December 7, 2005 in City

Judge hears arguments over church property

William McCall Associated Press
 

Bankruptcy history

The Roman Catholic Archdiocese of Portland became the first Catholic diocese in the nation to declare bankruptcy when Archbishop John Vlazny decided in July 2004 it was the only way to handle the growing number of sex abuse claims.

PORTLAND – Attorneys for priest sex abuse victims argued in a federal court Tuesday it’s absurd for the Roman Catholic Archdiocese of Portland to claim that federal bankruptcy law can be trumped by church law.

The victims are asking U.S. Bankruptcy Judge Elizabeth Perris to rule that church buildings, land and schools could be sold by the archdiocese to settle millions of dollars in sex abuse claims, if necessary.

But the archdiocese insists that property belongs to individual parishes, and selling off churches or schools would be an unfair burden and violate church law.

Albert Kennedy, representing the victims, said the archdiocese is trying to limit its liability by raising issues of religious freedom after filing for bankruptcy protection.

“This was a voluntary act for the purely secular purpose of avoiding jury trials and avoiding liability for child sex abuse by priests,” Kennedy told Perris at a hearing on motions to declare the property can be used to pay bankruptcy claims.

But Martin Nussbaum, an attorney for the archdiocese, argued the church has historically treated parishes and schools as separate and individual property.

Nussbaum said the archdiocese is bound by canon law – the law of the Catholic Church – to hold that property in trust for the parishes as individual owners.

He said Oregon state law permits a church to govern itself under its own rules, including the law that allows formation of a “corporation sole” for a religious organization, such as a church.

Kennedy, however, said the argument has never been accepted in any court.

“There is not a case, not a single case that Mr. Nussbaum cites, that supports his position,” Kennedy told the judge.

The archdiocese became the first Catholic diocese in the nation to declare bankruptcy when Archbishop John Vlazny decided in July 2004 it was the only way to handle the growing number of sex abuse claims.

The strategy was a gamble because it put church assets at risk, but Vlazny said it was the only way to ensure the church had enough money to pay claims.

Attorneys in the case said privately they expect a ruling on the ownership question before the end of the year, but Perris gave no indication of when she would decide.

Last August in Spokane, another federal bankruptcy judge ruled on the ownership issue by deciding that the Catholic diocese there can sell parish and school property to pay victims of sexual abuse by priests. The ruling has been appealed.

U.S. Bankruptcy Judge Patricia Williams said Spokane Bishop William Skylstad agreed to abide by federal law when he voluntarily entered the diocese into bankruptcy, and cannot claim that ownership must decided by church law.

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