San Diego Diocese files for bankruptcy

Times Staff Writer

The Catholic Diocese of San Diego announced Tuesday that it was filing for bankruptcy protection rather than face lawsuits from 150 people who alleged that they were sexually abused by priests. The first court case was set to begin today.

The diocese decision came despite a request Monday from a settlement judge to not file for bankruptcy until after a negotiating session set for Friday.

Bishop Robert Brom said in a statement that if the abuse cases went to court, monetary awards for those whose cases were first on the docket could "so deplete diocesan and insurance resources that there would be nothing left for other victims."

The Bankruptcy Court filing puts the cases, including the one set to begin today in San Diego County Superior Court, in abeyance as issues involving the diocese's assets are decided by a bankruptcy judge.

San Diego is the fifth diocese to file under Chapter 11 of bankruptcy laws. With about 1 million Catholics in its two-county area, it is the largest diocese to use the strategy. The others -- Tucson; Portland, Ore.; Spokane, Wash.; and Davenport, Iowa -- also faced multiple lawsuits that allege sexual abuse by priests.

Mary Grant, Western regional director of the advocacy group Survivors Network of Those Abused by Priests, called the decision "a morally bankrupt move by a self-serving bishop who's afraid to face tough questions about coddling and concealing pedophile priests."

On Monday, Los Angeles County Superior Court Judge Anthony Mohr, who had been assigned to oversee settlement attempts by lawyers for the accusers and the diocese, had asked Brom to delay a bankruptcy filing until after a Friday negotiating session.

But Brom said the decision to file was made by the Diocesan Financial Council, which is composed mainly of laymen, and the Diocesan College of Consultors, which is made up of priests.

Attorney Irwin Zalkin, who is representing a third of the litigants, called the church's decision "nothing more or less than the approach of a big corporation and its chief financial officer ... not the approach of a shepherd who is concerned for the well-being of his flock, especially the injured."

As part of Bankruptcy Court proceedings in the other dioceses, judges had ordered the opposing sides to resume settlement negotiations.

When the Dallas Diocese threatened to file for bankruptcy, litigants settled for less than a third of the $119.6 million awarded to them in a trial. The diocese did not file for bankruptcy.

The San Diego Diocese is the first diocese in California, and possibly the wealthiest in the nation, to file for bankruptcy protection in the face of abuse lawsuits. Some of the cases allege crimes committed decades ago. Some are covered by insurance, others not.

Recent settlements of similar cases in California have averaged more than $1 million per plaintiff. Litigants in San Diego have said that the diocese, with property holdings throughout San Diego and Imperial counties, could afford court judgments.

"This bankruptcy filing is frivolous," said Andrea Leavitt, who represents eight accusers. "The money issue is a smokescreen. If they thought the litigants were asking too much money, they should have let a jury decide. This is about the truth coming out."

The Orange Diocese in 2004 agreed to pay $100 million to settle 87 abuse claims. In December, the Los Angeles Archdiocese, the nation's largest, agreed to pay $60 million to 45 victims, but hundreds of cases are pending. The archdiocese has said that it will not go to Bankruptcy Court.

The San Diego litigants allege that Brom, who has been bishop since 1990, had long known that parishioners were being sexually abused by priests and had done little or nothing until the issue exploded on the national scene five years ago.

Some of the initial cases that would have gone to trial involve allegations that the diocese moved "predator priests" from parish to parish as victims came forward. The suits also allege that church officials often told victims that they were alone in their accusations, although the officials knew about other allegations.

Brom was unavailable for comment Tuesday. He prefers to issue written statements to parishioners, sometimes posted on the diocese website.

Even by San Diego standards, Brom has kept a low profile for a public figure, playing virtually no role outside the church and rarely communicating with the non-Catholic public. In that, he contrasts sharply with his predecessor, the late Leo. T. Maher, an activist and controversial figure.

In his statement, Brom appeared conciliatory toward the litigants:

"In pastoral outreach to victims of abuse over the past five years, our experience has been that they are not trying to harm the church, but looking for no more than just and equitable compensation."

In settlement talks, church lawyers had sought a "global" agreement that no additional cases would be filed. They said their offer was the largest ever made in an abuse case, although that assertion could not be verified without dollar figures.

Grant's group and lawyers for the accusers said that church lawyers, apparently at Brom's direction, have tried to drag out negotiations and limit public disclosure of the priests' names while making public the names of those suing them.

In his statement, Brom said a full list of the litigants would be part of the bankruptcy filing.

One of the first legal issues that the Bankruptcy Court may have to decide is whether the filing is a misuse of the bankruptcy law, as lawyers for the accusers assert.

A 1999 federal appeals court ruled that it was a misuse of the bankruptcy law to file for bankruptcy simply to avoid litigation.

In the bankruptcy cases involving the dioceses in Spokane and Portland, lawyers disputed whether the church had sufficient funds.

In Boston and Santa Fe, N.M., the dioceses considered filing for bankruptcy but instead sold assets to pay settlements.

The San Diego Diocese has 98 churches and 275 priests in the two counties. Its headquarters are at the University of San Diego on a scenic bluff overlooking Mission Valley. The diocese, however, does not run the university nor count its buildings among its assets.

The Tucson Diocese has emerged from bankruptcy with a settlement for victims. Settlements are awaiting court approval in Spokane and Portland.

Before San Diego, the most recent bankruptcy filing was in Davenport, Iowa, where the diocese filed just as a case involving allegations against a retired bishop was to begin.

After San Diego, the next largest diocese to file was Portland, with about 400,000 Catholics.

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tony.perry@latimes.com

For The Record Los Angeles Times Friday March 02, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 40 words Type of Material: Correction San Diego diocese: An article in Wednesday's Section A about the Catholic Diocese of San Diego filing for bankruptcy protection incorrectly said the diocese's headquarters are at the University of San Diego. The diocese headquarters are not on the campus.
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