Bankruptcy filing delays church sex abuse case


A bankruptcy filing by the Catholic Diocese of Wilmington was the best way to ensure reconciliation and compensation for all victims of clergy sexual abuse in the diocese, the bishop said Monday.

The diocese filed for Chapter 11 bankruptcy protection late Sunday after hours of settlement negotiations failed with about a dozen alleged victims, including eight plaintiffs whose cases were scheduled for trial. More than 100 other alleged victims are pursuing compensation through dispute resolution instead of trials.

“It was clear to us in our negotiations that the amount of money that was being sought by the early victims and the finite amount that we had … was not going to work,” said the Most Rev. W. Francis Malooly, the bishop of the diocese.

Plaintiffs’ attorneys, however, counter that the diocese has refused to offer fair settlements and that Malooly is trying to avoid damaging testimony and documents at trial.

“The arrogance of the diocese in their negotiations is unfounded in any type of negotiations that I’ve had,” said attorney Robert Jacobs who pointed out that the diocese offered a fraction of what other abuse victims have received.

Attorney Thomas Neuberger said former Bishop Michael Saltarelli, who died two weeks ago, had indicated the diocese was willing to pay each victim roughly $1.3 million, the average received in the record $660 million settlement for 500 victims in the Archdiocese of Los Angeles.

Malooly has refused to go along with the wishes of Saltarelli, said Neuberger, who represents 88 alleged victims.

“He remorsefully told the truth about the scandal before he met his Maker,” Neuberger said of Saltarelli. “… He actually condemned the conduct of these cases by Bishop Malooly since he took over from him on his retirement.”

The filing will expose the diocese’s finances _ something the plaintiffs have been fighting to access for five years, Neuberger said.

The filing came on the eve of a trial, scheduled to begin Monday, that would have been the first under a Delaware law that created a two-year “lookback” window allowing claims of abuse to be brought even if the statute of limitations had expired. More than 175 lawsuits were filed before the window closed this summer, with four being settled. The diocese and certain parishes are defendants in 131 cases that have yet to be scheduled.

The first eight cases scheduled for trial involve lawsuits against former priest Francis DeLuca. DeLuca served for 35 years but was defrocked last summer after he was jailed in 2007 in New York for repeatedly molesting his grandnephew.

Shortly after DeLuca’s arrest, Saltarelli released the names of 20 priests, including DeLuca, against whom the diocese had substantiated allegations of child sexual abuse.

Under federal bankruptcy rules, the filing automatically halts all litigation against the diocese. Attorneys for John Vai, the Chester County, Pa., man whose trial was supposed to begin Monday, said they hoped it would go forward.

Meanwhile, attorneys asked the bankruptcy court to allow a November trial about James Sheehan, 63, who is gravely ill and suffers from congestive heart failure. The attorneys noted that he and numerous other plaintiffs ill with cancer and other afflictions may die before they have a chance to try their cases.

The Associated Press doesn’t normally disclose the names of alleged sexual abuse victims, but several people have told their stories publicly.

The diocese has paid more than $6.2 million since 2002 to settle eight claims of sexual abuse, with insurance paying $475,000. Its bankruptcy filing lists assets between $50 million and $100 million and liabilities between $100 million and $500 million. Plaintiffs, banks and pensioners were listed as creditors.

The Wilmington diocese, which serves about 230,000 Catholics in Delaware and the Eastern Shore of Maryland, is the seventh U.S. Catholic diocese to seek Chapter 11 bankruptcy protection since the church abuse scandal erupted seven years ago in Boston.

Others are Davenport, Iowa; Fairbanks, Alaska; Portland, Ore.; San Diego; Spokane, Wash.; and Tucson, Ariz. The San Diego case was dismissed.

The cases in Davenport, Portland, Tucson and Spokane all ended with each diocese paying tens of millions of dollars to victims.

Chuck Zech, director of Villanova University’s Center for the Study of Church Management, said the bankruptcy filing is a fair way for the Wilmington diocese to make sure all victims are treated equally.

But Marci Hamilton, a law professor at the Cardozo School of Law who represented plaintiffs in the San Diego, Portland and Spokane, described the filing as a tactic to reduce financial liabilities.

“The notion that they don’t have the assets is ridiculous, and the timing just tells you everything,” Hamilton said.


Associated Press writer Brian Witte in Annapolis, Md., contributed to this report.


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