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The American Catholic Church may be vulnerable to a new wave of sexual abuse litigation — from plaintiffs who had previously settled their claims. A lawsuit recently filed in Sacramento, Calif., accuses the diocese there of fraud, contending that the church fraudulently induced the plaintiffs to settle by falsely telling each of them that he was the sole victim of that particular priest. Plaintiffs’ attorneys in other previously settled cases are also considering reopening some of these lawsuits — complaining that the church failed to live up to agreements to remove the priests from the active ministry or eliminate the priests’ contact with children. Reviving settled lawsuits based on new information is “the logical outgrowth of what we’re learning and it’s a natural outgrowth of the fraud and deception by the Catholic Church,” says leading clergy-abuse plaintiffs’ attorney Jeffrey Anderson of Minneapolis’ Reinhardt & Anderson. “If church officials failed to disclose material information and this led to the settlement, the settlement may be void. If there’s a fraud, why should the church benefit from it?” But defense attorneys for the church warn that judges are unlikely to allow plaintiffs “to take a second bite of the apple,” says Patrick Schiltz, interim dean of the University of St. Thomas Law School in Minneapolis, who represented the church in the past. “The massive publicity of the last few weeks, including some of the settlement numbers, has resulted in a lot of people seeking some way to reopen settlements. It’s a form of buyers’ remorse. But courts across the board are very reluctant to reopen settlement agreements.” A CASE OF FRAUD? At the heart of the Sacramento lawsuit is the theory that the church committed fraud and that “fraud vitiates a contract,” says plaintiffs’ attorney Kathryn Kohlman Druliner of Sacramento’s Law Offices of Kathryn Kohlman Druliner. “If you buy a car and find out that the seller lied to you, you can go back and void the contract.” The same is true, she says, of settlement agreements, if the plaintiff can prove he or she settled based on misinformation by the other side. Her clients, Michael Beam and Paul Doe, contend they were sexually abused by Father Michael Walsh, that the Diocese of Sacramento knew Walsh was molesting parishioners but was allowed to continue working as a priest and that the diocese represented to each that there were no other victims. Neither Beam nor Doe was a child at the time of the incidents, though the claim does specifically allege Walsh had molested a girl who was under 18. Beam v. The Roman Catholic Bishop of Sacramento, No. 02-AS02480. (Sacramento Co., Calif., Super. Ct.) Beam was 18 when he came to Walsh for advice about which of two girlfriends he should continue to pursue. “Walsh drugged him and [Beam] woke up with his face next to Walsh’s naked penis,” Druliner says. “Walsh tried to talk the plaintiff into fondling his penis.” Beam then jumped out of bed and fled Walsh’s home. Beam had suppressed the incident for years, Druliner says. When he reported it to the church, “they first sent him to a psychiatrist who labeled him delusional.” Subsequently, she contends, church representatives told Beam there had been no other victims, and paid him $25,000 to settle his claim. Beam was not represented by counsel at that time, Druliner says. The second incident cited in the new lawsuit occurred in 1985, several years before Beam had lodged his complaint. The plaintiff known as Paul Doe was considering becoming a priest and came to Walsh, who was then a chaplain at a Sacramento hospital. “Father Walsh invited Paul to his home,” Druliner says. “The first three or four times nothing untoward happened.” The final time, the complaint alleges, Doe came to Walsh’s home and he “was drugged unconscious and forcibly sodomized by Walsh.” Doe reported this allegation to the police, who investigated and turned it over to the district attorney’s office. “The church pressured the prosecution to drop it,” Druliner charges. In addition, she contends, the church did not supply any records about Walsh to the prosecutor’s office. Doe was 19 at the time of the incident. Walsh was never charged, but Doe went to a lawyer and settled his case for $35,000. The new lawsuit alleges, among other things, fraud and breach of fiduciary duty. The plaintiffs contend, according to the complaint, “that even though the Diocese knew of Fr. Walsh’s sexual predilections, specifically that he was a predator, he was allowed to continue in the Diocese and continued to molest parishioners who were minors and boys under the age of 21 by drugging them.” The plaintiffs were advised by the church officials, the complaint adds, that the