Canadian diocese told to pay

OLYMPIA – A judge has ordered the Roman Catholic Diocese of Victoria, B.C., to pay a Seattle-area lawyer more than $8 million after a five-year legal battle over a land deal.

Before setting the amount Friday, Thurston County Superior Court Judge Paula K. Casey rejected motions by lawyers for the diocese to reverse the verdict, reduce the award to Joseph C. Finley or order a new trial.

After a three-week trial, a jury ruled May 27 that the diocese, which covers Vancouver Island and has 75,000 members, had breached its contract with Finley.

The jury awarded him nearly $8.2 million for breach of contract, plus $4.2 million for breach of fiduciary duty or trust.

Casey ruled that Finley is entitled only to the larger sum and scheduled hearings for July 8 on his claim for attorney fees, which his lawyer estimated at more than $1 million.

Richard Clinton, a lawyer for the diocese, said he would appeal, claiming there were “judicial and jury irregularities” and questioning the adequacy of the judge’s instructions to the jury.

One juror withdrew from the case and another sent a note to the court during deliberations, matters that Casey ruled had not jeopardized the panel’s ability to render a fair verdict.

Diocesan officials estimate total losses at nearly $10 million in ill-fated dealings with Finley that dated from the 1980s and involved 160 acres of land in Hawks Prairie, near Lacey, north of Olympia.

According to evidence in the case, then-Bishop Remi De Roo loaned $600,000 of church money to Finley for an Arabian horse-breeding venture that failed. Finley then proposed buying, developing and selling the property to pay off his debt and accrued interest, which the diocese estimated at $3.2 million.

Finley persuaded the bishop to co-sign a $5.25 million loan to purchase the property, which later was refinanced with a $7.5 million loan to provide funds for the monthly debt service.

When that cushion ran out, De Roo covered the monthly payments with church proceeds, later explaining that he believed the property was about to be sold although Finley denied that he ever gave such assurance.

De Roo retired in 1999 after 37 years as head of the diocese.

His successor, Bishop Raymond Roussin, ordered a halt to the mortgage payments. The property went into foreclosure and the state secretary of state’s office dissolved the partnership, Corporate Business Park LLC.

In March 2000, a judge set the amount owed to the mortgage holder, AG Capital, at $8.15 million.

Diocesan officials believed a foreclosure sale wouldn’t generate enough money to pay off the debt.

Parishioners, fearing the loss of schools and churches, raised money through a bond offering to take control of the foreclosure judgment.

Fisgard Asset Management Corp. of Victoria, B.C., now controls the land and has agreed to sell it to developer John Teutsch, who reportedly plans to build several distribution centers at the site but has yet to submit a development application.

On May 26, concerned about truck traffic, the Lacey City Council declared a moratorium on distribution centers exceeding 200,000 square feet, pending a hearing this Thursday.

Bishop Richard Gagnon, who was appointed to succeed Roussin last July, said he couldn’t say how the moratorium will affect the sale agreement with Teutsch.

“The implications are speculative,” Gagnon said.

“We have to look at that more closely.”