A group of financial contributors to Loretto High School in Sacramento and Bishop Jaime Soto are suing the nuns who closed the all-girls school in June.
The bishop and seven other donors contend in the lawsuit, filed June 10 in Sacramento Superior Court against Loretto High School and the Institute of the Blessed Virgin Mary [Loretto Sisters], that the nuns want to use proceeds from the sale of the school to help fund their retirement at their motherhouse in Wheaton, Ill., rather than keep the money in Sacramento for Catholic education.
Kevin Eckery, spokesman for the Sacramento Diocese, said the suit was filed after donors and church leaders have tried repeatedly since February to negotiate with the Loretto Sisters through letters and attempts at meetings.
“We want to make sure that funds which were given in good faith go to support schools in Sacramento,” he said.
The lawsuit does not seek to stop the sale of Loretto High School to Aspire Public Schools, a statewide charter, which is now in escrow for a reported $8 million and is expected to close on July 15. The plaintiffs are asking the court to hold the proceeds of the sale and assign an arbitrator to determine how to allocate the money. . .
. . . Loretto High School was originally established in 1955 by the Institute of the Blessed Virgin Mary, but with the permission of then-Bishop Joseph McGucken and the current campus is on a site donated by the bishop, according to the lawsuit. The Loretto nuns ran Loretto High School since its inception.
The lawsuit states that since 1955, diocesan officials have regularly reiterated to the Institute of the Blessed Virgin Mary that “all gifts of real property, cash donations, loan forgiveness, and in-kind contributions were made to the IBVM and/or Loretto for the education of young women in the Catholic tradition” and not for any other purpose.
Since 1983, the diocese has donated approximately $1.5 million in cash, loan forgiveness and scholarship contributions “for the express purpose of educating young women of high school age in the Sacramento region,” according to the suit.
“It’s too bad that we haven’t been able to resolve this,” said James Sweeney, attorney for the diocese. “Cases such as this between religious institutions can usually be settled.”
“The critical message is that the church respects donor intent with regard to restricted-purpose gifts to its institutions,” he added. “We will take all the steps necessary to ensure that donor intent is fully respected by all church institutions, consistent with canon law and civil law.”
The story goes on to explain the complaints of several other donors who have given millions to the school for endowment and scholarship assistance and who've been kept in the dark about the funds and plans for the school. And then:
The lawsuit also alleges that Loretto officials began withdrawing funds at the end of 2008, “without the knowledge or consent of the board of trustees of the Loretto Endowment” to pay off debt for Loretto High School and the nun’s order and to pay operating expenses for Loretto. . .
. . .“The prospect of capital campaign funds being put toward any other purpose in Sacramento, let alone about the possibility of diverting the funds to a use in Illinois unrelated to the education of young women, was never, ever contemplated,” the application states.
Loretto Sister Rosemary Lynch, the U.S. Provincial, declined comment for the story and calls were not returned to the Herald by the attorney representing the order.