Court throws out Milwaukee abuse claim because of previous settlement

This story appears in the Milwaukee bankruptcy feature series. View the full series.

by Marie Rohde

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In a ruling likely to affect scores of other sex abuse claims in the Milwaukee archdiocese bankruptcy case, the 7th Circuit Court of Appeals on Wednesday threw out a claim by a deaf man who said he was assaulted as a teenager because he had agreed earlier to a settlement in mediation.

Lawyers for the man, identified only as John Doe, said the archdiocese had provided false information in getting the man to agree to an $80,000 settlement in 2007. Specifically, he says he was told that his alleged abuser -- Fr. Lawrence Murphy, a man accused of abusing hundreds of children over the years -- was not known to have a history of sexual misconduct. Later, church documents showed that to be false.

Under Wisconsin law, mediated settlements cannot be reopened by a court even if the settlement was procured based on false statements.

"Although one might contend it is unjust that a person like Doe cannot recover if he was in fact fraudulently induced into signing a settlement agreement, our task is to apply the Wisconsin statute as it is written," said Ann Claire Williams, writing for the three-judge panel who heard the case.

The ruling will likely impact "several dozen" of the 575 victims who filed claims, according to a press release from Peter Isely, the Midwest director for the Survivors Network of those Abused by Priests.

In a reorganization plan the archdiocese submitted to the court in February, the archdiocese asked that all but about 130 of the claims be dismissed for a variety of reasons, including previous settlements or if the victim was the first to be abused by a priest. The archdiocese offered about $4 million to the remaining victims, an amount SNAP said was far short of what victims in other dioceses had received, even if a smaller number of victims were to share it.

Jeff Anderson, a lawyer representing many of the victims in civil litigation against the church, said in an email to NCR that the decision was very disappointing, but there's "really no realistic chance of appeal."

The Milwaukee archdiocese did not immediately respond to a request for a comment.

Isely criticized the archdiocese for "the endless maneuvering, motions and the literally millions of pages of legal minutia" that has driven up legal bills to $18 million, according to court records.

The bankruptcy was filed in January 2011, just before a handful of cases by victims were to go to trial in state court. Abuse claims had largely been blocked by court rulings that the archdiocese was not responsible for the actions of its priests. The Wisconsin Supreme Court opened the door to some lawsuits if the claimants could prove fraud on the part of the archdiocese -- that church officials knew of abuse but failed to protect victims.

Meanwhile, other issues are expected to be decided soon by the appellate court, which sits in Chicago.

One issue involves whether money transferred from the church's general fund into other protected funds should be part of the bankruptcy assets. That includes an estimated $57 million transferred to a fund for the perpetual care of nine archdiocesan-owned cemeteries and other money transferred to parishes. The transfer was done by then-Archbishop Timothy Dolan, now a cardinal in New York. He would likely be questioned under oath regarding the transfer if it is ruled to be part of the estate.

In its proposed reorganization plan, the archdiocese seeks to protect parishes from future lawsuits despite the transfer of funds. U.S. Bankruptcy Judge Susan V. Kelley did provide the parishes that protection, but the issue is one that is under appeal.

Another issue under appeal is the decision by U.S. District Judge Rudolph Randa, the judge who overturned a ruling by Kelley that the cemetery fund should be part of the bankruptcy assets. Lawyers for the claimants said Randa should have stepped aside and not heard the case because several of his family members are entombed in one of the cemeteries, and he has a crypt there.

[Marie Rohde is a freelance writer based in Milwaukee.]

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