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Plaintiffs and their lawyers are charging the Archdiocese of Boston with breach of contract following the rejection by a diocese finance council of a negotiated multimillion-dollar settlement with victims of former priest and convicted child molester John Geoghan. And the litigants have hardly been mollified by suggestions from diocese representatives that the Archdiocese of Boston would set up a $40 million victims compensation fund, along the lines of the fund established for Sept. 11 victims. The fund, according to a statement by Archdiocese Chancellor David W. Smith, would be a “nonlitigious global assistance fund for all victims,” not just those molested by Father Geoghan. The diocese does not have the authority to establish unilaterally a victims compensation mechanism, run by the diocese, says plaintiffs’ attorney Mitchell Garabedian. “What gives the criminals and their superiors the right to establish a fund for the victims by their own authority?” he asked. “This is not what secular law is all about.” “They’re just trying to cap their liability,” says plaintiffs’ attorney Roderick MacLeish of the Boston office of Greenberg Traurig. The attorneys were responding to the May 3 collapse of a settlement between Garabedian’s clients and the diocese over the actions of Geoghan. Geoghan was charged with molesting dozens of young Catholics while serving as a priest in Boston. In the civil litigation, the diocese was charged with keeping his crimes secret, and passing him along to unsuspecting parishes. STAGED SETTLEMENT? As a result of arbitration, in March 2002, the archdiocese had agreed to pay a settlement ranging from $15 million to $30 million to the 86 plaintiffs represented by Garabedian. The exact amounts would be determined by arbitrators determining the damage to the individual victims, he says. Boston Cardinal Bernard Law announced the settlement on March 12. After reaching this agreement, Garabedian says, he acquired the approval of all 86 of his clients. At the time, he adds, he had no indication that the archdiocese might back out. But, on May 3, the finance council of the diocese decided to reject the proposed settlement. In a statement released that day, Archdiocese Chancellor Smith said that the council was concerned that “the proposed settlement would consume substantially all the resources of the archdiocese that can reasonably be made available and therefore such an action would leave the archdiocese unable to provide a just and proportional response to other victims.” But Garabedian says he believes the archdiocese never intended to go through with the settlement, but entered into the agreement expecting he would never get releases from all his clients. “The first time I was informed about the financial council was after I gave them the 86 agreements.” The committee, Garabedian notes, was appointed by the cardinal. “This was the first time in its 18-year history that it denied his request. I believe it was all staged.” Despite the finance council’s decision, the plaintiffs are seeking to have the proposed settlement enforced. “This is a breach of contract,” says Garabedian. Other plaintiffs’ attorneys who have handled such litigation against dioceses believe Garabedian is right. “There’s a powerful case that a deal was accepted and the archdiocese can’t back out,” MacLeish says. “It seems to me they had a deal,” says Sylvia M. Demarest of Dallas’ Demarest, Smith, Diunta & Howell. “This finance committee was created by the cardinal. This is just more Catholic B.S.” Demarest was one of the trial attorneys who won a $119 million verdict against the Diocese of Dallas in 1997. The case was settled for $31.5 million. REPRESENTATIONS ARE KEY But whether it is an enforceable contract depends on what representations were made, says Andrew Eisenzimmer of St. Paul, Minn.’s Meier, Kennedy & Quinn, who has represented the church in a number of these cases. It’s not a breach of contract, he says, if the parties reached agreement, but completion of the deal was dependent on getting authority from whoever would be financing the settlement. “Who finances it will vary case-by-case. If it’s an insurance company, you need the consent of the insurance company participants. If it’s a diocese, you need consent of the head of the diocese, and in some instances, the finance counsel would have to approve it.” Judge Constance Sweeney, who is overseeing the civil litigation against the archdiocese in the Geoghan cases, has announced she will hold an evidentiary hearing to determine if the agreement was a contract and if the archdiocese breached the contract by pulling out. Sweeney has indicated she will set a date for the hearing in the next few weeks. In his statement announcing the finance council’s actions, Smith noted that the council had