Spokane Diocese Suing Its Bankruptcy Lawyers For Malpractice

AP reported on Wednesday that the Catholic Diocese of Spokane has refiled in federal bankruptcy court its bankruptcy malpractice lawsuit against the law firm of Paine Hamblin and two lawyers who were members of the firm. The firm handled the reorganization of the diocese that began with bankruptcy filings in 2004 and ended in 2007 after a $48 million settlement with 175 abuse victims. (See prior posting.)  The malpractice suit seeking return of millions of dollars in legal fees and more millions of dollars in damages was originally filed in 2012, but dismissed on technical grounds. The 2012 suit was described by the Spokane Spokesman-Review:

The diocese... says ... that bankruptcy lawyers Shaun Cross and Greg Arpin failed to explore other means of ending the abuse scandal ... [and] blames the lawyers for writing a bankruptcy plan that failed to assess and adequately fund the risk of new claims, which nearly forced the foreclosure of churches. The lawsuit also accuses the attorneys of a conflict of interest, in shielding former Bishop William Skylstad from testifying in the first civil trial alleging sex abuse by filing for bankruptcy on the eve of that suit.

The law firm says it provided excellent representation in guiding the diocese out of a crisis that included over 180 clergy sex abuse claims.