Victims move to throw out Baltimore Archdiocese bankruptcy case if church gets charitable immunity

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Saying the Roman Catholic Archdiocese of Baltimore is hiding behind the bankruptcy process and retraumatizing victims of child sexual abuse, the committee representing victims on Wednesday filed a motion to dismiss the case if a judge grants the church charitable immunity.

The contingent motion to dismiss comes in response to the archdiocese’s attempt to use the doctrine of charitable immunity — which holds that donors expect their money to go toward the charity’s mission, not toward litigation costs — to shield itself from having to pay settlements to survivors with its own money. The church argues its insurers should be the only ones to pay survivors.

The Official Committee of Unsecured Creditors, which represents more than 900 people, says the church filed for bankruptcy in bad faith, and has no need for the protections offered by bankruptcy if it wins on the charitable immunity claim. Chief among those protections is a ban, or stay, on civil lawsuits.

“If the Debtor never actually faced financial jeopardy from Survivor claims, as it stated publicly, then the Debtor was never in financial distress and had no legitimate reason to file for bankruptcy or avail itself of the protections of the automatic stay,” the motion states.

Several recent motions by the committee reflect an increasingly aggressive strategy as settlement talks have reached an “impasse.” Parallel to the bankruptcy case, the committee filed a lawsuit in April over the charitable immunity claim; on Sunday it filed a motion for summary judgment. In late August, it filed a motion seeking to force the reversal of more than $1 million in payments made by the archdiocese in the months before it declared bankruptcy.

“The Debtor cannot have it both ways,” the committee wrote.

“The Debtor cannot use the automatic stay to protect its parishes and schools, stave off public scrutiny, and sidestep acknowledged, extreme liability, while simultaneously hiding behind charitable immunity to argue that it has no liability at all.”

In the Aug. 28 motion for summary judgment, the committee argued the church waived its right to charitable immunity when it chose to resolve victims’ claims using the bankruptcy system. It also argued that public statements by Archbishop William Lori demonstrate that paying survivors is part of the church’s mission, undercutting the immunity claim.

A three-day trial over the charitable immunity claim is scheduled for mid-December.

A spokesman for the archdiocese did not respond to a request for comment.

Meanwhile, the archdiocese on Wednesday responded to the committee’s motion for derivative standing, an effort to recover more than $1 million in “avoidable” or “fraudulent” expenses the church made in the 90 days before it declared bankruptcy.

It argued that the real amount that could be disputed is much lower — $152,395.48 — and that the litigation would cost much more than the “meager” amount recovered. It also argued the committee is ineligible for derivative standing.

“This Court’s gatekeeping role exists precisely to prevent such inefficient and counterproductive litigation that would undermine not only the efficiency, but also the efficacy and fairness, of the bankruptcy proceeding,” the archdiocese argued.