For Sale

by Kevin Taylor & r & Our goal is to get this thing settled." It's a simple, declarative sentence about the sex abuse scandal in the local Catholic Church from Spokane attorney Shaun Cross, who represents the diocese in bankruptcy court.


But it's a hollow sentence. The local church hierarchy appears to be doing nothing to resolve the painful question of how to compensate its children who were sexually abused by priests -- not even in the wake of a bankruptcy court ruling Aug. 26, which shredded arguments that the diocese doesn't have much in the way of assets.


Here are some declarative sentences that carry a different tone: & lt;ul & & lt;li & "People are more important than money, and the church is more important than our buildings."


This came from Boston Archbishop Sean Patrick O'Malley as he announced taking a $90 million loan, with archdiocese property as collateral, to settle lawsuits with victims of sex abuse. The property -- a four-story mansion used as a residence by former Cardinal Bernard Law -- was later sold to Boston College for $107 million.


& lt;li & "I am deeply saddened and ashamed by what brought us to this point. The terrible sins committed against these men and women are a blight on our Church. I am glad, however, that we were finally able to communicate to victims that we took their claims and their pain seriously."


This from Archbishop Thomas Kelly of Louisville, announcing he would sell a $24 million investment portfolio to settle with victims of sexual abuse.


& lt;li & "Local churches are reacting to a federal ruling that could force the Spokane Catholic Diocese to sell churches, schools and all parish property...."


This lead-in to a local television news broadcast is typical of the alarmist take on U.S. Bankruptcy Judge Patricia William's Aug. 26 ruling that the diocese controls far more assets than it claims. & lt;/ul &


In the wake of the federal bankruptcy judge's ruling, Spokane Bishop William Skylstad has said nothing about stepping up to heal wounds.


Skylstad has never been as blunt on the topic as O'Malley and Kelly. In a 2003 "Letter to Unnamed Victims of Sexual Abuse," Skylstad wrote: "Yes, I believe these terrible things happened to you. You are not to blame. We accept responsibility for your suffering. We will treat you with respect, gentleness and caring. We will provide you with counseling."


After the court ruling, he has said the diocese will "appeal this decision because we have a responsibility not only to victims but to the generations of parishioners ... who have given so generously of themselves" to build up the church in Eastern Washington.


Even the Vatican weighed in on the topic last month, issuing a statement that local parishes are separate entities. But Judge Williams, to tweak a famous saying, essentially ruled that we are not in Rome.





Williams' ruling that the diocese actually owns some 83-odd parishes, parochial schools and other properties throughout Eastern Washington, and thus controls vastly more than the $11 million it presented to the court, set a national precedent. Williams said this is a clear civil case of property ownership and not a violation of First Amendment rights.


It's a precedent that will rightly be tested on appeal. But in the meantime, wonders Seattle attorney Tim Kosnoff -- who represents many of the plaintiffs in Spokane and would win a percentage of any judgment or settlement -- why can't a settlement be reached?


Kosnoff and other attorneys representing victims don't get paid without a victory or a settlement, but hosts of attorneys representing several two or three different creditor organizations, future victims, parish associations and the diocese regularly submit billings ranging from $46,000 into the $60,000s, according to court documents.


Spokane's Roman Catholic diocese, facing 19 lawsuits representing at least 63 victims of sex abuse by clergy, voluntarily filed for bankruptcy last December with Skylstad arguing the diocese only controls about $11 million in real assets.


Under church law, parishes and parochial schools are separate entities, he argued, held only in trust by the diocese. Attorneys for the plaintiffs in the abuse lawsuits contend the parishes are worth about $80 million and accuse the bishop of trying to hide money.


The victims in the lawsuits are seeking, in total, $75 million.


"Real estate can be turned into money," Kosnoff says. "The Catholic church has good credit standing. Banks all over the country would race to do a financing deal with the Spokane diocese. The church has demonstrated it can raise money, that its members will support it."


The notion that the diocese will "be forced" to sell schools and other properties instead of mortgaging -- or otherwise using its holdings as leverage -- "is complete baloney," Kosnoff argues.


It may be more than that. Former Spokane County Prosecutor Don Brockett sees the dire fire-sale predictions as a wedge driven between parishioners and plaintiffs.


"What's really being lost in this, intentionally by the hierarchy, is the victims. They are being further victimized," Brockett says, "by saying we will take this to the Supreme Court and it may take nine years."


Stalling settlements with court fights carries its own costs beyond those in the dizzying layer cake of attorney fees.


"What this leads to," Brockett continues, "as in Portland -- three more people [there] have committed suicide," as settlement talks have stalled in bankruptcy court.


"The lay public doesn't understand: This is not about the molestation of individuals by priests -- it is about the cover-up of that molestation. And the cover-up is continuing," Brockett says. "The whole reason for going into bankruptcy is to stop the lawsuits. And the whole reason to stop the lawsuits is to hide the bishop's complicity" in shuffling abusive priests from parish to parish.


"It's time to stop blaming the victims," says Kosnoff, citing examples of dioceses and archdioceses from Boston to San Diego that have settled sex abuse lawsuits.


"It is completely affordable without selling a single school, without selling a single parish," he says. "We did back-of-the-envelope calculations that 35 cents per parishioner per day can pay off a $50 million loan in five years."





Cross, the attorney hired by Skylstad for the bankruptcy filing, says the possibility of approaching banks "was explored at length last year."


He says the diocese has used property as collateral to obtain commercial loans in the past.


There seems to be no initiative to extend the practice to settle the lawsuits, or to open all parish properties for potential use as collateral.


Lenders, Cross says, "were not willing to use church property as collateral. Bankers said it would be like foreclosing against God and they didn't want to get involved in a public relations issue."


Kosnoff based his pennies per day repayment calculations on 93,000 Catholic households in the diocese.


Cross, limiting the total to 26,000 Catholic households in Spokane, says "only 9,000 give regularly. The diocese is poor."


It's the sort of talk that angers Kosnoff.


"This turns parishioners against victims. The diocese still has not opened its books to scrutiny," he says. "In summary, there is no evidence that the diocese does not have the resources to pay the victims.


"This case has been so appallingly mishandled by Bishop Skylstad and the attorneys advising him," Kosnoff says. "It is my personal belief that things are so broken that the best thing that could happen to make a settlement possible is what happened in Boston when a new bishop came in."


After Archbishop O'Malley replaced Cardinal Law in Boston, "the first thing he did was fire the archdiocese law firm," Kosnoff said, adding that a settlement was reached within a few months.


Cross says the bankruptcy ruling "will make a settlement more difficult. The parties are less willing to settle if they think there is a huge pot of money in the next room."


Kosnoff, from the other side of the coin, contends the diocese is trying to hide assets.


Cross, just before talking about the timeline for filing an appeal of the bankruptcy judge's ruling, says "The main goal when we filed the case was to come up with a mechanism for fairly compensating victims of abuse and to do so in a manner that allows the diocese to continue with its mission in Eastern Washington. That's still the goal."


Kosnoff counters that the people in the lawsuits are only a fraction of those who were sexually abused as children by priests.


"Most will never come forward. The diocese has never indicated it should have to accept some [financial] pain - but it should.


"There is no doubt in my mind they have the wealth to go out and borrow. The Catholic Church can have a mortgage for awhile," Kosnoff says. "Maybe they should, because every time they make a payment they will remember why."