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Bankruptcy Cases Will See If Parishes Are Liable

BY PHILIP S. MOORE

Register Correspondent

March 20-26, 2005 Issue | Posted 3/21/05 at 10:00 AM

 

PORTLAND, Ore. — It’s not likely that parishes in Portland, Ore., and Tucson, Ariz., will know whether they’ll be shelling out a lot of money to compensate clerical sex abuse victims as two judges hear arguments on the issue in U.S. Bankruptcy Court this month and next. 

Last July, the 356,000-member Archdiocese of Portland filed for protection under Chapter 11 of the federal bankruptcy code. The archdiocese, which had already paid $53 million to settle claims, was facing possible judgments twice as large from additional people seeking damages. The archdiocese’s bankruptcy was followed by bankruptcy filings by the Diocese of Tucson in September and the Diocese of Spokane in December.

Since then, the bankruptcy court, hearing the cases in different district offices, has been faced with the issue of whether parishes are the property of the diocese or separate entities, held in trust for the parishioners. Because of the similarities in the filings, the decision in one case is likely to be the decision for all.

At stake for the litigants is whether tens of millions of dollars in parish real estate, bank accounts and other assets can be added to the pot to settle claims against a bankrupt diocese. For the parishioners, however, the question is whether they will be forced to suffer again for the actions of a few priests who broke their vows and the law while serving in parishes.

According to Portland Archdiocese spokesman Bud Bunce, the bankruptcy court will have its first chance to consider the question on April 4. That’s when the archdiocese will be presenting case histories, allowing the judge to review histories and financial operations for 10 parishes.

“We will be testifying that these case histories show that parishes were built with parishioner donations and maintained by them, since the beginning,” Bunce said. “Because of this, they belong to the parishioners and not the archdiocese, and should be considered separate.”

Commenting on the cases, Ed Peters, professor of canon law at Ave Maria University in Naples, Fla., said the litigants will be arguing the opposite. Despite their claim that it’s simply a choice between canon law, which describes parishes as separate, and bankruptcy law, which doesn’t, Peters said the status of parishes is not automatically what the litigants would want, even if only U.S. law is considered. “It’s not just bankruptcy law, but property law, that counts.”

Peters said, “Canonically, parish property belongs to the parishes, and even unrestricted gifts to a parish might well be unrestricted, but they still belong to the parish and not the diocese.”

 

Want Voices Heard

Even if parishes aren’t separately incorporated, for whatever reason, Peters said, property law is likely to consider the customary understanding of parish status in making a decision. In that case, “the discrepancy between state law and canon law should not be held against the parishes.”

That is the argument that a 70-member Committee of Parishes in the Portland Archdiocese is anxious to make to the Portland District of the U.S. Bankruptcy Court. The committee has petitioned to intervene in the case in order to argue on behalf of the affected parishes, but the tort clients’ lawyers are fighting to keep them out.

The committee’s attorney, Douglas Pahl of the Portland law firm Perkins Coie, said, “What we’d like to say is that, as Catholics, we make donations to the parish with the belief that our wishes will be honored.” Whether it’s canon law or civil law, a giver’s intent “is something that civil law will enforce.”

He said the attorneys representing those making sexual abuse claims against the archdiocese want to avoid having the parishes intervene as a separate class. Instead, they are promoting a “parishioners class,” which would group all parishioner groups under one umbrella, without regard to their special interests in the bankruptcy case. Pahl said, “We’re in the process of responding to that, since making parishioners a class … would effectively silence them.”

While a hearing on the motion to intervene was to be heard March 15, Pahl said it could be another month before a decision is made.

But Jim Parker, president of the Tucson chapter of the Survivors Network of Those Abused by Priests, said, “It’s ridiculous to consider canon law. It amounts to letting the diocese decide the rules.”

Parker, a close partner of the litigators, claims abuse existed in more than half of the Tucson Diocese’s churches. He sees the monetary damages as a way of fomenting “a revolution” in the Church. “Catholics in the pews should be outraged,” he said. “They should demand more accountability and more voice.”

Diane Welter, parishioner of the 125-year-old St. Boniface Catholic Church in the Portland Archdiocese and organizer of the Committee of Parishes, said she wants her voice heard, but it’s the litigants and their attorneys that she wants to persuade.

 “We have compassion for the victims of abuse,” she said. “It was a horrible situation. They’re entitled to some retribution, but I don’t believe parishes are accountable for what happened and should by paying the price.”

Welter said penalizing parishes amounts to making them suffer twice for the offenses of a few clergymen — first as communities that had their trust violated, then as those financially responsible for settlement of claims. She said penalizing parishes would only harm the people cared for by the parish, as programs are cut back and services curtailed to pay the claims.

Even this would be understandable, if parishes had been recipients of diocese support. However, Welter said, the opposite is true.

“Individual parishioners have a vested interest in how this comes out, because it was parishioner money that bought the land and built the church. And it’s parishioner money that supports the programs and services administered by the individual parishes.”

She said, “I can see how the [litigants’ attorneys] would want to get as much as they can, but common sense would tell you they aren’t making a valid argument. This is our parish community, and to try to say we don’t exist is very narrow-minded and insulting.”

       

Philip S. Moore writes

from Vail, Arizona.