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Is Church Property At Risk In Abuse Suits?

Aug 5, 2002 | The Miami Herald The 13 sexual abuse lawsuits pending against the Archdiocese of Miami is a small number compared to elsewhere in the country. But over the years, even single multimillion dollar jury awards have driven some dioceses to sell off property and take out loans to pay victims.

The cases against the Archdiocese of Miami still have formidable legal hurdles to clear. Church lawyers have been aggressively trying to get a number of the suits tossed out of court because the allegations are decades old and the time limit for suing has long elapsed.

One such case was dismissed last month.

But if any of the 13 remaining cases survive legal challenges and a plaintiff were to prevail, the archdiocese could potentially face hefty fees and settlement payouts.

Experiences of dioceses around the country during the past decade suggest church officials are increasingly finding their insurance companies balking at paying out huge settlements in sexual abuse cases.

In Dallas, the diocese mortgaged a former school and undeveloped land in 1998 to pay its share of a $30 million settlement after insurance paid $19.6 million.

In some dioceses, church officials have begun soliciting donations from their wealthiest donors for special funds set up to deal with sex-abuse judgments.

Archdiocese of Miami church officials declined to discuss whether they've attempted to set up such a fund.

''We're obviously not experiencing the problems some other dioceses around the country are,'' said Mary Ross Agosta, spokeswoman for the archdiocese. ``We're self-insured, and that seems a wise decision now.''

Agosta declined to comment on the limits of the archdiocese's self-insurance.

Typically, though, self-insurance is only the first layer of coverage a diocese has, and it doesn't usually cover more than $250,000 per incident, said lawyers with expertise in church suits.

''Self-insurance is really like having a deductible,'' said Sylvia Demarest, a Dallas lawyer who represented some of the 11 plaintiffs who won the $30 million judgment in 1998.

In that case, a jury awarded the plaintiffs $119 million. In the end, the plaintiffs settled for a $30 million payout. After first balking, insurance companies paid $19.6 million; Demarest had repeatedly hammered them in the press, saying their refusal to pay would force the diocese into bankruptcy.

''We're in a different time now,'' Demarest said. `` Ever since this crisis started, the church has been involved in a battle with its insurance carriers. I don't think the insurance companies will continue to pay.''


For at least the last decade, insurers have regularly inserted clauses in church policies limiting or excluding coverage for sexual abuse.

''I've seen policies that have millions in coverage for general negligence, but limit coverage for sexual abuse to $300,000,'' said Sheldon Stevens, a Cocoa Beach attorney who has filed more than 50 sex-abuse cases against the church over the years.

Stevens said if a diocese says its insurance won't cover a judgment, plaintiffs would then go after assets, something he's never had to do for a client.

Demarest says going after the assets -- which usually primarily consist of real estate -- can be tricky.

In some cases, she and Stevens said, separate corporations are set up to distance the assets from the diocese in an attempt to make them judgment-proof.

Lawyers for the diocese would argue the assets are held by a separate entity that isn't connected to the operation of the diocese and isn't responsible for the action of an offending priest.

''They might still try things like that, but I think they are less likely to work now,'' Stevens said. ``There are enough cases out here, and enough of us who know how to do them, that I don't think they can get away with that type of thing.''


The Archdiocese of Miami has several nonprofit real estate companies set up, including Francis Realty, Dom Inc. and Provincial Realty, according to property and state corporate records. Agosta said the companies buy, sell and hold property ``for the archdiocese.''

Almost a hundred properties are in the name of Archbishop John C. Favalora, which makes them the most vulnerable holdings, said several plaintiffs' lawyers.

Ronald Weil, a Miami attorney who has won settlements with the archdiocese in the past, said the archbishop or bishop of a diocese is seen as an individual who actually is the corporation under the law.

''If the property is in his name, then there are fewer hoops to jump through to prove a connection between the asset and the archdiocese,'' Weil said. ``The public record -- the deed in his name -- establishes the connection.''

Stevens said even when separate corporations are set up to hold the property or parishes and schools are set up as separate corporate entities, it wouldn't be hard to show a link back to a diocese.

''Under [church] law, the bishop is the individual who is designated as the corporation,'' he said. ``The bishop is the only one who has the right of possession.''

In cases where huge judgments might amount to more than even a diocese's insurance and assets -- such as the scenario represented by the Archdiocese of Boston, the epicenter of the current sex-abuse scandal rippling across the country -- plaintiffs don't have much recourse.


Although the Vatican, the headquarters of the Roman Catholic Church, is said to have unfathomable wealth, its assets are untouchable.

''Even if you could show the Vatican had direct involvement and knowledge -- and that's not so far-fetched -- right now under the state of the laws, it is an impossibility to hold them responsible,'' Stevens said.

``The Vatican is a nation unto itself. You'd have to get jurisdiction to sue, and I don't know that there's any way you could do that.''

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