District Court Modifies Wilmington Diocese Bankruptcy Order, Eliminating Ban On Payments To Accused Priests

In an appeal of the bankruptcy court's confirmation of the Chapter 11 reorganization plan of the Catholic Diocese of Wilmington, a Delaware federal district court has eliminated the bankruptcy court's order banning payment of any salaries, employment benefits, medical benefits, charity payments, pensions or other financial benefits to a list of nine removed priests. The appeal was filed by one of the nine priests, Kenneth Martin. In Martin v. Catholic Diocese of Wilmington, Inc., (D DE, Dec. 18, 2012), the Delaware federal district court held that a crucial letter by now-deceased Bishop Salterelli was hearsay that was wrongly admitted into evidence.  The letter, on which the list of priests denied benefits was based, represented in a conclusory fashion the names of priests as to whom Saltarelli had confirmed sexual abuse allegations. The court said in part:

In this case, the bankruptcy court imposed a permanent injunction on third parties without referring to any evidentiary requirements ... and without requiring the Diocese (or the Official Committee or the Ad Hoc Committee) to bear any burden of proof in that regard.  Moreover, the record demonstrates that the imposition of the Injunction will have no impact on the property of the estate, as the Diocese has represented, through its agent under oath, that it has no intention of providing any prospective benefits to appellant or other similarly situated individuals....

In weighing the public interest, the court does not question the motivations behind the imposition of the Injunction.  However, good intentions cannot trump the rule of law and the fundamental requirement that there be a nexus established between the wrongs alleged and the remedy imposed.  No such nexus exists of record,  as there is no indication at bar that appellant was the subject of any of the survivor claims actually at issue in the Diocese's chapter 11  proceedings, and appellant was not given the opportunity to contest his inclusion as a subject of the Injunction.

The Wilmington News Journal reports on the decision.