Spokane Diocese Bankruptcy

The Catholic Diocese of Spokane has turned to mediation in hopes of resolving a host of legal appeals and other problems. U.S. District Judge Michael Hogan, of Oregon, has been named mediator.

A senior federal judge in Spokane reversed a lower court order Monday and cleared the Spokane Catholic Diocese and its lawyers of contempt. It was a rare legal win for the diocese since it reopened its bankruptcy case last year to fight a group of newly filed sex abuse claims.

The Spokane Catholic Diocese must raise more than $800,000 this fall, some of it due in two weeks, to pay sex abuse claims or risk defaulting on its bankruptcy obligations and losing parishes to foreclosure. The diocese lost a legal fight Tuesday that could have forestalled such a drastic step. Diocese officials did not respond to messages left Tuesday after U.S. Bankruptcy Court Judge Patricia Williams cleared the way for collection efforts.

The Catholic Diocese of Spokane has appealed a recent series of bankruptcy court rulings that could cost it millions of dollars more. U.S. Bankruptcy Judge Patricia Williams last month affirmed the powers of a court-appointed reviewer who weighs the merits of clergy sex abuse claims and determines cash awards to victims. Williams rejected diocese motions to seal court records and then challenge the reviewer’s decisions in an attempt to unwind recent cash awards to some sex abuse victims.

A federal bankruptcy judge will decide next month whether the Catholic Diocese of Spokane can seek to overturn cash awards to alleged victims of clergy sex abuse. The diocese is upset about several decisions by a court-appointed claims reviewer responsible for weighing the merits of sex abuse claims and then deciding how much money should be paid.

Twenty-one new claims of clergy sex abuse have been filed against the Catholic Diocese of Spokane, a number that has surprised the diocese and could reopen its contentious bankruptcy case. None of the new allegations – called future claims – was made by children alleging recent abuse, said diocese attorney Greg Arpin. Instead, they are accusations by adults who contend they were sexually abused by priests and other diocese clergy years ago and are just now able to link that abuse to financial damage and other problems in their lives.

Former priest Patrick G. O’Donnell apologized again Wednesday, this time through his lawyer via a phone call in front of Spokane County Superior Court Judge Maryann Moreno, to the victims of his rampant sexual abuse. The apology, along with an agreement to pay $5 million, enables O’Donnell to avoid a looming civil trial over a child sexual abuse scandal that bankrupted the Catholic Diocese of Spokane.

The former Catholic priest involved in many of the child sex abuse allegations in Spokane has agreed to pay his victims $5 million to avoid a trial that was scheduled this week. The catch is that Patrick O’Donnell doesn’t have the money and his victims may never be paid.

By bringing attention to the issue of child sexual abuse within the Catholic Church for a third time on his U.S. visit, Pope Benedict XVI has "indicated that this is a tragedy that can never happen again," the bishop of the Spokane Diocese said on Thursday. "He also prefaced that by saying that we really need to be compassionate to the victims," Bishop William Skylstad said.