Judge lets archdiocese bankruptcy abuse ruling stand

(JS Online) A federal judge on Monday handed partial victories to both the Archdiocese of Milwaukee and the sex abuse victims who make up the vast majority of creditors in its bankruptcy.

The ruling, by U.S. District Judge Rudolph Randa, lets stand a February decision by U.S. Bankruptcy Judge Susan V. Kelley dismissing one victim’s claim and allowing two others to move forward, at least for now.

The three cases were seen as test cases in which the archdiocese argued that a significant number of victims of clergy sexual abuse had enough information on the church’s handling of cases to have filed fraud claims years earlier, and that the statute of limitations expired before those victims stepped forward. It also sought to exclude cases that involve religious offenders, teachers and others it does not consider its employees, and cases where the victims received prior settlements.

A decision to dismiss all three cases would have opened the door for the archdiocese to remove most of the 574 sex abuse claims involved in the bankruptcy proceedings, victims and their attorneys have said.

The lone dismissal – of a claim in which a victim already received a $100,000 settlement from the church – lays the groundwork for the archdiocese to object to more than 90 claims by individuals who also signed prior settlement agreements.

A spokesman for the church suggested Monday that may be coming.

“The archdiocese will continue to do whatever we can to move the case forward and we plan to explore ways that can quickly determine whether there are any other valid claims,” Jerry Topczewski said in an email.

The archdiocese has consistently denied wrongdoing in its handling of the cases; while critics have said that attempting to remove large blocs of people with claims essentially revictimizes them.

Jeffrey Anderson, who represents 350 of the men and women who allege they were sexually assaulted as children by priests and other church employees, said the claims could not be tossed en masse and would have to be individually analyzed.

“We’re saddened by the loss of the one claim, but all the others are alive and will require individual scrutiny,” Anderson said.

He also said the victims would mount a new strategy: urging Kelley to push the archdiocese to pursue newly discovered insurance coverage rather than attempt to throw out claims.

“We will be urging the court to take a hard look at that,” Anderson said.

A circuit court has ruled that the archdiocese’s insurer was not liable for claims regarding sexual abuse because they involved allegations of fraud. The archdiocese is appealing that ruling to the Wisconsin Supreme Court.

But victims’ attorneys say that ruling involved a specific carrier, OneBeacon Insurance Group, and did not include newly discovered policies with Lloyd’s of London and Stonewall Insurance that could cover claims by as many as half of the creditors.

Topczewski said Monday that the archdiocese is pursuing insurance coverage and has made demands on all of its insurers.

The archdiocese appealed the initial Kelley decision to Randa, and filed a second round of objections – this time to seven claims, that raised the same legal issues. It asked Randa to rule on the second round instead of Kelley, an unusual maneuver that victims derided as venue shopping.

Randa said Monday he did not have jurisdiction to hear the appeals or the new round of objections – effectively letting Kelley’s ruling stand.

An earlier version of this story incorrectly reported that the Wisconsin Supreme Court has ruled that the Milwaukee Archdiocese’s insurer was not liable for claims regarding sexual abuse. Actually it was a circuit court that ruled, and the archdiocese is appealing the ruling to the state Supreme Court.