U.S. BANKRUPTCY COURT SY NG NORTHERN DISTRICT OF CALIFORNIA □□□□ SM □□ 1 YX ast Signed and Filed: April 10, 2025 □□□□□□ □□ 2 Grin J 2 4 Vin An 0 5 DENNIS MONTALI U.S. Bankruptcy Judge 6 7 UNITED STATES BANKRUPTCY COURT 8 NORTHERN DISTRICT OF CALIFORNIA 9 In re ) Bankruptcy Case 10 ) No. 23-30564-DM 11 THE ROMAN CATHOLIC ARCHBISHOP ) OF SAN FRANCISCO, ) Chapter 11 12 ) ) 13 Debtor. ) ) 14 ) 15 16 MEMORANDUM DECISION ON MOTION FOR RELIEF FROM STAY 17 I. INTRODUCTION 18 19 On March 27, 2025, the court heard The Official Committee 20 Unsecured Creditors’ Motion for an Order Granting Certain Trial- 21 Ready Survivors Relief from the Automatic Stay to Pursue State 22 Court Litigation (“Motion”) (Dkt. 1015); the Debtor’s Opposition 23 to the Official Committee Unsecured Creditors’ Motion for an 24 Order Granting Certain Trial-Ready Survivors Relief from the 25 Automatic Stay to Pursue State Court Litigation (“Opposition”) 26 (Dkt. 1083); Certain Insurers’ Objection to the Official 27 Committee Unsecured Creditors’ Motion for an Order Granting 28 Certain Trial-Ready Survivors Relief from the Automatic Stay to

=_ 1 =_

1 Pursue State Court Litigation (“Objection”) (Dkt. 1081); and The Official Committee of Unsecured Creditors' Reply Brief in 2 Support of an Order Granting Certain Trial-Ready Survivors 3 4 Relief from the Automatic Stay to Pursue State Court Litigation 5 (Dkt. 1097). Appearances are noted on the record. 6 For the reasons that follow, the court will grant the 7 Motion in part and will overrule the Opposition and the 8 Objection. 9 II. BACKGROUND 10 Prior to bankruptcy, the Debtor and other California based 11 dioceses and Catholic entities were parties to a matter pending 12 in the Superior Court of California, County of Alameda, entitled 13 In re Northern California Clergy Cases, JCCP No. 5108 14 (“Coordinated Proceedings”). On December 5, 2022, the court in 15 the Coordinated Proceedings identified five cases described as 16 “Bellwether Cases” for trial. Two of those cases (the “Trial 17 Cases”) are pending against Debtor (and no other defendant) in 18 San Francisco Superior Court. The Trial Cases were days away 19 from trial when Debtor filed its Chapter 11 case on August 21, 20 2023. 21 Now, almost twenty months into this Chapter 11 case, the 22 Official Committee of Unsecured Creditors (“OCC”) filed the 23 Motion to obtain relief from the automatic stay to permit the 24 Trial Cases to proceed to trial. Debtor and certain insurers 25 (“Insurers”) opposed that Motion. No party has questioned the 26 standing of the OCC to act on behalf of the individual 27 plaintiffs in the Trial Cases; no party has questioned the 28 standing of the Insurers to file the Objection. For that 1 reason, the court will not question the standing of either the 2 OCC or the Insurers and will proceed to address the merits of 3 the Motion as presented. 4 As is well established by case law and bankruptcy practice, 5 motions for relief from stay generally turn on case specifics 6 and are decided through the court’s exercise of broad 7 discretion. Bankruptcy courts routinely consider the so-called 8 “Curtis” factors in deciding to grant or deny such requests.1 9 There are twelve Curtis factors, and some applicable factors 10 will be considered briefly.2 The most important factors that 11 apply here will be discussed in more detail. 12

