Opinion
Case No. 11-20059-svk
02-01-2013
In re Archdiocese of Milwaukee, Debtor.
Chapter 11
MEMORANDUM DECISION ON DEBTOR'S OBJECTION TO CLAIM NO. 106
FILED BY CLAIMANT A-36
The Archdiocese of Milwaukee (the "Debtor") objected to Proof of Claim number 106 (the "Claim") filed by A-36 (the "Claimant"). The Debtor moved for summary judgment, arguing that the Claim should be disallowed as time-barred under Wisconsin's statute of limitations. The Court held hearings on December 13, 2012 and January 24, 2013. After consideration of the written submissions and argument of counsel, the Court issued an oral ruling at the January 24, 2013 hearing, which is memorialized by this decision.
Pursuant to the Order Authorizing Special Confidentiality Procedures to Protect Abuse Survivors, the Claimant is being referred to by his number rather than his name. (Order, Docket No. 327).
I. BACKGROUND AND FACTS
The Debtor filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on January 4, 2011. On September 30, 2011, the Claimant filed the Claim, alleging that Father William Effinger sexually abused him in 1980 or 1981 when the Claimant was 11 years old in the seventh grade. Effinger was a family friend, and the abuse occurred in the Claimant's bedroom.
In support of its motion, the Debtor filed the affidavits of Attorneys Francis LoCoco and Lindsey Johnson. Attorney LoCoco's affidavit attaches a copy of the Claim; Attorney Johnson's affidavit contains voluminous copies of newspaper articles about the priest sex abuse scandal in general and Effinger in particular. For example, Attorney Johnson submitted a December 6, 1992 Milwaukee Journal article stating, "Archbishop Rembert G. Weakland said earlier that he first became aware of allegations against Effinger in 1978 and placed the priest in treatment. Later, Weakland assigned Effinger to other parishes." (Johnson Aff. ¶ 14, Ex. K, at 38).
The Claimant filed an affidavit opposing the Debtor's motion for summary judgment. According to the affidavit, he moved to Texas in 1983 and lived there until 1985. From 1985 to 1993, the Claimant lived in California. He moved to Wisconsin in 1993 and lived there until 2008 when he moved to Illinois. In 1992, when he was living in California, his mother told him that Effinger had been arrested for sexual abuse, and she asked the Claimant if he had been abused. He did not tell his mother about the abuse. The Claimant does not remember hearing anything on the news about the priest abuse scandal when he lived in Wisconsin from 1993 through 2008. He did not see the newspaper articles submitted with Attorney Johnson's affidavit until after the Debtor's bankruptcy filing. The Claimant did not know about the Debtor's published list of abusive priests or hear anything related to the list until after the bankruptcy petition. He did not have any idea or suspicion that Effinger was a child abuser before his abuse until after the Debtor filed bankruptcy.
The Debtor urges disallowance of the Claim under 11 U.S.C. § 502(b)(1) because the Claim is "unenforceable against the debtor . . . under any agreement or applicable law." The applicable law is Wisconsin's six-year statute of limitations for fraud. The Claimant disputes that the statute of limitations bars the Claim.
II. JURISDICTION
Ruling on objections to proofs of claim falls within the core jurisdiction of the bankruptcy court under 28 U.S.C. §§ 1334 and 157(b)(2)(B). Unlike the entry of a final order on a State law counterclaim, allowance of claims was not deemed unconstitutional in Stern v. Marshall, 131 S. Ct. 2594, 2614 (2011). In Stern, the Supreme Court reaffirmed that bankruptcy courts have the authority to restructure the debtor-creditor relationship and determine "creditors' hierarchically ordered claims to a pro rata share of the bankruptcy res." Id.
Under 28 U.S.C. § 157(b)(5), personal injury tort claims must be tried in the district court. However, in Stern, the Supreme Court confirmed that this provision is waivable. Stern, 131 S. Ct. at 2608. Further, an objection to the legal validity of a personal injury tort claim, such as the Debtor's statute of limitations objection in this case, does not fall within the personal injury exception to the core jurisdiction of the Bankruptcy Court. In re UAL Corp., 310 B.R. 373 (Bankr. N.D. Ill. 2004). Finally, a claim that the Debtor defrauded the Claimant, as is made here, is not necessarily a personal injury tort claim.
