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Victims, diocese talks stopped

RENO – Mediation to settle the Spokane Catholic Diocese bankruptcy was cut short this week without explanation.

Teams of leaders and lawyers from the diocese and the Association of Parishes, and those representing victims of priest sex abuse negotiated into the evening on Thursday. Then they canceled Friday’s planned mediation session.

U.S. Bankruptcy Judge Gregg Zive, the judge overseeing the sensitive talks from his chambers in Reno,, said during an interview Friday morning that the case is complex and difficult to resolve.

However, “I believe all counsel and their parties are working hard and negotiating in good faith,” he said. He declined to say if another mediation session would be scheduled.

The secrecy surrounding the mediation is necessary to “foster an environment of trust and confidentiality” among those involved, Zive added.

The Thursday session was the third and perhaps last effort to end the diocese’s Chapter 11 bankruptcy, now 21 ½ months old.

After a late breakfast Friday morning at the Siena Hotel Spa & Casino in downtown Reno, diocese Vicar General Steve Dublinski, diocese Business Manager Michael Miller, and lawyers Shaun Cross and Michael Paukert declined to comment on any aspect of the mediation, citing the gag order issued by Judge Zive.

Bishop William Skylstad and another diocese lawyer, Greg Arpin, also stayed at the Siena, an Italian-themed hotel along the banks of the Truckee River that is absent the grit and desperate hustle of Reno’s gaudy downtown casinos two blocks away.

“We just can’t talk about what’s going on,” Cross said. The diocese team was able to rearrange their flight schedules for a minimal fee and leave Reno in the early afternoon.

Lawyers representing abuse victims also declined to talk about the mediation. They met for breakfast Friday at the Peppermill Hotel Casino and made arrangements to fly out a day early. Two of those attorneys, Michael Pfau and Duane Rasmussen, said they were obligated to keep quiet about the mediation.

Those involved say Friday’s canceled mediation should not be interpreted as a sign that a deal has been inked, nor should it be construed that negotiations failed. The complex issues to be resolved include multiple national and regional insurers, more than 100 victims – many of whom insist that they don’t want money, but rather a chance to face their abuser or diocese leaders in court – along with precedent for Catholic Church governance in the United States.

The talks are aimed at resolving how much the diocese can pay to dozens of people who were sexually abused as children by diocesan priests during the past 60 years. The diocese and parish association have so far been able to protect the 82 Eastern Washington parishes from financial exposure. Though the parish association has said from the start that it was willing to pay millions toward an all-encompassing settlement to resolve all legitimate claims and end the bankruptcy, the question of how much has hung over the case.

Last spring Bishop Skylstad pledged $45.7 million to a group of 75 victims. That was an average of about $600,000 per person. The deal wasn’t extended to other victims who filed later claims. Nor did the deal receive approval from laity leaders, who worried that the sum would cripple parish finances.

The agreement was rejected by the U.S. Bankruptcy Court Judge Patricia Williams of Spokane.

Williams has said that if mediation fails she intends to hold hearings the week after Christmas with the intent to end the bankruptcy by Jan. 2. If that happens, victims’ attorneys have said they likely would file lawsuits against individual parishes.

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