Martin v. Catholic Diocese of Wilmington, Inc.

484 B.R. 629, 2012 WL 6589162, 57 Bankr. Ct. Dec. (CRR) 90, 2012 U.S. Dist. LEXIS 178613
CourtDistrict Court, D. Delaware
DecidedDecember 18, 2012
DocketNo. 09-13560 (CSS); Civil No. 11-814-SLR
StatusPublished
Cited by1 cases

This text of 484 B.R. 629 (Martin v. Catholic Diocese of Wilmington, Inc.) is published on Counsel Stack Legal Research, covering District Court, D. Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Martin v. Catholic Diocese of Wilmington, Inc., 484 B.R. 629, 2012 WL 6589162, 57 Bankr. Ct. Dec. (CRR) 90, 2012 U.S. Dist. LEXIS 178613 (D. Del. 2012).

Opinion

[631]*631MEMORANDUM OPINION

ROBINSON, District Judge.

I. INTRODUCTION

Before the court is an appeal from the July 28, 2011 confirmation order (“the Order”) of the bankruptcy court in the above referenced bankruptcy case. This court has jurisdiction to hear an appeal from the bankruptcy court pursuant to 28 U.S.C. § 158(a). In undertaking a review of the issues on appeal, the court applies a clearly erroneous standard to the bankruptcy court’s findings of fact and a plenary standard to that court’s legal conclusions. See Am. Flint Glass Workers Union v. Anchor Resolution Corp., 197 F.3d 76, 80 (3d Cir.1999). With mixed questions of law and fact, the court must accept the bankruptcy court’s “finding of historical or narrative facts unless clearly erroneous, but exercise[s] ‘plenary review of the [bankruptcy] court’s choice and interpretation of legal precepts and its application of those precepts to the historical facts.’ ” Mellon Bank, N.A. v. Metro Communications, Inc., 945 F.2d 635, 642 (3d Cir.1991) (citing Universal Minerals, Inc. v. C. A. Hughes & Co., 669 F.2d 98, 101-02 (3d Cir.1981)). The district court’s appellate responsibilities are further informed by the directive of the United States Court of Appeals for the Third Circuit, which effectively reviews on a de novo basis bankruptcy court opinions. In re Hechinger, 298 F.3d 219, 224 (3d Cir.2002); In re Telegroup, 281 F.3d 133, 136 (3d Cir.2002).

II. PROCEDURAL BACKGROUND

On October 18, 2009, the Catholic Diocese of Wilmington, Inc. (“the Diocese”) filed a petition in the United States Bankruptcy Court for the District of Delaware for relief under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. §§ 101-1532. On November 19, 2009, the Diocese sought court approval for an “order authorizing it (1) to continue providing pensions, sustenance and/or medical coverage in the ordinary course to certain retired or removed priests accused of sexual abuse; and (2) to use certain restricted funds to pay prepetition priest pension obligations” (“the sustenance motion”). (D.I. 3, ex. 4) The sustenance motion was opposed by the Official Committee of Unsecured Creditors (“Official Committee”); the “Unofficial Committee of State Court Abuse Survivors” (“Ad Hoc Committee”) joined in the opposition. (Id., exs. 6, 7) After protracted litigation, the sustenance motion was dismissed by order signed February 19, 2010. (Id., exs. 20-31) Appellant Kenneth Martin (“appellant”) filed a proof of claim in the Diocese’ chapter 11 case on April 14, 2010. (D.I. 13, ex. 2)

The Diocese filed a second amended plan of reorganization on May 23, 2011. (D.I. 3, ex. 32) In said plan, the clergy pension plans were unimpaired, and the Diocese sought permission for the reorganized debtor to manage its property and its affairs without further order of the bankruptcy court. (D.I. 2, ex. 11 at 123) The Ad Hoc Committee filed its opposition to said plan on June 30, 2011, citing three objections: (1) to the timing of payment and distribution to survivors; (2) to payment of professionals for the Ad Hoc Committee from the settlement trust rather than by the Diocese; and (3) to excluding counsel for the Ad Hoc Committee from the protection of the indemnification provision. (D.I. 3, ex. 41) By “comment,” also filed on June 30, 2011, the Official Committee expressed that it was “deeply offended by the Plan’s treatment of the Clergy Pension Claims or Other Unsecured Claims asserted by anyone who is responsible for Abuse.” (Id., ex. 42)

At the July 8, 2011 confirmation hearing, the Diocese called Bishop Malooly as a [632]*632witness in support of its plan of reorganization. Bishop Malooly was cross-examined on the issue of clergy pension claims, and testified that he had no intention of giving money or benefits in the ordinary course to certain individuals named by counsel for the Ad Hoc Committee. (Id., ex. 44 at 61-76, 110-112) Following the hearing and at the request of the bankruptcy court, the Diocese submitted a letter brief that addressed the canonical obligation of a Roman Catholic diocesan bishop to provide sustenance or charity to clergy. (Id., ex. 45) Counsel for the Ad Hoc Committee filed an objection to said letter on the grounds that it contained expert testimony. (Id., ex. 46)

In anticipation of the continued confirmation hearing, the Ad Hoc Committee filed a bench memo on July 13, 2011 in opposition to what it labeled the “renewed” sustenance motion. (D.I. 2, ex. 5) In its submission, the Ad Hoc Committee sought affirmative relief by urging the bankruptcy court to issue an injunction (hereafter, “the Injunction”) in one of the two following alternate forms:

The Reorganized Debtor, the Bishop, and the Non-Debtor Catholic Entities under the Plan, and their successors and assigns, officers, agents, servants, employees and attorneys are forever barred and permanently enjoined from providing any money, salary, wages, employment benefits, pension, medical benefits, housing benefits, medical insurance, other financial benefits of any kind whatever, sustenance or charity to Francis G. DeLuca, Douglas W. Dempster, Edward F. Dudzinski, Kenneth J: Martin, Joseph A. McGovern, Francis J. Rogers, John A. Sarro, Charles W. Wiggins, or Harry P. Weaver.
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The Reorganized Debtor, the Bishop, and the Non-Debtor Catholic Entities under the Plan, and their successors and assigns, officers, agents, servants, employees and attorneys are forever barred and permanently enjoined from providing any money, salary, wages, employment benefits, pension, medical benefits, housing benefits, medical insurance, other financial benefits of any kind whatsoever, sustenance or charity to Francis G. DeLuca, Douglas W. Demp-ster, Edward F. Dudzinski, Kenneth J. Martin, Joseph A. McGovern, Francis J. Rogers, John A. Sarro, Charles W. Wiggins or Harry P. Weaver without first notifying the Court in writing of its consideration of such action, then filing a Motion seeking such relief, notifying all parties with interest in such a proceeding, including current state court counsel for any survivor or childhood sexual abuse, and seeking an order of the Court approving such action after notice and an opportunity to be heard by state court counsel and their clients.

(Id., ex. 5 at 7-8)

The bankruptcy court entertained argument on the above request the following day. Despite the fact that the record had been closed and no notice had been given to opposing counsel, the Ad Hoc Committee asked the bankruptcy court to admit as an exhibit an undated letter1 authored by deceased Bishop Saltarelli (“the Saltarelli letter”) and captioned “Update on sexual abuse of minor by priests.” The Saltarelli letter reads in pertinent part as follows:

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484 B.R. 629, 2012 WL 6589162, 57 Bankr. Ct. Dec. (CRR) 90, 2012 U.S. Dist. LEXIS 178613, Counsel Stack Legal Research, https://law.counselstack.com/opinion/martin-v-catholic-diocese-of-wilmington-inc-ded-2012.