III. DISCUSSION
A. Summary Judgment Standard
Summary judgment is governed by Rule 7056 of the Federal Rules of Bankruptcy Procedure, incorporating Rule 56 of the Federal Rules of Civil Procedure, and should be granted if the Debtor can establish that there is no genuine issue of material fact and that the Debtor is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Material facts are those that "might affect the outcome of the suit." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). When analyzing a summary judgment motion in a similar context, the Seventh Circuit Court of Appeals explained: "[I]t follows that summary judgment is appropriate only if (1) the statute of limitations has run, thereby barring plaintiff's claim as a matter of law, and (2) there exist no genuine issues of material fact regarding the time at which plaintiff's claim has accrued and the application of the statute to plaintiff's claim which may be resolved in plaintiff's favor." Yorger v. Pittsburgh Corning Corp., 733 F.2d 1215, 1219 (7th Cir. 1984).
B. The Claimant's Negligence-Based Claims are Barred by the Statute of Limitations
The Wisconsin statute of limitations for negligence is three years from when the claim accrues. Wis. Stat. § 893.54(1) (2009-10). The Claimant's negligence-based claims relate back to the date of his abuse in 1981, and the statute of limitations has expired. See In re Archdiocese of Milwaukee, 470 B.R. 495 (Bankr. E.D. Wis. 2012) (negligence claims filed by Claimants A-12 and A-13 were barred by the statute of limitations, citing John Doe 1 v. Archdiocese of Milwaukee, 2007 WI 95, 303 Wis. 2d 34, 734 N.W.2d 827)). The Court rejects the Claimant's attempt to distinguish his negligence-based claims from those adjudicated in John Doe 1.
C. A Question of Fact Remains on Whether the Claimant's Fraud-Based Claims are Barred by the Statute of Limitations
The statute of limitations for fraud is six years from when the claim accrues. Wis. Stat. § 893.93(1)(b). "The cause of action in such case is not deemed to have accrued until the discovery, by the aggrieved party, of the facts constituting the fraud." Id. In John Doe 1, the Wisconsin Supreme Court stated that the statute of limitations starts to run "[w]hen the information brought home to the aggrieved party is such as to indicate where the facts constituting the fraud can be effectually discovered upon diligent inquiry." John Doe 1, ¶51 (quoting Koehler v. Haechler, 27 Wis. 2d 275, 278, 133 N.W.2d 730 (1965)).
The discovery rule to start the statute of limitations has subjective and objective components. As Judge Randa noted in In re Archdiocese of Milwaukee, 482 B.R. 792, 798 (E.D. Wis. 2012), "The focus of the subjective component is on what a particular plaintiff knew, such that an objectively reasonable inquiry would then lead to the fraud being discovered. . . . In other words, the objective component does not come into play until a plaintiff has enough information to be chargeable with notice of all facts to which a diligent inquiry might have led." (internal quotes and citations omitted). And the John Doe 1 court distinguished the analysis for fraud claims against the Debtor in the priest sex abuse scandal from the analysis of the commercial claims in Stroh Die Casting Co. v. Monsanto Co., 177 Wis. 2d 91, 502 N.W.2d 132 (Ct. App. 1993). The court observed: "[R]easoning about the investigation that reasonably may be required in a business context is not directly transferable to a relationship that is based on trust, particularly when the trust relationship arises in a religious context such as that of priest and parishioner." John Doe 1, ¶ 55. In Stroh, a "tremendous public outcry" about PCBs in the 1970s contributed to the court's conclusion that the statute of limitations had run.
The Debtor contends that the publicity about the priest abuse scandal in general, and the articles about Effinger in particular, suffice to bring home the requisite information to the Claimant. Therefore, argues the Debtor, the Claimant should be charged with knowledge of the Debtor's purported fraud in covering up the priest sex abuse scandal and transferring abusive priests to unsuspecting parishes. But the Claimant counters with an affidavit stating that he never saw the articles. He was not living in Wisconsin when the articles about Effinger appeared in the Milwaukee Journal, and he was unaware that the Debtor knew that Effinger was an abuser before the Debtor placed Effinger in a position where he could abuse the Claimant. The only evidence of information brought home to the Claimant is the abuse he suffered and his mother's telephone call telling him that Effinger had been arrested. Since there is no evidence that any information about the Debtor's alleged fraud was brought home to the Claimant, it is not reasonable to require him to conduct an investigation.
It is possible that discovery will reveal that the Claimant indeed had more information brought home to him than appears in the record. If that is the case, the Court will revisit this issue. But in the battle of affidavits between an attorney who attached reams of publicity about the priest sex abuse scandal and an abuse victim who says he saw none of it, the Court sides with the Claimant as having raised a disputed fact about whether he should have discovered the Debtor's alleged fraud.
IV. CONCLUSION
For the foregoing reasons, the Debtor's motion for summary judgment is denied. The Court will enter a separate order.
By the Court:
________________________
Susan V. Kelley
U.S. Bankruptcy Judge