All signs point to bankruptcy settlement

O n Monday morning, Dawn Stephens, the courtroom deputy forU.S. District Judge Michael Mosman, took one lastexasperated look at a curiously empty chamber, then firedoff an e-mail to the missing attorneys.

A pretrial conference for the $135 million lawsuit that sentthe Portland Archdiocese into bankruptcy 29 months ago wasscheduled for 10 a.m., Stephens noted: "No one is here,and the court has received nothing from the parties. Pleaseadvise."

The next morning, Stephens received this mea culpa fromplaintiff's attorney Erin Olson: "We apologize. Wewere ordered to Eugene by Judge Hogan, and were there allday yesterday, and I am pretty certain that we all justforgot."

A potential judgment of $135 million hangs in the balance,and the lawyers "forgot"?

Hardly. The lawyers have moved on. They're sitting atthe feet of U.S. District Judge Michael Hogan and LaneCounty Judge Lyle Velure, the two mediators in thebankruptcy proceedings.

And if the parties weren't muffled by a gag order,I'm betting they'd admit the bankruptcy case isall but settled, and the two judges are simply negotiatingwhat kind of bow to slap on this holiday package.

Given that three routine hearings -- the latest Wednesday --have been canceled in the past 10 days, that's areasonably safe prediction. What remains to be seen iswhether the settlement is an early Christmas present for thevictims of priest and clergy abuse . . . or an unseasonalcredit-card bill for the city's Catholic parishioners.

Multimillion-dollar settlements involving allegations of sexabuse by priests have cost the Roman Catholic Church morethan $1.5 billion since 1950, including the $60 millionpayout announced last Friday by the Los Angeles Archdiocese,the nation's largest.

The Portland Archdiocese had paid out $53 million to settle133 cases when -- on the July 2004 morning"CB's" case against the late Rev. MauriceGrammond was set to begin -- the church filed for bankruptcyprotection.

Three other dioceses -- Tucson, Spokane and Davenport, Iowa-- followed Portland's lead and opted for Chapter 11.If the rumblings are true, Portland will soon join Tucson inclosing the book on bankruptcy.

Spokesmen for Hogan -- who brought an iron fist and a velvetgag to the mediation sessions -- and bankruptcy JudgeElizabeth Perris had no comment on a potential settlement.It should surprise no one, however, if word is leaking out,since more than 140 lawyers are involved in the 280 casesthat have been filed against the archdiocese to date.

Those members of the bar have generated more than $15million in attorney fees. The plaintiff attorneys areexpected to receive a 25 percent to 40 percent share of thebankruptcy settlement.

At the giving end of the settlement, which is likely to soarpast $50 million, are the archdiocese's 400,000Catholic parishioners. One of the more problematic issues inthe case is how much those parishioners may be asked to payto help bring their church out from beneath the seeminglyendless cloud of abuse allegations.

A tentative bankruptcy agreement in Spokane collapsed onthat issue.

Once a settlement is negotiated, the archdiocese willprobably make this clear: If parishioners balk at paying offthat debt over time, the archdiocese will cut back onservices or begin liquidating assets, which include 124parishes and three high schools.

Last December, Perris essentially ruled that thearchdiocese, not the individual parishes, own that property,potentially making it available to pay off the millions insettlement claims.

The archdiocese has appealed Perris' ruling. Mosman isoverseeing the appeal, which may be rendered moot by asettlement. Someone, in other words, should let Stephensknow there may soon be a few more cancellations on hercourtroom docket.

Steve Duin: 503-221-8597; 1320 S.W. Broadway, Portland, OR97201 steveduin@news.oregonian.comhttp://steveduin.blogs.oregonlive.com