Portland archdiocese bankruptcy may be nearing settlement

PORTLAND, Ore. — More than two years after the Archdiocese of Portland became the first Roman Catholic diocese in the nation to declare bankruptcy, a settlement with alleged victims of priest sex abuse may be near.

A pair of judges who have been mediating settlement talks between the archdiocese and attorneys for alleged victims since September have scheduled a news conference for today at the federal courthouse in Eugene, Ore.

U.S. District Judge Michael Hogan and Lane County Circuit Judge Lyle Velure imposed a strict gag order on attorneys and all parties involved with the case, so there was no confirmation whether a settlement would be announced or any indication of terms, if an agreement had been reached.

If there is a settlement, it likely would require a new reorganization plan for the archdiocese that would require a judge's approval. Creditors, including alleged victims, would vote on whether to adopt the revised plan.

The settlement talks had delayed trial for a $135 million lawsuit alleging sexual abuse by the late Rev. Maurice Grammond. A number of Oregon claims involve Grammond, who worked in several Oregon parishes, including Seaside, Oakridge and Portland.

It is the same $135 million lawsuit that had been scheduled to go to trial the day the archdiocese declared bankruptcy in July 2004, temporarily freezing all litigation. It had been rescheduled for today, according to The Oregonian newspaper.

The negotiations also delayed an Oregon ruling on whether the archdiocese or its individual parishes own church property — an important issue when deciding how claims could be paid.

The archdiocese had claimed it merely holds parish property in trust for the parishes and could not sell it to satisfy any judgments.

U.S. District Judge Michael Mosman had been reviewing an archdiocese appeal of a decision by U.S. Bankruptcy Judge Elizabeth Perris, who had ruled that parish property belonged to the archdiocese, potentially allowing its sale.

In a separate bankruptcy case in Spokane, a federal judge reached the opposite conclusion, ruling that parish property was held in trust and could not be sold to pay sex-abuse victims. The Spokane ruling was not binding on Mosman.

Perris cleared the way for alleged abuse victims to go to trial last April after the archdiocese and its creditors — the alleged victims — were unable to agree on settlement plans each side had offered.

Nearly 130 claims were pending at the time, with roughly two-thirds headed for federal court and the remaining third headed for state court, according to attorneys in the case.

Numerous bankruptcy hearings before Perris have repeatedly filled her courtroom with attorneys for the archdiocese, insurance companies, Catholic schools and alleged victims.

Court records show the legal costs of the Portland bankruptcy case alone have already topped $15 million.

Earlier this month, the Archdiocese of Los Angeles said it would pay $60 million to settle 45 abuse lawsuits, possibly selling off some of its property in Southern California to help cover the cost.

There were still as many as 485 lawsuits pending against the nation's largest Roman Catholic archdiocese.

Three other dioceses have filed for bankruptcy since the Portland archdiocese sought protection by filing in July 2004: Spokane; Tucson, Ariz.; and most recently, Davenport, Iowa.

The Roman Catholic church has paid an estimated $1.5 billion since 1950 to handle claims of sex abuse by its priests.