In a strongly worded legal brief, survivors of abuse with claims in the bankrupt Roman Catholic Diocese of Rochester responded to the diocese’s attempt to halt state court cases accusing priests and other officials of the church of sexual abuse.
The message from the survivors is undoubtedly clear: We have waited too long for our grievances to be resolved by this long-standing bankruptcy. Let the state court cases continue.
“The diocese’s inability to marshal its assets and insurance to provide a just settlement underscores the need for (separate) litigation (against the parishes and other affiliated dioceses) at this time,” the survivors’ brief states.
In the filing, the survivors then accuse the diocese of negotiating in bad faith in a nearly three-year-old bankruptcy court mediation between the diocese and its insurers by “negotiating through attrition…to exhaust survivors in the purpose of getting them to agree to an unreasonable settlement.
The survivors’ filing came nearly to the deadline last Friday, days before bankruptcy judge Paul Warren was supposed to hear oral arguments for and against the diocese’s April 6 bid to reinstate a freeze on court cases in state targeting individual parishes, parish priests and other church leaders.
In state lawsuits, aging survivors accuse priests, nuns, deacons, camp counselors and other church officials of sexually abusing them as children decades ago. decades and accuse the church of knowingly allowing the abuse to continue.
Those dormant claims in state court were frozen in time about two years ago under an agreement between the official bankruptcy creditors’ committee and the diocese. Warren commemorated the pact in a court order as a stipulation subject to periodic renewals.
The Diocese of Rochester Bankruptcy Creditors’ Committee is a 12-member body appointed by the U.S. Trustee and made up of survivors of abuse. The committee and the diocese had previously agreed to renew the stipulation 11 times.
On the date supposed to be the 12th extension of the stipulation, March 28, one party refused to renew the pact. This began a 45-day countdown for 86 parishes and other affiliated dioceses like Catholic Charities of the Diocese of Rochester, the Diocese’s Catholic Youth Organization and Camp Stella Maris to respond to state lawsuits.
The state lawsuits were already filed and awaiting action when the diocese filed for bankruptcy court protection in September 2019.
In the April 6 filing, the diocese’s chief bankruptcy attorney, Stephen Donato, places blame for the expiry of the stipulation entirely on the creditors’ committee, writing that “the diocese has requested that the stipulation and the order be further extended, but the committee refused to consent to a further stay of proceedings against the (affiliated parishes, priests and other dioceses).”
In the response to the April 6 complaint, creditors’ committee attorney Ilan Scharf blames Donato for allegedly breaching an agreement to remain silent on the details of the mediation.
“The Diocese’s actions toward survivors have been aggressive, including the rhetoric it uses in its injunction motion – in which it violates mediation privilege by falsely accusing the committee of being the reason it does not There is no solution to this case,” Scharf claims in the response. papers.
“The diocese is not the victim here,” he adds. “The diocese’s own failures to protect children are the cause of its responsibility.”
Arguing that paying settlements that could total $100 million or more to settle dozens of abuse claims would exceed its entire assets, the Diocese of Rochester filed its Chapter 11 case a month after it entered into force of the New York Child Victims Act.
Signed into law by former Governor Andrew Cuomo in February 2019, the CVA temporarily lifted a seven-year statute of limitations, creating a roughly two-year window for adults sexually abused as children to sue their alleged abusers in civil court. A total of 485 men and women have filed abuse claims in the bankruptcy of the Diocese of Rochester.
In an initial meeting with creditors, the Diocese of Rochester’s chief financial officer, Lisa Passero, said the diocese expected insurers who wrote its liability policies for a period of about 20 years to from the 1950s are paying most of the cost of any settlement with victims of abuse.
Insurers, however, balked. About a month after the case began, a dozen insurers proposed in bankruptcy court that they be allowed to file a lawsuit in state court seeking to reduce or completely avoid payments to settle abuse claims.
The diocese opposed it, asking for a trial in bankruptcy court. Instead of granting the request, Warren suspended the dispute, ordering the insurance companies and the diocese to settle their differences through mediation. Survivors say that after nearly three years of talks, this mediation shows no sign of reaching an agreement.
In the complaint of April 6, Donato maintains that “there is every reason to expect that the diocese will succeed in reorganizing itself. Indeed, the parties have been and continue to engage in active mediation and negotiation with the assistance of Judge (Gregg) Zive to achieve this collective goal. Zive is the court-appointed mediator.
That’s not the case, counters Scharf, who argues in the survivors’ response that “the diocese has done nothing significant to get its insurers to fund an appropriate settlement.” The only action the diocese has taken against its insurers was to oppose the relief suspension and file a complaint (in adversarial proceedings that were quickly suspended) more than two years ago.
Restarting state court cases will add costs and confusion to already costly bankruptcy, Donato argues. In a recent filing, the diocese recorded its costs to pay lawyers, accountants and consultants working on its bankruptcy as totaling just over $6 million so far. Costs continue to rise in six-figure increments each month.
“Prosecuting the CVA cases during this critical stage of the Chapter 11 case will be cumbersome and time-consuming and will disrupt and delay the ongoing mediation and negotiations for a plan to reorganize the Diocese, to the detriment of all creditors,” Donato said in the April 6 complaint.
On the contrary, argues Scharf in the Survivors’ Response Papers, “continued litigation in the CVA cases will facilitate rather than hinder global settlement negotiations toward a consensual plan of reorganization, by incentivizing insurers and (the parishes) to make a contribution to fund a settlement trust under a consensual plan. At present, there is no proposed plan and no indication that the (parishes) will make a substantial contribution to fund a plan to obtain releases.
The dispute arises because of a disjunction between the way that state’s Catholic dioceses and affiliated parishes like parishes are organized under New York law and how they are organized under New York’s legal code. ‘Church, known as Canon Law.
Under canon law, parishes and other diocesan branches are part of a diocese and are firmly under the control of the bishop of that diocese. Despite this feature, the Diocese of Rochester and other Catholic dioceses in the state are registered under state law as separate corporations. Bishop Salvatore Matano is president of each parish corporation in the 12-county Diocese of Rochester and is the titular head of the other affiliated dioceses. The same arrangement is true in the other Catholic dioceses in the state.
Under permanent bankruptcy court orders known as automatic stays, all civil suits against debtors are halted while a bankruptcy works its way through the courts. The provision is intended to give debtors leeway to develop a plan of reorganization or develop a plan to liquidate assets. In most bankruptcies, stays halt actions such as mortgage foreclosures and contract disputes.
Since the parishes of the Diocese of Rochester are legally separate, the automatic stay of the diocese is not extended to them. The stipulation was meant to address that issue, giving the diocese, its creditors, and diocesan insurers time to work out a comprehensive bankruptcy court settlement acceptable to all.
The outcome of the Diocese of Rochester dispute will likely be closely watched across the state.
After the CVA took effect, Rochester was the first of the state’s Catholic dioceses to seek bankruptcy court protection. Also facing CVA claims, the dioceses of Buffalo, Syracuse and Long Island soon followed suit.
Several months ago, a Buffalo bankruptcy judge ordered the Diocese of Buffalo and its recalcitrant insurers to mediate. Many of the insurance companies involved in the bankruptcies of the Dioceses of Syracuse, Buffalo and Long Island are the same as those of the Diocese of Rochester. Donato also represents the dioceses of Syracuse, Buffalo and Long Island.
Does Astor is the Senior Writer of Rochester Beacon. The Beacon welcomes feedback from readers who adhere to our comments policy including the use of their full real name.