FW: Interesting question: Portland Archdiocese Filing Chapter 11

[Berg, Thomas C.]

Here are thoughts from two law prof friends at other schools, expressing
doubts about (1) whether a fraud claim would be viable here and (2) whether
a fraud judgment would be non-dischargeable in bankruptcy anyway.  I don't
know the answers myself, but my colleagues are knowledgeable and so I pass
on their reactions.
 
Tom Berg
University of St. Thomas School of Law, Minneapolis
 
 
 
(1) On whether a fraud claim is viable:

The note writer criticizes "Jim", who said that fraud allows recovery 
relating only to the value of an asset or failure to perform a contract.  My

instincts, however, tell me that Jim is right.  For example, here is how Dan

Dobbs' treatise describes the scope of fraud in tort law:  "Fraudulent 
misrepresentation is a stand-alone economic or commercial tort that causes 
financial harm without causing physical harm either to person or property." 

That's not to say that someone couldn't try to push fraud beyond its 
traditional boundaries.  But I think the note writer is wrong to suggest 
that fraud law could easily be applied to the "full panoply of direct losses

a plaintiff can suffer as a result of [the absence of] the concealed fact." 

 

(2) On whether a fraud judgment would be non-dischargeable (from my second
colleague):

Is the fraud suit against the diocese and has the diocese filed for BR? 
If so, then any debt for fraud would seem to me to be dischargeable in 
BR because 11 USC 523(a) only excepts (some) fraud from discharge for 
individual debtors. 

 
 

  _____  

From: Vance R. Koven [mailto:vrkoven at world.std.com]
Sent: Thu 7/8/2004 12:26 PM
To: religionlaw at lists.ucla.edu
Subject: Re: FW: Interesting question: Portland Archdiocese Filing Chapter
11



At 11:47 AM 7/8/2004, JMHACLJ at aol.com wrote: 
>So, help me understand the application of fraud law to the diocesan ... 
>paedophile priest scandal. 

1. Diocese knowingly conceals (and thereby misrepresents) priest's 
predilection to pedophilia from parishes and parishioners (which we've 
agreed by hypothesis, though of course the scienter part has to be proven 
case by case). 

2. Parishes and parishioners rely on the priest's good moral character as 
the basis on which he is allowed to interact unsupervised with minors (a 
reasonable assumption, though  this may need proof as well). 

3. Priest is not as represented, owing to the concealed character defect. 

4. As a result of the inherent and undisclosed defect in the priest, the 
priest sexually assaults minor parishioners. 

5. Parishioners, at the least, suffer medical and emotional damage whose 
extent can be quantified for purposes of computing an award (they may also 
suffer other forms of economic injury, such as church school tuition and 
contributions paid). Parishes, if not included within the diocese's 
bankruptcy petition, may suffer damages for the vicarious liability they 
have for the priest. 

Where I think Jim is not getting the connection is in thinking that the 
damages for fraud must be a decrease in the market value of an asset, or 
the failure in performance of a contract, rather than the full panoply of 
direct losses a plaintiff can suffer as a result of [the absence of] the 
concealed fact. While it is more direct to state a claim based solely on 
the tortious acts of the priest and hold the diocese responsible based on 
respondeat superior and a variety of other direct and vicarious liability 
theories, the fraud theory could hold up, too. If it does, then the diocese 
might find an undischargeable debt on its hands. 


Vance R. Koven 
Boston, Massachusetts USA 
vrkoven at world.std.com  

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