating plant and grounds improvements including sidewalks, fences and paved parking.
 
Catholic Charities' complaint asks the diocese to transfer ownership of the facility and surrounding area to the charity.
 
"This is an unusual position we find ourselves in," Steve Pareja, the Catholic Charities affiliate's executive director, said July 2.
 
"While we work closely with the diocese, we are in fact a separately governed and
separately run organization. Our separateness comes with obligations – legally and morally – to protect the financial health and sustainability of Catholic Charities and to be responsible stewards of the assets our donors have entrusted to us."
 
The lawsuit filing reflected those responsibilities, according to Pareja.
 
Beginning in 2014, diocesan officers had committed to transfer to Catholic Charities the St. Cloud Children's Home and surrounding property. Relying on that commitment, Catholic Charities said, it had incurred "significant debt" to build a new 16-unit residential treatment facility, debt secured by assets which could be used for other purposes.
 
Pareja said the issue had been under "active discussion" for almost four years and the diocese's bankruptcy announcement gave new urgency to resolving the situation.
 
"If this issue is to be settled, it is on us to move a resolution forward and to do so
with the assistance of the court," he said.
 
Catholic Charities stopped providing residential treatment services at the facility in May 2017. However, it provides youth behavior health services in day-treatment programs at the location. It aims to continue these services amid the diocese's bankruptcy filing.
 
The Catholic Charities affiliate describes itself as "a nonprofit organization that advances the charitable and social mission of the Diocese of St. Cloud." The diocesan chancellor, Jane Marrin, is listed on its website as a 2018 board member.
 
The charity's executive director addressed relations with the diocese and the context of the lawsuit amid other legal claims on the diocese.
 
"This is not an attack on the diocese or a break in our support for its mission," Pareja said. "We think the diocese is as interested in resolving this matter as we are, but its ability to act is constrained by the pending Chapter 11 filing."
 
Pareja explicitly rejected any characterization of the lawsuit as a legal tactic to shelter diocesan or Church-related assets in anticipation of bankruptcy hearings.
 
"(W)e are moving independently and in good faith to carry out our fiduciary duties to Catholic Charities and our supporters," he said. "I want to emphasize this last point in the strongest possible terms: We support the victims of sexual abuse and their efforts to seek justice. We also support the diocese in its efforts to find a way forward that cares for these victims and allows it to continue its ministry to our communities."
 
Catholic Charities of St. Cloud serves 54,000 people across 16 counties with services including housing, mental health services and assistance for children and families. CNA contacted the charity but did not receive additional comment by deadline.
 
St. Cloud was the fourth diocese in Minnesota to declare bankruptcy after the passage of the Minnesota Child Victims Act in 2013, which lifted the civil statute of limitations for child abuse allegations until May 2016. The act gave alleged victims three years in which to file claims for abuse alleged to have occurred decades ago.
 
During the three-year window, more than six hundred claims were filed against Catholic dioceses in Minnesota.