plaintiffs “and other parishioners need not worry about Fr. Walsh and that [church officials] would take care of it.” But, Druliner says, no action was taken by the church and Walsh continued as an active priest. The church officials, the complaint maintains, “intended plaintiffs should rely on said representations as an inducement to be silent about Walsh, and not to commence litigation.” The statute of limitations does not apply to these plaintiffs because it was “a continuing fraud,” Druliner says. “The statute runs from when you discover the lie.” Whether this particular lawsuit will prevail, some plaintiffs’ attorneys consider the theory that previous settlements with the church can be voided because of misrepresentation compelling. “It’s a viable theory, if the agreement was induced based on fraudulent misrepresentation,” says Roderick MacLeish of the Boston office of Greenberg Traurig. “It’s fraud in the inducement.” In addition to convincing plaintiffs to settle quickly for fear they might lose at trial, MacLeish says, plaintiffs might have settled for far less than their cases were worth because they were convinced they were the only victims. “If there were many other complaints, that would enhance the ‘value’ of the case.” “It’s very important to know if it happened before,” says plaintiffs’ attorney Katherine K. Freberg of Irvine, Calif.’s Freberg & Associates. “It goes to the church’s own knowledge and liability. If the church was not truthful, you’ve absolutely got a case for fraud.” “The church is very vulnerable” to charges of fraud in these settlements, says plaintiffs’ attorney Stephen Rubino of Margate, N.J.’s Ross & Rubino. “There have been specific representations made to litigants and myself that it was a single event.” Rubino is currently reconsidering some cases he settled in past years. “If there is evidence that these representations were fraudulent, we’d make an effort to reopen.” The charge of fraud could be used as well, Rubino says, in initiating or reviving cases that were never filed or were filed late, if misrepresentations “convinced the plaintiffs not to file the claim or caused them to file late.” NO FOLLOW-THROUGH? The church is also vulnerable to charges of fraud and breach of contract in cases that were settled if the church failed to fulfill promises to discipline priests, says MacLeish. MacLeish and his partner, Robert Sherman, represent plaintiffs accusing priests of sexual abuse and have won more than 150 settlements over the past decade. “In all our cases, we didn’t just take the money and run,” says MacLeish. The settlement agreements included clauses binding the diocese to “commit to removing the priest from the active ministry and that the priest would have no more access to children.” In several cases, he says, the church did not honor these commitments. In particular, MacLeish and attorney Robert Sherman, also of Greenberg Traurig, are considering reopening several lawsuits involving the Rev. Paul Shanley, who was arrested in California on May 2 on charges of raping three children. MacLeish and Sherman have recently sued the Boston archdiocese on behalf of a boy Shanley is alleged to have molested for several years, starting when the child was 6. In the mid-1990s, MacLeish and Sherman settled several lawsuits against the church involving previous incidents where Shanley sexually abused young boys. There are, however, significant obstacles to reopening these cases. “If plaintiffs are seeking to set aside settlement agreements, they’re facing an uphill battle,” adds defense attorney Andrew Eisenzimmer of St. Paul, Minn.’s Meier, Kennedy & Quin, who has represented the church in numerous lawsuits. “Courts will not be sympathetic.” Most settlement agreements, Eisenzimmer says, will include language that precludes reopening the action. “Any of us in defense work use boilerplate language in these settlements, whether it’s sexual abuse or an auto accident.” These agreements include words to the effect that the settlement “is a compromise of a doubtful or disputed claim and not an admission of liability.” They also include waivers on relevant information withheld by ignorance or oversight. “If in discovery, the parties testified that there were no other victims, that may change the analysis,” Eisenzimmer says. But these misrepresentations would have to be on the record. Failure to provide information, however, can be used as an element of proof of fraud, says Freberg, who recently won settlements of $5.2 million and $1.2 million in separate priest-abuse cases. If during discovery, she says, “you requested the employment files and didn’t get them, then it’s open season. You have them for fraud based on concealment.”

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