13 1 In re Curtis,

(Bankr. D. Utah 1984). 2 The Curtis factors are: 14 (1) Whether the relief will result in a partial or 15 complete resolution of the issues 16 (2) The lack of any connection with or interference with the bankruptcy case; 17 (3) Whether the foreign proceeding involves the debtor 18 as a fiduciary; 19 (4) Whether a specialized tribunal has been established to hear the particular cause of action and that 20 tribunal has the expertise to hear such cases; 21 (5) Whether the debtor’s insurance carrier has assumed full financial responsibility for defending the 22 litigation; 23 (6) Whether the action essentially involves third parties, and the debtor only functions as a bailee o 24 or conduit for the goods or proceeds in question; 25 (7) Whether litigation in another forum would prejudice the interests of other creditors, the creditors’ 26 committee, or other parties; 27 (8) Whether the judgment claim arising from the foreign action is subject to equitable subordination under 28 Section 510(c); III. DISCUSSION 1 A. Less Persuasive Curtis Factors 2 Factor 5 questions whether the debtor’s insurance 3 carrier(s) has assumed full financial responsibility for 4 defending the litigation. Here, although the record is not 5 completely clear, that factor weighs in favor of granting the 6 Motion. 7 Next, Factor 7 asks whether litigation elsewhere will 8 prejudice the interests of other creditors, the OCC or other 9 interested parties. In a complex Chapter 11 reorganization 10 where full payment by a debtor, with or without assistance of 11 insurance, is highly unlikely, and others may be adversely 12 impacted, denying such a motion would be appropriate. The 13 present record, with no reason to suspect that allowed claims 14 will not be paid in full, together with the active involvement 15 of the OCC in bringing the Motion, supports granting the Motion. 16 Added to that, the Trial Cases involve just two of hundreds of 17 pending similar cases against the Debtor, so results there 18 19

20 (9) Whether movant’s success in the foreign proceeding 21 would result in a judicial lien avoidable by the debtor under Section 522(f); 22 (10) The interest of judicial economy and the expeditious 23 and economical determination of litigation for the parties; 24 (11) Whether the foreign proceedings have progressed to 25 the point where the parties are prepared for trial; (12) The impact of the stay on the parties and the 26 ‘balance of hurt’

27

. The third, fourth, sixth, eight, and ninth 28 factors have no application to this case and will not be addressed. 1 following jury trials may help facilitate a global resolution. 2 This factor again weighs in favor of granting the Motion. 3 Factor 10 looks to the interest of judicial economy and 4 expeditious and economical determination of litigation. Because 5 the Trial Cases involve personal injury matters,

