Catholic Diocese of Spokane, Washington
"A letter to parishioners"
by Bishop Blase J. Cupich
(From the June 21, 2012 edition of the Inland Register)
In October, 2010, I informed you that the Diocese of Spokane had entered a period of mediation to address demands resulting from claims of sexual abuse by clergy in past years, but which were made after the 2007 bankruptcy settlement’s Plan of Reorganization. That Plan, in addition to establishing a multi-million fund to compensate victim survivors, also provided for the possibility of claims to be made after the bar date of March 2007, for a period of nine years, or until 2016. At that time, one million dollars were set aside to cover these “future claims.” Twenty-two parishes in Spokane County stepped forward on behalf of all the parishes in the Diocese to offer their parish properties as collateral to assure that awards exceeding this one million dollar amount would be paid. Parishioners were advised that the risk of foreclosure was small, given that the number of future claims in all likelihood would not be significant.
As I noted in my letter to you shortly after I arrived in the fall of 2010, the Trustee, appointed to oversee the bankruptcy plan, informed me that the one million dollar fund would soon be exhausted with the payment of several future claims awards and that we would need to recapitalize the future claims fund immediately or face foreclosure on parish and school properties to satisfy this obligation. The Diocese did not have the funds available, which meant foreclosure action was imminent. The situation was deteriorating even more so at this time, since the high costs of legal efforts beginning in 2009 to challenge some of the future claims awards were draining what little resources we needed to operate and, as reported by the media, these challenges had reached a stalemate. We also were informed that more future claims would in all likelihood be accepted, thus placing the very survivability of the Catholic Church in Eastern Washington as we know it into serious question.
Taking all of this into consideration, I sought the assistance of advisors to take a fresh look at things, put together a strategy to mediate this impasse and help me identify goals and priorities. With their advice, I engaged the services of Federal Judge Michael Hogan of the U.S. District Court for the District of Oregon to serve as mediator. Once we secured the agreement of all parties, the bankruptcy court approved the mediation arrangement, which included the suspension of all appeals and court actions.
We identified four goals which we needed to achieve, if the mediation were to be successful.
1. Remove the immediate threat of foreclosure on parishes. I was convinced that the seizure of parish properties was not only a matter of losing facilities and material assets, but it also involved the displacement of faith communities and the diminishment of our Catholic school system. Thus, everything should be done to avoid that scenario;
2. Reduce our legal fees, which were averaging nearly a quarter of a million dollars annually in the three years following the bankruptcy settlement;
3. Reach a reasonable agreement on the amount of the awards to justly compensate victims through a global settlement of all of the pending future claims and which would be manageable in view of our financial situation. If this issue were left unaddressed, the awards potentially involved a new obligation of several million dollars, thus putting at least half of the parishes and schools serving as collateral in serious jeopardy, and
4. Chart a new strategy and procedure for the remaining four years of the bankruptcy plan, that is, until 2016. Even if we could deal with the pending future claims cases in a reasonable way, we still saw the need to address what would be done in the remaining four years of the Plan.
I met twice with pastors and lay representatives (parish and finance council members) this past year to provide updates on the mediation process and developments. I am very grateful for their support of the mediation efforts and the prayers offered in our parishes for its success.
Today, I am pleased to inform you that this week a motion will be filed with the bankruptcy court in Spokane which achieves all four of these goals. All parties have accepted the terms. While there is a notice period, it is anticipated that the plan submitted to the court will be approved early next month. In a word, this means the following:
ONE) No parish will be foreclosed to satisfy the obligations related to awards in these future claims cases. I cannot underscore enough how close we were to losing by foreclosure up to one-half of our parishes in Spokane County, had the mediation process not intervened. Everyone would have lost. Protracted legal battles could have ensued with the displacement of faith and school communities, which would have triggered even more legal defense costs. It is also certain that eventual proceeds from the sale of parish and school properties would have gone disproportionately to legal and court fees rather than compensating victims.
TWO) All appeals will be withdrawn, thus eliminating the costly legal fees we were incurring.
THREE) We will be able to meet our obligations in paying the awards and mediation and legal fees. All existing future claims cases and the mediation expenses will be satisfied by our contribution of $1.5 million, which is a fraction of the earlier projected amounts. This contribution will also recapitalize the future claims fund to the required level.
The good news is that after speaking to the pastors and the lay representatives, we are able to meet this obligation. Each parish in the entire diocese has contributed a pro-rated share using an equitable formula agreed to by the parishes. In the event a given parish did not have on hand the funds to make their contribution at this time, a common fund has been established with the help of parish and private donors who have generously loaned these parishes the needed funds at 0 percent interest, with the understanding that they will have up to five years to repay the loans, and
FOUR) Federal Judge Michael Hogan will now become the Tort Claim Reviewer and adjudicate any new future claims in the remaining four years of the bankruptcy plan, observant of the future claims provisions of the bankruptcy plan. We will also have a new Trustee, Ms. Maggie Lyons of Hayden, Idaho. This two-fold administrative change will substantially reduce costs.
All of this could not have been possible without the wise counsel of Mr. Ford Elsaesser, our lead attorney, now assisted by local attorney John Munding, and the incomparable skill of Judge Hogan. I am personally grateful to Judge Hogan and I know you share that sentiment.
At the same time, I am very much aware that this agreement is also the fruit of the prayer you have offered privately and as communities, which I requested when I first wrote to you about the mediation in the fall of 2010. It is clear to me that without God’s help none of this would have been possible, a conviction I became increasingly certain of during the various twists and turns of the mediation. Even as this mediation process comes to a fruitful conclusion, I ask that you continue your prayers as an expression of gratitude to God until August 15, the Feast of Our Lady’s Assumption.
While I have communicated privately over these months since the fall of 2010, with our pastors and finance councils and other lay leaders of our parishes to explain the details, I always have intended to do my best to give all parishioners advance notice of any decision and its details. Since the agreement will now become public with the court filings this week, I ask that this letter be made available in our parishes this coming weekend, the Feast of Pentecost, and that a copy be posted in the churches.
This is an important and significant turning point in a very sad chapter of our diocesan history. We can never forget the harm done to children, who deserved better from the Church and her ministers. Once again, I apologize to the survivors of sexual abuse by clergy and to the families of survivors. We will not waiver in staying vigilant and making sure that our churches and schools remain safe environments for our young people. I am also personally committed to promoting healing in our Church and I plan to announce in the near future some new initiatives in this regard.
With this development, announced on this feast known as the “Birthday of the Church”, we are given the chance of making a fresh start and taking up the task of promoting all the good that belongs to the Gospel and our Catholic tradition. I am personally grateful for the support you have shown to me during personal encounters, parish visits and other gatherings. Let us now move forward, humbled by the evident grace of God in this moment, but confident that Christ’s Spirit, which we are told is given on this day to renew the face of the earth, will now renew our Church as well.
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