Judge rules diocese can be liquidated in sex-abuse case: questions arise about “big business”

Spokane, Wash., Aug 28, 2005 / 22:00 pm

In a shocking decision last week, a federal bankruptcy judge ruled that all parish churches, schools and other property of the Diocese of Spokane could be liquidated to pay 58 alleged victims of clergy sexual abuse.

Bishop William Skylstad had argued in court that he did not control individual parishes and they were not available to cover settlement, reported the Associated Press. He said only about $10 million worth of real estate were under his control, and that the diocese has filed for bankruptcy protection last year.

But lawyers argued that the bishop holds title to and controls more than 82 parish churches, 16 schools, Catholic cemeteries and other property in eastern Washington state, making his financial assets total more than $80 million, reported the AP.

The decision ignores the fact that parishes and other institutions, associated to the diocese, are independent legal entities. It is expected to impact dioceses and cases across the country.

"It is not a violation of the First Amendment to apply federal bankruptcy law to identify and define property of the bankruptcy estate even though the Chapter 11 debtor is a religious organization," Judge Patricia Williams wrote.

Skylstad said he would appeal the decision "because we have a responsibility, not only to the victims, but to the generations of parishioners ... who have given so generously of themselves in order to build up the work of the Catholic Church in Eastern Washington".

Sex-abuse cases are ‘huge business’

This decision may be viewed as another phase in a very long and carefully planned campaign to attack the Church and use it as a focal point in a larger effort to turn the sex-abuse crisis into big business. The trend was documented in Forbes Magazine more than two years ago.

The article, dated June 9, 2003, says abuse cases against Catholic dioceses have been about more than justice. Forbes said they “have sparked a litigation gold rush,” and litigators have turned the sex-abuse crisis into a billion-dollar industry.

The cash flow related to sex-abuse cases is astounding. According to the publication, $1 billion in damages had already been paid out to victims and indications were that the total will approach $5 billion before the crisis is over.

Patrick Schiltz, associate dean at the University of St. Thomas Law school in Minneapolis, Minn., described the decade-long litigation campaign and the litigators’ strategy as "warfare."

"Phase One was for plaintiff lawyers to maximize bad publicity and destroy the credibility of the Church. Phase Two is to use that publicity to push for legislative changes. Phase Three will be to collect," he told Forbes.

"There is an absolute explosion of sexual abuse litigation, and there will continue to be. This is going to be a huge business," plaintiff lawyer Roderick MacLeish Jr. admitted frankly to Forbes. The 50-year-old lawyer had won more than $30 million for more than 100 plaintiffs over the last 10 years.

The majority of cases are legitimate, but Schiltz said the huge settlements may attract others who want a piece of the pie.

"Who's going to doubt them?” said Schiltz. “I worry about the person who was an altar boy 30 years ago, and his life has been a disappointment, and now he realizes he has a lottery ticket in his pocket."

In addition, Schiltz said, the situation can snowball and lead to similar litigation against day cares, babysitters, Boy Scouts, Girl Scouts, summer camps, study-abroad programs, etc.

In the meantime, litigators have been using other strategies to generate settlements. They continue to lobby states to lift the statute of limitations on sex abuse cases, allowing people to file complaints that date back decades.

As well, Forbes reported that Minnesota lawyer Jeffrey Anderson had plans to use the Racketeer Influenced & Corrupt Organization Act (RICO) and to argue that bishops conspired in a cover-up. He has also tried to sue the Vatican.

More than this, litigators are going after big insurers. “Put aside the pious talk about protecting kids, and the racket boils down to this: Plaintiff lawyers are going after old insurance policies written decades ago under entirely different circumstances,” Forbes said.

Lawyer Roderick MacLeish, who represented 240 plaintiffs against the Archdiocese of Boston, had shared his next career move with the magazine. He said when the clergy abuse crisis is over he would use his experience to consult businesses that want to protect themselves from sex abuse lawsuits. His hourly rate is $500.