157(b)(5) precludes this court from deciding the Motion and thus 7 a California Superior Court, or perhaps a United States District 8 Court, is a more suitable forum. This factor also weighs in 9 favor of granting the Motion. 10 Factor 11 looks to whether the matter is ready for trial. 11 The comments of OCC counsel strongly indicated at the hearing 12 that trial before a jury for the two plaintiffs in the Trial 13 Cases is perhaps only weeks away. That factor clearly weighs in 14 favor of granting the Motion. 15 B. Significant Curtis Factors 16 It is inefficient separately to analyze and discuss the 17 first, second, and last Curtis factors: whether relief from stay 18 will result in partial or complete resolution of the issues; 19 lack of interference with the bankruptcy case; and balance of 20 hurt. The court will consider the first two factors in tandem, 21 then apply them to assess the final one. 22 To begin, the court rejects the argument of the Debtor and 23 the Insurers that no new data points are needed regarding the 24 accused perpetrator. Though the court understands that the 25 parties use the term “data point” to describe the outcome of a 26 jury trial, the court emphasizes that the two plaintiffs 27 themselves (along with other Survivor Claimants) are not data 28 points. They are aging survivors of clergy abuse, with stories 1 that are both unique to themselves and similar to other 2 survivors. 3 Letting two cases go to trial involving wrongful conduct 4 committed decades ago by a long-deceased perpetrator, whose 5 similar conduct resulted in two substantial judgments against 6 the Debtor in previous decades, will not result in a complete 7 resolution of issues in this bankruptcy. Verdicts in favor of 8 those two plaintiffs will not resolve everything for them, since 9 relief would only be to obtain and defend judgments, but not to 10 collect on them except perhaps from the Insurers. But the 11 insights provided from trying these cases, even if the outcome 12 is a partial resolution for the two plaintiffs, will move the 13 entire case toward, and not away from, a global resolution of 14 these abuse cases. 15 Nor will trial of these cases, as Debtor contends, 16 interfere with the main bankruptcy case. Despite the protests 17 of both the Debtor and Insurers that allowing the Trial Cases to 18 proceed will interfere with Debtor’s mediation and 19 reorganization efforts, neither have provided anything but 20 responses without specifics to support their contention. The 21 court is well-aware of the moving parts of any complex corporate 22 reorganization, whether it be a massive public utility, a law 23 firm, a tech company or a religious organization. The Debtor is 24 not a small, understaffed business. It has its own panoply of 25 active components engaged in a variety of schools, churches, 26 charitable activities, administrative tasks, and religious 27 functions, and more. This work is aided by many employees, one 28 of whom is its general counsel. It has also engaged a 1 substantial number of outside attorneys and other professionals 2 to deal with insurance, real estate, litigation, bankruptcy and 3 other related matters. It can defend two long standing 4 lawsuits, manage several hundred more (protected by the 5 automatic stay) and move forward on its mediation and 6 reorganization efforts at the same time. If the Archbishop 7 personally, or any senior member of his staff, or any of his 8 outside counsel, wish or need to attend sessions of the Trial 9 Cases that conflict with a mediation session, or vice versa, the 10 court is confident that either the mediators or the presiding 11 superior court judge will accommodate them 12 In this court’s experience as both a trial judge and as an 13 occasional mediator, the actual conflicts between such parallel 14 actions are more imagined than real. This case is no different. 15 These two factors weigh in favor of granting the Motion. 16 C. Pending Mediation 17 Before completing the assessment of the Curtis factors, it 18 is necessary to look to one other important factor not 19 explicitly found on the Curtis list. Mediation is now a regular 20 part of the bankruptcy landscape for many large-scale tort- 21 related bankruptcies. All parties have mentioned the numerous 22 clergy-abuse cases around the country that have turned to 23 mediation. This case is no exception. While ongoing mediation 24 may be wrapped into one or multiple Curtis factors, the court 25 feels that is a significant process that merits its own 26 consideration when weighing a related motion for relief from 27 stay. 28 1 This court has appointed the mediators, with the 2 concurrence of the Debtor, the OCC, the Insurers and others. 3 It has been and remains impressed by the mediators’ experience 4 and efforts in carrying out their assignment. It knows of 5 several sessions that have occurred and several that are 6 scheduled in coming days. The OCC says not enough progress is 7 being made and relief from stay will encourage all parties to 8 mediate in a more serious and meaningful manner. The Debtor and 9 the Insurers say things are early in the process and on track. 10 Somewhere in between is probably the case. 11 This court will not speak to the mediators. They know how 12 to declare an impasse and they have not. The fact that they 13 have scheduled more mediation is in this court’s mind a good 14 sign, not a bad one. This factor, which the court terms the 15 progress of mediation, weighs in favor of denying the Motion at 16 this time. 17 IV. BALANCE OF HARM 18 The twelfth Curtis factor, the impact of the stay and 19 balance of harm, is the driving factor of the court’s ultimate 20 decision. It is more properly thought of as a summation of all 21 the considerations taken together and leading to the proper 22 conclusion. The court concludes that more good than harm will 23 be achieved, more progress forward than retreat backward or 24 status quo will be the case, by granting the Motion but delaying 25 the effectiveness of that grant for a short period. This will 26 permit if not encourage the parties and the mediators to have a 27 meaningful impact on the case. Both the OCC’s citations to 28 other bankruptcies that have progressed after relief from stay 1 has been lifted (and others that have languished where no stay 2 relief was granted) and the court’s own experience lead the 3 court to this decision. 4 V. CONCLUSION 5 Having considered all of the applicable factors, and 6 weighing the interest of the parties and the potential for harm 7 on both sides, the court exercises its discretion and will grant 8 the Motion, effective June 30, 2025. This brief pause is to 9 allow more time for ongoing mediation, potentially to achieve a 10 global resolution of matters that would render adjudication of 11 the Trial Cases unnecessary. After that, all sides will need to 12 attend to both the trials and the mediation. 13 Concurrent with this Memorandum Decision, the court is 14 issuing an order granting the Motion and permitting the Trial 15 Cases to proceed without regard to and free of the automatic 16 stay, effective as of June 30, 2025. 17 18 19 **END OF MEMORANDUM DECISION** 20 21 22 23 24 25 26 27 28 COURT SERVICE LIST 1 ECF Recipients 2

3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28