A federal judge has granted a request from the Archdiocese of Baltimore to temporarily stop all lawsuits against Catholic schools, charities and parishes on archdiocesan insurance plans.
U.S. Bankruptcy Judge Michelle Harner ordered on Tuesday the stop to all state court cases that could bring judgments against the church insurance. The Archdiocese of Baltimore, the oldest Catholic diocese in the U.S., filed for bankruptcy Friday, two days before a new state law was expected to bring a flood of lawsuits against the church for clergy sex abuse.
The bankruptcy filing immediately stopped lawsuits against the archdiocese itself. Abuse survivors will have to bring these claims to the bankruptcy court.
Some plaintiffs’ attorneys had pressed forward with lawsuits against individual parishes and schools, but the judge’s order stops those lawsuits, too. The protection extends to all entities on archdiocesan insurance.
Church lawyers told the judge they want to make sure as much money as possible is available for survivors who file claims in the bankruptcy case. Without this protection, they said, individual cases in state court risk depleting the insurance money.
Typically, insurance amounts to about 55% of the money available in the bankruptcy trust to settle claims, said Blake Roth, an attorney from the national law firm of Holland & Knight who is representing the archdiocese. He said the archdiocese expects hundreds of survivors to file claims in the bankruptcy case.
The order was the most significant decision from the judge during the first hearing of the bankruptcy case.
David Lorenz, the Maryland director of the Survivors Network of those Abused by Priests, or SNAP, said he was disappointed to see the parishes, schools and other church entities removed from the threat of lawsuits. Survivors of clergy sexual abuse and their attorneys have criticized diocesan bankruptcy as a tactic to limit payouts and protect church secrets.
Lorenz also took issue with a suggestion made by archdiocese lawyers that the new Child Victims Act forced the the church into bankruptcy.
“I want to make it absolutely clear. We’re not here because the CVA passed. That was righting the wrong in the legal system,” he said. “We’re here because people were abused and the archdiocese enabled it.”
On Tuesday, the judge also granted the archdiocese’s request to continue paying salaries and benefits to its employees and conduct routine financial business, so the church may operate while the bankruptcy case proceeds. Attorneys estimated the case could take two years to resolve.
Archdiocesan lawyers also said they expect the court to set a “bar date” within four to nine months. That date serves as a deadline for abuse survivors to file their claims in the bankruptcy. The judge did not yet set a date.
The judge, however, addressed concerns from survivors that the bankruptcy case would allow the church to hide assets and escape financial accountability for a history of clergy sex abuse.
“Actually, it’s the opposite,” Harner told the courtroom. “When a debtor like the Roman Catholic Archbishop of Baltimore files, they’re operating in a fishbowl. We get to know everything about them.”
Still, plaintiffs’ attorneys said their clients felt like the door had slammed closed on them. Survivors had lobbied lawmakers for years to lift the statute of limitations and allow them to sue the church over old acts of abuse. The church filed for Chapter 11 bankruptcy two days before their chance to sue.
The Archdiocese follows more than 30 other Catholic dioceses in the U.S. that have filed for bankruptcy under Chapter 11. Whereas Chapter 7 bankruptcy liquidates a business, Chapter 11 aims to reorganize it. Archbishop William E. Lori has offered two reasons for the bankruptcy filing.
First, he said, more survivors would be paid than if the archdiocese litigated cases one by one in state court. Second, he said, it’s the best chance for Baltimore’s Catholic schools, parishes and charities to stay open. A series of events over the past year set the stage for his decision.
In November, the Maryland Attorney General’s Office revealed the results of its yearslong investigation into the history of child sexual abuse within the archdiocese. Investigators found 158 priests and other church figures accused of the “sexual abuse” and “physical torture” of more than 600 victims in the past 80 years.
The disclosure energized long-stalled efforts in Annapolis to reform Maryland’s statute of limitations for sex abuse lawsuits. The attorney general released the 456-page report in April — the same day lawmakers passed the Child Victims Act. The bill lifts age and time limits for abuse survivors to sue churches, schools and other institutions. The church’s lobbying arm had warned that legislation could push the archdiocese into bankruptcy. Some archdiocesan employees expressed concerns about their jobs and pensions.
The bill also repeals a murky legal provision known as a “statute of repose.” Opponents of the bill argued the repeal violates the Maryland Constitution, therefore the law was invalid.
Maryland’s Supreme Court is to decide whether the new law will stand.
Meanwhile, the new opportunity to sue the Archdiocese of Baltimore attracted attorneys from across the country. Law firms advertised on billboards and local TV and radio stations to solicit survivors of clergy sex abuse.
Church lawyers began arguing in Friday’s papers that some assets should be considered out-of-bounds for the bankruptcy. They wrote that money in the priest pension plan and an employee pension plan is not an asset of the archdiocese.
They wrote that the 18 Catholic high schools and 40 elementary and middle schools are each a separate entity from the Archdiocese of Baltimore, even though they receive funding from the archdiocese. Assets of the church lobbying arm, the Maryland Catholic Conference, are not assets of the archdiocese, the lawyers wrote. And the 53 parish cemeteries within the archdiocese share no assets with the Archdiocese of Baltimore, the lawyers wrote.
This story has been updated with remarks from David Lorenz.