advised Law “to come up with a nonlitigious global assistance fund for all victims. Such a fund is to be in an amount consistent with the resources that can be made available without crippling the ability of the archdiocese to fulfill its mission.” Smith said the total money available for the fund would be about $40 million, and the church was hoping to bypass the attorneys representing the victims. “The pool will be the best we can come up with, and we would like to share that with victims without the lawyers eating up a third of it. It does seem to be a shame that so much of what little we are going to make available will go to attorneys,” Smith was quoted in the Boston Herald as saying. There are clear advantages to the archdiocese in working out a global settlement, says Eisenzimmer. “It gets all the cases together and it fixes the total amount of money the church would be responsible for.” There are some advantages to plaintiffs as well, he says. “From the victims’ standpoint, they’re compensated without trying a particular case. They’re all treated equally and there’s no advantage to those who try their cases early.” Punitive judgments would go to the first victims who get to trial, he says. The defendants could block later punitive awards by claiming they had already been punished. But the plaintiffs’ attorneys did not welcome the idea of a global settlement. “The archdiocese would like to have their liability capped, but it’s not going to be up to them,” says MacLeish. The Smith statement asserted that the fund would be fairer to the plaintiffs, because the fund administrators would award settlements based on how badly each victim had been injured. But, says Garabedian, the proposed settlement in the Geoghan case did encompass degrees of harm, with the amounts to be determined by arbitrators. Smith also indicated that the church would attempt to invoke the Massachusetts $20,000 charitable immunity cap on the claims of those plaintiffs who chose to sue rather than accept the amounts determined by the administrators of the fund. Massachusetts is one of three states that still offers charitable immunity to churches, says Mark Chopko, general counsel of the American Conference of Bishops. The other two are Texas and New Jersey. The laws were phased out in other states beginning in the 1930s, he says. But the charitable immunity provision does not apply in these cases, MacLeish says. “Harboring known child molesters and putting them back into the community can’t be protected,” he says. “Under no sense could this have been undertaken for charitable purposes.” One of the reasons that the Geoghan settlement fell apart is that the publicity over the case spurred charges by more potential plaintiffs, Eisenzimmer notes. “The original settlement was based on the expectation of a finite number of cases. Then a whole lot more came forward,” he says. In Smith’s statement, he said that the finance council rejected the proposed settlement because the archdiocese could not pay off all the victims, if it paid these victims up to $30 million. But the plaintiffs’ attorneys contend there is money to pay the victims — no matter how many ultimately bring lawsuits against the Archdiocese of Boston. During negotiations over the Geoghan suits, Garabedian says, “I was informed that there was adequate money to pay $30 million. This included insurance money, a $20 million line of credit and at least two private donors.” SEEKING ASSETS Plaintiffs’ attorneys in litigation against the archdiocese will be seeking an accounting of diocesan assets, MacLeish says. “We won’t go after schools or parish assets, but the archdiocese owns huge amounts of land and we’ll go after those assets.” MacLeish has written to lead diocese attorney Wilson Rogers Jr., “saying I want a full disclosure on the number of assets the archdiocese has. We’re also doing a complete title search for all of Massachusetts and New Hampshire.” The archdiocese also has extensive insurance coverage, MacLeish says. “They have tens of millions of dollars in insurance that they haven’t tapped yet.” But insurance coverage isn’t as clear-cut as the plaintiffs’ attorneys believe, Eisenzimmer contends. “Many cases go back in time, for decades.” The older insurance policies may not cover emotional injuries, which is the vast majority of injuries claimed by sexual abuse victims. In addition, he says, “There is tons of litigation between churches and insurance companies over disputed coverage.” Diocese assets may not be liquid enough for settlements, Eisenzimmer says. “Churches have assets, but they’re usually tied up in some way, shape or form. Oftentimes, assets are restricted or dedicated to certain purposes.” A church may have $1 million, he says, but the donor may have restricted where it could be used.

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