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Gallup Diocese case attorney says deal ‘nonbinding’

ALBUQUERQUE, N.M. — An attorney for alleged victims of sexual abuse by priests has declined to sign a letter listing financial terms of a settlement in the Diocese of Gallup bankruptcy case because the agreement is “nonbinding” and could allow insurers to walk away from the deal, Los Angeles attorney James Stang told a judge on Wednesday.

“We want to know that the letter means something,” and that insurers and others are required to provide the amounts indicated in the letter, said Stang, who represents 57 alleged victims of clerical abuse who have filed claims in the case. “We have got a long road to go here.”

U.S. Bankruptcy Judge David T. Thuma said he was not surprised that attorneys are having difficulty finalizing a settlement in the 2-year-old bankruptcy case and asked them to continue working toward resolution. He set a hearing for Jan. 6 to review any progress toward a deal.

The Diocese of Gallup in November 2013 became the ninth U.S. diocese to file for bankruptcy in response to a growing number of lawsuits alleging sexual abuse of children by clergy in the diocese.

The letter of intent emerged from a mediation earlier this month in Phoenix between attorneys for the claimants, the diocese and its insurers, and other parties, including St. Bonaventure School and Indian Mission in Thoreau, which the diocese contends it owns.

During the hearing, Stang asked St. Bonaventure to commit to its proposed contribution to the financial settlement, including real estate sales contracts. An attorney for St. Bonaventure responded that he was surprised by Stang’s request.

“Bonaventure is not prepared to go on record committing to any terms of this deal” while other parties have declined to do so, said Albuquerque attorney Charles Hughson, who represents St. Bonaventure.

The school and Indian mission was among several groups that have signed the letter, including the diocese’s two insurers.

Attorneys also said that they have yet to resolve “non-monetary issues” of a proposed settlement, including a disclosure statement by the diocese.

In prior church bankruptcy settlements, disclosure statements are public documents that set out how the diocese will pay claims and future claims, including funding sources, and other financial and operational details about the diocese. They also list measures the diocese will take to apologize to parishioners, reach out to abuse victims and prevent future abuses.

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