Portland Archdiocese, Sex Abuse Claimants Agree to Settle

Nearly all the some 170 people claiming they were sexually abused by priests who once worked in Western Oregon have agreed to settle their lawsuits against the Roman Catholic Archdiocese of Portland, a federal judge who mediated the deal announced on Monday.

U.S. District Judge Michael Hogan announced the agreement but would not give a dollar amount. He told reporters that insurance companies have agreed to provide more than $50 million to the settlement, and that all current and future claims could be covered by the archdiocese without selling off property held by parishes and schools.

The Archdiocese of Portland was the first in the nation to seek protection from creditors when it went to federal bankruptcy court to head off a massive sex-abuse lawsuit.

A settlement agreement has been reached with about 150 claimants, leaving about 20 to go, Hogan said. He expressed confidence those cases would be settled as well. The agreement will be filed with the U.S. Bankruptcy Court by Dec. 18.

Court records show the archdiocese has spent $15 million already on legal costs in the case. Before going into bankruptcy court in 2004, the archdiocese had paid out $53 million in claims, with insurance covering about half.

“These are expensive lessons,” Hogan said. “All of our hope is, including the archdiocese, is that they have been learned.”

All parties to the litigation remained under a strict gag order.

David Clohessy, national director of Survivors Network of those Abused by Priests, who is not a party to the case, said in a statement that he hoped the settlement would bring healing to the victims.

“We are grateful they had the wisdom to go to the courts and had the persistence to continue throughout this arduous process,” he said. “Kids are safer because of their courage. Every Catholic in Oregon owes these wounded but compassionate victims a debt of gratitude.”

As part of the settlement, a “healing” service will be held, in which all the parties, including the victims of sexual abuse who sued the archdiocese and their lawyers, will be thanked, Hogan said.

“Most bishops are breathing a sigh of relief across the country,” that the settlement will not require selling off parish churches and schools, said Chuck Zech, professor of economics at Villanova University, who has been following the case closely. “If you had asked me this a month ago, I would have said there was probably no way to pull this off without selling some worship sites.”

Hogan and Lane County Circuit Judge Lyle Velure have held months of secret talks, described by Hogan as “rough and ready,” between the archdiocese and plaintiffs, trying to reach a settlement.

Three other dioceses — Tucson, Ariz.; Spokane, Wash.; and Davenport, Iowa — have also sought bankruptcy protection from a flood of lawsuits by people alleging sexual abuse by priests. Tucson emerged from the process in 2005 without having to sell off parish and school properties.

Fred Naffziger, a professor of business law at Indiana University South Bend, said the Portland case was the longest running of four bankruptcy cases, indicating a high level of stubbornness by all parties. He added that the fact Hogan spoke enthusiastically about the agreement indicated he probably feels it will be accepted by the bankruptcy judge.

“It was good news they have been able to settle so many cases, but without knowing the exact dollar amounts and how the money is allocated, it’s difficult to say what this means for the overall financial settlement by the (arch)diocese with its creditors,” he said.

He added holdouts may be seeking more money, and that the bankruptcy judge in the Spokane case did not accept the initial settlement presented in that case.

Despite the settlement agreement, there’s still work to be done in the Portland Archdiocese bankruptcy case.

Terms of the settlement will have to be incorporated into a new reorganization plan for the archdiocese. And U.S. bankruptcy Judge Elizabeth L. Perris will have to rule that the reorganization plan is fair for all parties.

The Oregon bankruptcy case has pitted the federal courts against church law, or canon law, in a dispute over who owns church property.

The archdiocese had claimed it merely holds the property of its individual parishes in trust, and cannot sell it to satisfy any judgments. Perris, however, had ruled that church property and real estate are under the control of the archdiocese, potentially allowing its sale.

Hogan said the archdiocese will be reorganized so that the parishes and schools will be legally separate in future.

Perris cleared the way for alleged abuse victims to go to trial last April after the archdiocese and its creditors –the alleged victims –were unable to agree on settlement plans each side had offered.

Earlier this month, the Archdiocese of Los Angeles said it would pay $60 million to settle 45 abuse lawsuits.

Roman Catholic dioceses in the United States have paid an estimated $1.5 billion since 1950 to handle claims of sex abuse by its priests.

Other large settlements include $100 million paid to 87 claimants last year by the Diocese of Orange in Orange County, Calif., and $85 million paid to 552 claimants in 2003 by the Archdiocese of Boston.