San Diego Diocese files for bankruptcy

SAN DIEGO – The San Diego Diocese has filed for Chapter 11 bankruptcy protection to handle more than 140 clergy sexual abuse claims equitably. It is the fifth and largest U.S. diocese to do so since 2004.

San Diego Bishop Robert H. Brom announced the decision Feb. 27, the day before the first abuse lawsuit was to go to trial, after a last-minute flurry of negotiations between diocesan and plaintiffs’ lawyers brought no agreement.

“We put money on the table that would have stretched our financial capability to the limit, but demands were made which exceeded the financial resources of both the diocese and our insurance carrier,” Bishop Brom said in a statement posted on the diocesan Web site.

The bankruptcy proceedings, which will be conducted under the jurisdiction of the federal bankruptcy court in San Diego, effectively put any civil lawsuits on hold.

“We have decided against litigating our cases because of the length of time the process could take and, more importantly, because early trial judgments in favor of some victims could so deplete diocesan and insurance resources that there would be nothing left for other victims,” Bishop Brom said.

“Chapter 11 reorganization is now the best way available for us to compensate all of the victims as fairly and equitably as our resources will allow. … Our participation in this process will demonstrate that this is not a ‘cop out,’ but a sincere effort to face up to our responsibility,” he said.

In a letter sent out to all parishes 10 days earlier, Bishop Brom said the diocese was considering filing for bankruptcy. He said the diocese had resolved claims by 43 people but negotiations with 143 others “have, unfortunately, been unsuccessful.”

With nearly a million Catholics, San Diego is by far the largest of the five U.S. dioceses that have filed for bankruptcy since 2004.

The next-largest, the Archdiocese of Portland, Ore., has almost 400,000 Catholics. It is currently awaiting the court’s final judgment on a $75 million court-supervised settlement with 150 claimants that was reached last December.

In January the Diocese of Spokane, Wash., reached a $48 million settlement over claims by up to 185 people, but it is also awaiting final confirmation of that agreement in court. The diocese has about 100,000 Catholics.

The Diocese of Tucson, Ariz., filed for bankruptcy in September 2004 and emerged from bankruptcy a year later following a $22.2 million settlement with sex abuse claimants that was approved by the bankruptcy court in July 2005. Tucson has more than 350,000 Catholics.

The Diocese of Davenport, Iowa, which has about 100,000 Catholics, filed for bankruptcy protection last October. It had just lost a court case in which the jury awarded a single plaintiff $1.5 million and it faced at least 25 other claims totaling $7 million. The bankruptcy procedure there is still in its early stages.

No dollar figures were published in the negotiations that went on in San Diego just before the bankruptcy filing, but other recent settlements in Southern California have worked out to an average of more than $1 million per claimant.

In 2004 the Orange Diocese settled 87 claims for $100 million. Last December the Los Angeles Archdiocese reached a $60 million settlement with 45 claimants. The Los Angeles Archdiocese still faces about 500 unresolved claims.

Catholic Review

The Catholic Review is the official publication of the Archdiocese of Baltimore.