Catholic Church Is
Dealt a Blow
In Asset Dispute
By SUZANNE SATALINE,
THE WALL STREET JOURNAL, From the Web, December 31, 2005
A federal bankruptcy-court judge in
Portland, Ore., ruled Friday that the Catholic archdiocese there can't shield
the sale of parish assets from compensation claims made by victims of sexual
abuse by priests.
In a decision that could have national ramifications, Judge Elizabeth Perris
found that sex-abuse victims, who have filed about 100 outstanding claims with
potential damages of at least $300 million, may seek compensation from assets
including parish churches and schools within the diocese.
While a victory for abuse victims, the decision represents a blow not only for
the diocese but also for Catholic parishioners in Portland and across the
country who are trying to protect church properties and bank accounts from
liquidation.
Ruling in the bankruptcy case of the Portland archdiocese, the judge denied the
diocese's claim that its extensive real-estate holdings — valued from $400
million to $600 million — shouldn't be available to pay creditors' claims
because they are held in trust for the parishes as beneficiaries. The
diocese contended that victims should only be entitled to diocesan possessions,
valued at around $19 million, including the bishop's residence and chancery.
Although the diocese said that the question should properly be decided under
canon, or church law, the judge wrote, "Who owns the property is, quite simply,
not a theological or doctrinal matter."
The judge also rejected the argument of the Portland diocese's 390,000
Catholics, who were named a separate defendant class, that civil law would bar
the diocese from selling assets against parishioner wishes. "Under civil
law, the parishes and high schools are not separate civil legal entities," Judge
Perris found.
A written statement issued by the diocese said: "We feel strongly that
this decision is not supported by the facts or the law, and believe it infringes
on Archdiocese's right and the parishioners' rights to freely exercise their
religion. We will review our options to appeal."
Although Judge Perris's decision and a similar ruling by a bankruptcy-court
judge in Washington state in August aren't binding on judges in other
jurisdictions, they are expected to influence cases cropping up across the
country that also deal with control over church assets.
Catholics in Boston, New York and elsewhere are fighting the closings of their
parishes by contending that they, rather than the diocese, have control over
churches, schools, bank accounts and other assets. These internal battles
have become so heated that the St. Louis archdiocese recently excommunicated
leaders of one parish who refused to turn over assets to the bishop, a subject
of a page one Wall Street Journal article on Dec. 20.
Another federal bankruptcy judge sided against the Spokane, Wash., diocese in a
similar bankruptcy ruling in August. The Spokane bishop has appealed.
David Skeel, a University of Pennsylvania law professor, said that the Portland
ruling hurts parishioners nationwide who contend that dioceses cannot close
churches or take assets on their own. "What this opinion confirms is that
the archdiocese is in charge, with respect to the property," he said. He
added that the decision is likely to unsettle parishioners by making clear that
parishioners will ultimately pay for the abuse scandal. "Even if...the
priest was never in their parish, they still pay the price," he said.
Parishioners seeking financial control of their churches and schools had taken
heart from a Vatican decree, issued in September, which warned the archbishop of
Boston not to take assets from a closed parish. The Vatican said the
assets must follow parishioners to their new church.
Portland unnerved Catholics across the country in 2004 when it became the first
diocese in the nation to file for bankruptcy-court protection. Besides
Spokane, the diocese of Tucson, Ariz., also sought bankruptcy protection but
settled with creditors earlier in 2005.
Write to Suzanne Sataline at
suzanne.sataline@wsj.com.
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