Diocese offers $45.7 million

The Roman Catholic Diocese of Spokane has offered $45.7 million to settle sex abuse claims that ultimately drove the church into bankruptcy 14 months ago.

A press conference will be called today, said James Stang, an attorney representing alleged victims. A settlement would be a major development in a case widely criticized for its slow pace and high fees. Attorneys and a small group of alleged victims involved in the bankruptcy are recommending approval of the deal following a meeting at the Davenport Hotel on Tuesday night.

Church officials including Bishop William Skylstad were unavailable for comment Tuesday. Diocese attorneys Shaun Cross and Michael Paukert declined to comment on the settlement.

Secretive terms of the deal were confirmed by several people familiar with the settlement. About $2 million will be made available to victims in September, and about $8 million more will be ready for disbursement by the end of the year.

The remainder will be paid within three years of the close of the bankruptcy case, sources said.

Though previous offers have been made, this is the first that appears to meet the financial criteria first sought by alleged victims. Several declined to comment on the pending deal.

The settlement covers the approximately 70 alleged victims who hired attorneys to pursue claims – including those who filed lawsuits. It does not cover other alleged victims, such as those who did not file legal actions, and those who might file sex abuse claims in the future.

The settlement leaves open the question of how to fund it.

With about $10 million in undisputed cash and property, the diocese can cover the initial payments. Assembling the remainder will be more difficult.

Some of the money due is expected to come from diocese liability insurers. Estimates vary, and the diocese is pressing legal action that could net results this fall. The difference may have to come from parishioners and the potential sale and mortgaging of church properties.

Though problematic, the sale of churches, land and schools is possible because of a ruling last summer by U.S. Bankruptcy Judge Patricia Williams that parish property is held in trust to benefit the diocese.

That property ruling, the first of its kind in federal bankruptcy court, has been appealed to senior U.S. District Judge Justin Quackenbush. Progress of that appeal may stall because of the settlement.

Ford Elsaesser and John Munding, lawyers for the Association of Parishes, declined to comment on what repercussions the settlement may have for the 82 parishes of Eastern Washington.

The Spokane Diocese is one of three in the nation that filed for bankruptcy because of clergy sex abuse claims.

While the Archdiocese of Portland’s case remains mired in court, the Diocese of Tucson was able to settle with victims last summer.

Parishes in the Tucson Diocese agreed to contribute $2 million toward the diocese’s $22.2 million settlement. The contribution came with the promise that claimants would not sue any individual parish.

The compromise also included insurers, which had initially resisted contributing to the Tucson settlement pool. The insurers agreed to pay $14.8 million. The plan was made available to a total of 77 claimants, according to the Associated Press.

The Tucson case skirted the issue of parish property ownership that has marked the Spokane and Portland bankruptcies.