Judge to Appoint Independent Expert in New Orleans Archdiocese Bankruptcy Case Amid Concerns Over Delayed Compensation for Abuse Victims

 

In a significant move within the protracted bankruptcy proceedings of the Roman Catholic Archdiocese of New Orleans, a federal judge announced her intention to hire an independent expert to evaluate the possibility of reaching a viable settlement plan. The decision comes after years of legal wrangling that have yet to yield compensation for survivors of clergy abuse, leading to widespread frustration.

Bankruptcy Judge Meredith Grabill, presiding over the case, expressed her impatience with the slow progress, stating that "people are tired. They are frustrated." Her remarks followed requests from attorneys representing the archdiocese and a committee of creditors for additional time to finalize competing reorganization plans. These legal teams have charged substantial fees, with rates ranging from $500 to $800 per hour, accumulating approximately $40 million in legal and professional costs over the last four and a half years.

Attorneys Mark Mintz of Jones Walker, representing the archdiocese, and Andrew Caine of Pachulski Stang Ziehl & Jones, representing the creditors' committee, argued that they were close to submitting their proposals for reorganization. However, they resisted the judge's plan to involve an outside expert, citing concerns over additional expenses.

Douglas Draper, representing affiliated institutions such as churches and Catholic schools, questioned the necessity of the judge's decision, asking, "Isn’t that really your job?" This led to a sharp response from Judge Grabill, who pointedly remarked, "This is rich. Now we’re worried about cost?"

Judge Grabill's decision to adopt a more proactive role in the settlement process was influenced by several recent developments. Notably, the Louisiana Supreme Court recently upheld the constitutionality of state laws allowing victims of child sexual abuse to pursue civil claims regardless of when the abuse occurred. This ruling has empowered approximately 500 claimants, who allege abuse by archdiocesan clergy and staff, to seek justice.

The majority of these claimants, who now dominate the bankruptcy case, must approve any reorganization plan negotiated between the church and the creditors' committee. Despite efforts by the archdiocese's legal team to dismiss these claims as too old to be legally valid, the court's ruling has strengthened the survivors' position.

Further complicating the case, attorneys for the abuse survivors presented testimony from Lee Eagan, a businessman managing the archdiocese's bankruptcy finances as a volunteer. Eagan admitted to cognitive impairments stemming from a car accident and acknowledged approving legal fees for the archdiocese without oversight from the church's in-house lawyer, who is married to a partner at one of the law firms profiting from the bankruptcy.

In light of these revelations, survivors' attorneys filed a motion to appoint a trustee to replace Archbishop Gregory Aymond as the decision-maker on financial matters, effectively sidelining Eagan. Additionally, motions from one of the church's insurers and the U.S. trustee overseeing bankruptcy cases on behalf of the Department of Justice called for a 20% holdback on legal fees until a final settlement is reached.

Judge Grabill indicated she would soon issue an order detailing the appointment of the independent expert, who will have 45 days to assess the case and produce a public report within two months. "I’m willing to spend a little bit of money to reinvigorate – or instill for the first time – confidence in this process," she stated. "This is our shot. We’re going to take it."

Despite initial opposition, Frank D’Amico, an attorney representing some of the abuse survivors, expressed support for the judge's decision. "I think the judge sees that this is going to go a long way in motivating people and giving confidence to the claimants that this is a transparent process, that the court is wanting to do the right thing, and that they can rest assured that the right thing is being done," he said.

As the bankruptcy proceedings continue, all eyes will be on the independent expert's findings and the potential impact on the settlement process for the hundreds of abuse survivors awaiting justice.