Bishop Cupich’s ex-vicar general critical of Catholic lawsuit against Paine Hamblen

Spokane Bishop Blase Cupich’s former top lieutenant told attorneys that Cupich has attempted a money grab against the law firm that guided the church through bankruptcy proceedings.

The allegations leveled by the Spokane Diocese against Paine Hamblen, the downtown Spokane firm that represented the church in bankruptcy proceedings sparked by multiple cases of priest sexual abuse, came seven years after a settlement designed to limit the diocese’s liability in future claims. In January, the diocese asked a federal judge to overturn an order to pay attorney fees to the firm.

The church also is asking for damages after several unexpected claims were lodged, exhausting a fund set up through the bankruptcy settlement to compensate victims through 2016.

In its response filed Monday in federal Bankruptcy Court, the law firm says Cupich’s lawsuit caused fractures among the diocese’s inner circle, many of whom disagreed with the decision to go after Paine Hamblen. Former Vicar General Steve Dublinski, who resigned in August after what he called “irreconcilable differences” with Cupich on several matters, said in a recorded interview with attorneys last month that Cupich told him the complaints against Paine Hamblen were a designed money-grab.

“We are throwing mud at Paine-Hamblen to see if any mud sticks,” Dublinski recalled Cupich saying after the pair discussed the complaint. Dublinski also said he was pressured by the church’s attorneys into supporting the lawsuit, which was part of the reason he resigned.

Cupich was chosen earlier this year by Pope Francis to be the next archbishop of Chicago. He remains in charge of the Spokane Diocese until he is installed as the archbishop next Tuesday. His successor in Spokane has not been named.

Attempts made to reach Cupich were unsuccessful Tuesday. The diocese’s current attorney in the bankruptcy, Robert Gould, also did not return a call requesting comment.

The Spokane diocese was ordered to pay about $3.5 million in attorney’s fees to Paine Hamblen for representation in the bankruptcy, according to court documents. The church is asking for at least $4 million in damages from the firm after alleging attorneys failed to disclose a conflict of interest in the case and were wrong about how many claims would be made against the church by abuse victims.

The conflict of interest allegation centers on Paine Hamblen attorney Greg Arpin, who was working on cases involving allegations of priest abuse and the discovery of pornography in the apartment of another priest. The diocese says Paine Hamblen was representing former Bishop William Skylstad as an individual in the cases and should have informed the bankruptcy judge of the potential conflict of interest before finalizing the settlement.

Arpin and his wife, Lori, were originally named as defendants in the suit. The diocese has since dropped its claim against them.

The firm said in its court filing that it was unclear at the time whether Skylstad was named in the lawsuits as an individual or as a representative of the diocese. In the filing requesting the court dismiss the malpractice claims, Paine Hamblen attorney Ralph Cromwell downplayed the representation’s significance.

“As for the conflicts of interest, assuming they exist, they are subtle and no one has been able to identify any harm they caused because there is none,” Cromwell wrote. He declined to comment further on the case by email.

The diocese sought to change the terms of its bankruptcy settlement after a flurry of abuse allegations, most of them outside of Spokane, depleted the $1 million fund the church had set aside to pay future claims. Cupich and the diocese say Paine Hamblen undershot the amount that would be necessary to pay future claimants because lawyers failed to conduct an independent study of potential cases and limited the diocese’s ability to challenge payments out of the victim fund.

Shaun Cross, the attorney at Paine Hamblen who took the lead on the bankruptcy case, left the firm shortly after the settlement was reached.

The firm argues the diocese’s complaint is too late, coming seven years after the bankruptcy settlement was inked. Cromwell also accused the diocese of gamesmanship, waiting until the federal bankruptcy judge who had presided over the case retired before challenging her settlement agreement.

In his deposition, Dublinski bolstered that argument. He said while he didn’t know who made the decision to allege malpractice by Paine Hamblen, the discussions preceding the decision centered on U.S. Bankruptcy Judge Patty Williams. The diocese waited seven or eight months to file the lawsuit, which Dublinski said was to avoid the case being heard by Williams.