A two-day trial in the Roman Catholic Diocese of Rochester’s Chapter 11 bankruptcy wrapped up Tuesday.
A decision in that trial is one of the final pieces needed to fall into place before the now nearly five-year old bankruptcy can wrap up. The trial’s end leaves no clear indication of how soon the long-running case might conclude, however.
The diocese filed the bankruptcy in September 2019, a month after New York’s Child Victims Act took effect. The CVA created a two-year window during which survivors of long-past sexual abuse could pursue molesters who violated them as children but otherwise would have been protected by a statute of limitations.
Four hundred eighty-five survivors filed claims in the diocese case. Several have died while the case has wended its way through the court.
Meanwhile, as of May 31, the diocese has spent $14 million to pay lawyers, accountants and consultant working on the case. Those expenses mount in six-figure sums monthly. The May bill totaled $579,709.
In the trial, the Continental Insurance Co., also known as CNA, sued to collect damages from the diocese over an alleged breach of contract.
A verdict for the insurer—potentially on the hook to pay claims for 335 of the 485 sexual abuse survivors seeking reparations in the diocese bankruptcy—could upend a settlement painfully worked out among the diocese, abuse survivors and other insurers.
The trial began two weeks after survivors overwhelmingly approved a plan of reorganization jointly sponsored by the diocese and the bankruptcy’s official creditors committee, a body entirely made up of abuse survivors.
CNA is the lone holdout among the diocese’s liability carriers refusing to agree to the settlement outlined in the joint diocese/committee plan. CNA offered a rival plan. Survivors overwhelmingly voted it down.
The approved plan calls for the diocese, its 86 parishes and insurers to jointly contribute $127.3 million to a trust to pay survivors’ bankruptcy claims. Terms call for the diocese and its parishes as well as insurers contributing to the trust to be excused from further liability. As a non-contributor to the trust, CNA would not be excused from liability and could face further state court actions.
As proposed, the plan needs revisions to accommodate a June 27 U.S. Supreme Court ruling. The decision bars bankruptcy judges from excusing from liability parties that, like the diocese’s parishes, are not direct parties to a bankruptcy.
Lawyers for the diocese, the survivors committee and the diocese’s insurers are meeting to try to craft a fix that would let Bankruptcy Judge Paul Warren approve the joint plan.
In the meantime, CNA’s breach-of-contract claim poses a separate and potentially devastating obstacle to the plan’s confirmation.
In the court action, CNA claims the diocese breached a contract when it dropped out of settlement proposed in 2022 in which CNA agreed to contribute $63.5 million to a survivor-compensation fund.
The $63.5 million contribution was to have been CNA’s share of a $107.25 million pot of money that the diocese’s liability carriers, including CNA, proposed to contribute to a survivor-compensation fund.
Complaining that it had been left out of negotiations and that all the insurers’ proposed contributions were too low, the survivors committee nixed the 2022 settlement.
The diocese withdrew from the plan, while other insurers agreed to up their contributions to amounts reflected in the diocese’s and committee’s just-approved reorganization plan.
CNA’s rejected rival plan would have upped CNA’s contribution to $75 million, an amount the survivors committee characterized as unacceptably paltry compared to other insurers’ per-survivor contributions.
In the breach-of-contract claim, CNA seeks damages for time and money it claims to have spent to research the 2022 settlement deal. The insurer also seeks to have the diocese rather than itself pay claim amounts beyond the $63.5 million it would have contributed.
In oral arguments at trial, CNA’s lawyers maintained the 2022 settlement deal was a contract. Attorneys for the diocese and the survivors committee argued that the 2022 deal was just a proposal that would have been binding only had the deal been memorialized in a court-confirmed plan of reorganization.
CNA also presented expert witnesses to back its contentions that the $63.5 million contribution was a reasonable settlement amount and that it could reasonably argue to disavow some survivors’ claims.
Attorneys for the survivors committee presented their own sets of experts who sought to refute the insurance company’s experts’ claims on both counts.
Warren gave no indication that he favored either side’s positions.
In the meantime, the judge has scheduled an early September hearing to consider confirmation of diocese and survivor committee joint plan. It is not clear whether either the Supreme Court issue or the CNA breach-of-contract claim will be resolved by that time.
