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Catholic Church Legal Hardball and Hairsplitting Legal Maneuvers Didn't Work,"

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Judge Rules Parishes, Other Assets, Available To Abuse Victims

August 26, 2005

By KOMO Staff & News Services

SPOKANE - A federal bankruptcy judge ruled Friday that all the parish churches, parochial schools and other property of the Catholic Diocese of Spokane can be liquidated to pay victims of sexual abuse by priests.

The decision, expected to have ramifications for dioceses across the nation, was a defeat for Spokane Bishop William Skylstad, who had argued that he did not control individual parishes and thus they were not available to cover settlement costs.

"It is not a violation of the First Amendment to apply federal bankruptcy law to identify and define property of the bankruptcy estate even though the Chapter 11 debtor is a religious organization," U.S. Bankruptcy Judge Patricia Williams wrote in a 50-page decision.

It is also proper to use state law, rather than church law, to determine the size of the estate, Williams said.

The bishop holds legal title to church property in trust for the diocese, and "the disputed real property constitutes property of the estate," she wrote.

Barbara Blaine, president of the Survivors Network of those Abused by Priests, said from Chicago that she hoped the ruling would prompt leaders of other dioceses to stop fighting victims.

"I'm grateful the church legal hardball and hairsplitting legal maneuvers didn't work," Blaine said.

She said church leaders "have not been pastoral and it would take so little to really help the victims. They spend more energy fighting victims ... rather than embracing them."

Leaders of the Spokane Diocese did not immediately return telephone calls seeking comment.

Skylstad, head of the U.S. Conference of Catholic Bishops, had argued that only about million in assets directly under his control was available to settle lawsuits brought by 58 victims of sexual abuse. The cases forced the Spokane Diocese to declare bankruptcy last year.

But attorneys for the victims argued that the bishop holds title to and controls more than 82 parish churches, 16 parochial schools, Catholic cemeteries and other property throughout 13 counties of Eastern Washington. Victims contended the diocese's financial assets totaled more than million.

The Spokane case is the first in which the issue of parish ownership has been decided by a judge.

Last month, in the bankruptcy case of the Archdiocese of Portland, Ore., lawyers for members of 124 parishes argued that they, and not the archdiocese, owned million in church assets and property. More than 240 abuse claims are pending against the Archdiocese of Portland, seeking at least million in damages. The archdiocese has said it has only about million in assets.

In the only other bankruptcy case involving a diocese, a federal judge laat month approved a reorganization plan for the Roman Catholic Diocese of Tucson, paving the way for it to become the first in the nation to emerge from bankruptcy.

The Spokane Diocese filed for Chapter 11 protection in December, listing assets of .1 million and liabilities of .3 million. Most of the liabilities are sexual abuse claims.

Williams listened to a full day of arguments on the assets question in late June.

Lawyers for victims said church leaders must be punished for allowing pedophile priests to prey on children for so long. Advocates for parishioners argued that they should not be punished for the depredations of a few deviant priests.

There were arcane arguments about Washington trust law, separation of church and state and an obscure legal construct known as "corporation sole," under which a bishop of a diocese is permitted to hold title to property as a trustee who receives no benefit himself from the holding.

But attorneys for victims say the diocese is subject to the same laws as other corporations that harm people.

The Spokane Diocese serves about 90,000 Catholics in 13 Eastern Washington counties, from Metaline Falls on the Canadian border to Walla Walla on the Washington-Oregon line.

The nationwide sex-abuse scandal was sparked by revelations that many Catholic bishops had moved guilty priests among parish assignments without warning parents or police. Hundreds of accused clergy have been removed in the past three years. Abuse cases so far have cost the church about $1 billion.