Parishes stay intact under mediated plan.

Byline: Bill Bishop The Register-Guard

No Catholic parish property or school will be sold or encumbered in a far-reaching bankruptcy reorganization of the Archdiocese of Portland announced Monday that will settle as many as 170 legal claims by victims of sexual abuse by priests.

The reorganization will resolve the nation's first bankruptcy involving a Roman Catholic diocese in response to sexual abuse lawsuits. It also ends the possibility that the parish and school properties could be ruled the legal possessions of the archdiocese, and therefore be used to pay millions of dollars in claims to abuse victims.

Details of the reorganization plan and the total cost of legal settlements to date will not be released until the plan is filed in U.S. Bankruptcy Court next Monday.

In the meantime, U.S. District Judge Michael Hogan and Lane County Circuit Judge Lyle Velure have imposed a gag order on attorneys and all parties involved with the case.

The reorganization and settlement agreements, brokered by the two judges serving as mediators, have been in the works since mid August. To date, about 150 legal claims against the archdiocese have been settled, Hogan said in a news conference Monday. About 20 claims remain to be settled or tried.

A key point to the settlement is compromise reached among insurance companies and the archdiocese, in which the insurers will pay more than $50 million to a fund for victims. Archdiocese resources will comprise the remainder of a fund to cover current and future legal claims, Hogan indicated. He said the combined resources will be "ample" to cover the claims.

Another key feature is a new structure that will split the parishes and schools into legal entities separate from the archdiocese, Hogan said.

The new organization should settle once and for all the important question of whether parish property belongs to the archdiocese, as one court had recently ruled. The archdiocese was appealing that ruling.

The news brings relief to area Catholics who have been wondering how the legal battles of the archdiocese might affect their local parish and school operations. The Archdiocese of Oregon has 124 parishes and operates 42 elementary schools, 10 high schools and two colleges. It also controls several charitable funds for specific projects that also could have been tapped to pay legal claims.

At Marist High School in Eugene, Principal Perry Martin said most of the 480 families of the school had remained confident in the church leadership since the bankruptcy filing in mid 2004. Martin said Archbishop John Vlazny focused on the responsibility of the church to justly compensate victims.

Vlazny instilled confidence in church leadership with frequent letters and articles to keep parishioners updated about the process, Martin said.

"We'd never been through this before. I'm happy with the way the archbishop has taken us through this," Martin said. "I think everybody is really happy it's going to be over, and I'm really thankful those two judges could get through all this. It must have been hard."

Hogan and Velure - both widely known for mediating complex, high-stakes cases - were appointed by the federal bankruptcy court to attempt mediation. They began on Aug. 18 and worked daily on the case since then to reach the settlement, Hogan said.

The work involved the big picture reorganization as well as individual claimants.

Hogan said the reorganization was formulated among the archdiocese and lawyers for the tort claimants committee and the future claimants committee. He said more than 140 lawyers were involved on behalf of individual claimants and the committees.

Hogan complimented Velure for his role in the settlement and said mediation is "the hardest work judges do."

"These have been rough-and-ready negotiations," Hogan said.

As the final part of their work, the judges will set a value for the remaining unsettled cases, based on their experience with the cases which did settle. Claimants in the unsettled cases may then choose to take the deal or go to trial.

Velure noted said church earlier enacted rigorous policies to prevent child abuse - including background checks on all priests and church employees who have contact with children, school curriculum that teaches children to report abuse, and an abuse reporting process.

Archdiocese spokesman Bud Bunce said the church has paid more than $15 million in legal fees in the bankruptcy process, including consulting and legal costs for the committee work.