At the trial’s conclusion, Warren granted requests by CNA’s and the survivors committee’s lawyers to submit new, post-trial briefs. How much those new papers might delay a ruling is not clear.
Will Astor is Rochester Beacon senior writer. The Beacon welcomes comments and letters from readers who adhere to our comment policy including use of their full, real name. Submissions to the Letters page should be sent to [email protected].
Has there been any resolution yet! Thought there was a court date for September 12? Seems like this takes forever ever. This bankruptcy sets the tone for other Diocese’s in the state, I am so frustrated with this whole situation. The Churches lawyers have gotten rich off and dragged this on and on, for more and more money! This is shameful, they absolutely have no integrity or conscious!
I am in 💯 agreement!
Going through this process from the beginning, all I wanted was to get closer and tell a jury what happened to me at the hands of a suck pedophile Priest! Took years off my life and has stayed with me forever. Instead of getting what I deserved! The church and it’s coward lawyers, dragged this out over years. They knew bankruptcy was always going to be the play of the church. Now we are in the bankruptcy stage, and again they delay over and over again, along with the judge! We know the Catholic Church could have settled all these abuse cases years ago. They have trillions in the Vatican vault. The insurance companies will fight to pay the least they have to! So here we go, money, influence and a Judge who is most likely bought and paid for by the church! We will continue to wait and suffer more emotional pain and suffering. No cares for the victims, we are just a paycheck for other abusers who control our fate! Sad
The tragedy of all this, are the victims who are dying! The Judge, Lawyers for the Catholic Churches and Insurance companies are heartless bastards. For 8 years this has been dragging on and on, with no end or justice in sight! The Catholic church has become the devils mission to continue hmto harm God’s children who were abused at the hands of Satan’s devils. Whenever this gets done, the bankruptcy system has proven to be broken and needs restructuring! No bankruptcy’s should take years to complete, no lawsuits should taken over 2 years to complete. When will the Politicians take action to give us victims justice, once and for all!
I am absolutely Broken over how “Evil” seems to be playing the Victim! Dragging and dragging and dragging this on for years while the Victims continue to be victimized. Judgement day for this political “Wickedness” will be harsh on that day when we must all give account.
Once again, the victims of these pedophile priest. And the multitude of lawyers are stuck on stupid. As we the survivors/Victims, slowly die off. The lawyers and CNA and all the other insurance benefit. Including the Catholic Church. This is one of the largest miscarriage of justice I have ever witnessed. The burocracy that surrounds this debauchery, also helps everyone but us the victim’s. It’s really quite simple. Over 475 children, teenagers and young men and women. We’re groomed, raped, tortured and had there innocence, and self worth torn from them. The shame and guilt are overwhelming. The long term effects devastating. So stop the BS. We deserve justice and some form of closer in a timely manner. Closer is a term I’m not so sure exists. Stop revictiomizing us with your prolonged dog and pony show. You people are evil. It gets no simpler than that.
It’s not the court system, it’s the abuse of that system by the attorney. Attorneys reside in a unique business and are the only profession that wins no matter the outcome. In addition, delaying the outcome puts more money in the kitty. What a deal! It’s time to adopt the EU system. If you win you get your due, if you lose you pay the associated cost. One will think twice about suing or calling an attorney.
More delays!! This Court system is a joke, for the victims. The Lawyers, Accounts and othe greedy hands in tye kitty, continue to reap the harvest! While the victims have to anguish over the past and present emotional abuse caused by the court proceedings in this bankruptcy process! This whole system is a joke, period! Who are your politicians? Mostly ex Lawyers, DA’s and Judges. Do you think the Governments local, state and federal ever would revamp this lawsuit system , to make it more efficient and timely? Hell no, they would cost this corrupt system to lose money for the Lawyers, Judges and system! The horrendous facts are the victims suffer more and more emotional abuse! This in itself should be a crime, caused by this bankruptcy court!
Remember, it’s not the system, it’s the “self perpetuating parasites” known as attorney/lawyer who abuse the system. While they may hide in the “doing things right”, they fail, miserably, to do “the right thing”. They know the difference but are driven by the dollar. Attorneys have only themselves to blame for their social status. The joke is (which actually is a product of reality) what is the difference between a dead lawyer and a dead snake on the highway? There are skid marks associated with the snake. Yes, there are attorneys/lawyers who do the right thing, sadly they are in the minority.