BUFFALO, N.Y. — A federal judge on Tuesday heard arguments for and against granting a request by the Diocese of Buffalo to further delay the filing of individual sex abuse lawsuits amid their ongoing bankruptcy process.
At question is whether non-debitor entities such as parishes and schools can be sued by survivors while the Diocese is shielded during Chapter 11 reorganization.
The Diocese filed for bankruptcy protection over three years ago and the Creditors' Committee made up of dozens of alleged clergy sex abuse victims and their attorneys argue that three years is long enough.
“There’s been sort of an agreement, extension, agreement, extension and the survivors have finally said no more extensions we want to move forward with the non-bankrupt entities like the parishes and the schools we want to move those cases back to state court so that the people who were abused as children have their day in court," said attorney Steve Boyd, who represents several survivors.
Hired counsel for the Diocese argued that allowing individual litigation to proceed could dilute potential damages awarded as part of a settlement, would unfairly put some survivors ahead of their counterparts, and may violate bankruptcy law or at the very least defy precedent.
Attorneys for the Creditors' Committee called the request by the Diocese no more than a dilatory tactic.
"The Diocese doesn’t want [survivors] to have their day in court so they are arguing to the judge that they are so intertwined with the other entities that the cases should not move forward," Boyd explained.
For the past 9 months, the Diocese and the Creditors' Committee have been engaged in mediation seeking to reach a settlement. Attorneys representing the Diocese said Tuesday that significant progress has been made in mediation although specifics could not be discussed.
Information disclosed during bankruptcy mediation is confidential/privileged.
Four witnesses including the Diocese of Buffalo's Chief Operating Officer Richard Suchan, General Counsel Melissa Potzler, Director of Insurance Services John Scholl, and James Murray, who was called as an insurance expert, testified or had declarations submitted during Tuesday's court proceeding.
Both Suchan and Potzler testified that bankruptcy, the Child Victims Act, or related matters currently take up 65-75% of their work hours and that if parishes or other non-debitor entities were sued, the Diocese would face an additional burden.
The Diocese's Attorneys added that they fear a "flood of lawsuits" will be filed if their request is not granted - arguing that those proceedings and legal costs will erode the "limited" pool of assets available to survivors.
During cross-examination lead attorney for the Creditors's Committee asked Suchan where funds for a proposed $100 million settlement would come from.
Suchan stated: Diocesan assets (including property), cash, and the broader catholic community; although he added that conversations with individual parishes and any potential burden they may face have not been had.
Attorney Steve Boyd told 2 On Your Side he believes those entities should face liability because they employed the alleged perpetrators for decades.
"Perpetrators who were sexually abusing children so they complain about a flood of lawsuits because there was a flood of children who were taken into a room or a rectory or some other place and sexually assaulted," Boyd said.
Boyd added that after decades of waiting New York State has said that survivors should have their day in court but the Diocese is fighting to prevent that.
Chief Judge Carl Bucki said he would weigh all arguments made during Tuesday's proceeding with a ruling expected in the coming days.
At the same time, mediation between the Diocese and the Creditors' Committee is scheduled to resume on Wednesday, November 29, and continue on Thursday the 30th.