Diocese appeals contempt order

The Catholic Diocese of Spokane and members of its legal team have appealed a ruling that they were in contempt of court for intimidating a bankruptcy trustee.

It’s the latest in a series of appeals by the diocese, which has suffered legal setbacks since reopening its bankruptcy case late last year to protest a rash of newly filed claims alleging sex abuse by priests decades ago.

The diocese insists that some of these new accusations – made by alleged victims called “future claimants” – should not be allowed. Diocese lawyers argued that a court-appointed claims reviewer was violating the settlement by allowing some of these claims.

The judge disagreed. The diocese then filed an appeal while its lawyer, Greg Arpin, wrote an e-mail threatening to sue the court-appointed trustee if she disbursed funds to these future claimants while the appeal was pending.

The trustee considered the e-mail a threat and asked U.S. Bankruptcy Judge Patricia Williams to hold Arpin, his law firm Paine Hamblen, and the diocese in contempt.

The diocese and its legal team argued the e-mail was not threatening. Williams ruled that it was and signed the contempt order.

Hearing dates for the appeals have not been scheduled by the U.S. District Court judges overseeing the issues.

The diocese bankruptcy case was closed in 2007 after the diocese committed $48 million to a settlement designed to pay about 180 sex abuse victims. The settlement was funded by parishioners, insurers, loans and the sale of property.

The agreement earmarked $1 million to pay future claims. That amount may now be inadequate to fund payment of those and potentially more claims that could be filed.

The diocese must replenish the fund if it is drained – a requirement collateralized by parish property.