Judge rules church property subject to bankruptcy settlement

Associated Press
Dec 30, 2005 - 10:08:02 pm PST

PORTLAND -- A bankruptcy judge ruled Friday that the Archdiocese of Portland, not its parishes, owns church assets, dealing a major blow to its efforts to protect church property from lawsuits filed by alleged victims of priest sex abuse.

U.S. Bankruptcy Judge Elizabeth Perris, in a pair of opinions, ruled that church property and real estate are under the control of the archdiocese, not its individual parishes, as attorneys for the archdiocese had argued.

In a related ruling, Perris approved questions that attorneys for the victims plan to ask Archbishop William Levada on Jan. 6 when he becomes the highest-ranking Vatican official to testify in a deposition.

The archdiocese became the first in the nation to declare bankruptcy when it filed for protection from creditors in July 2004, just before the scheduled start of jury trials for victims seeking more than $155 million in damages.

Since then, the archdiocese has been trying to protect church buildings and real estate from being included in settlements with alleged victims, arguing the property is owned by the 124 individual parishes and a handful of schools -- and not the archdiocese.

Perris, however, ruled it was clear the archdiocese held title to all property and controlled church assets she noted were worth an estimated $98 million, including real estate.

The archdiocese, Perris wrote, has the "authority to convey real property without limitation."

Attorneys for the victims praised the ruling, saying it should allow the bankruptcy case to move forward.

"It's a clear victory," said Erin Olson, who represents some of the victims.

Attorneys for the archdiocese said they were considering an appeal.

"We believe strongly the decision is not supported by the facts of the law and that it infringes on the archdiocese's and parishioners' rights to the free exercise of religion," said Howard Levine, a lawyer for the archdiocese.

Perris rejected arguments that accepting the jurisdiction of a federal court might violate First Amendment rights to the free exercise of religion by forcing the church to ignore canon law on ownership.

"There is no First Amendment impediment to this court's jurisdiction," Perris wrote.

Perris ruled the case is about property -- not religion.

"Who owns the property is, quite simply, not a theological or doctrinal matter," Perris wrote. "The religious organization's internal law is not relevant to the dispute."

In her separate ruling on the deposition scheduled Jan. 6 in San Francisco, Perris ruled that attorneys for alleged victims can ask how much Levada knew about sex abuse claims when he was archbishop in Portland from 1986 to 1995.

Perris said the attorneys can ask Levada about "policies, practices and procedures regarding the manner of responding to allegations of, or to any information suggesting, that a member of the clergy has or may have engaged in sexual misconduct."

Pope Benedict XVI last May made Levada the highest-ranking American in the Vatican by naming him to take over the pontiff's old job as prefect of the Congregation for the Doctrine of the Faith at the Vatican, responsible for protecting church teachings and for reviewing all sex abuse claims against clergy.

Levada also served as auxiliary bishop of the Archdiocese of Los Angeles in 1985, when he was assigned to review a report warning U.S. bishops about the extent of clergy sex abuse. In 2002, he was appointed to an eight-member commission of U.S. bishops and Vatican representatives who finalized rules for dealing with abuse.

Vatican lawyers had tried to limit the scope of the questions planned at the deposition.

But the judge "has basically allowed us to ask everything we wanted to," said Olson, who will question Levada with Kelly Clark, another Portland lawyer who represents alleged abuse victims.

The deposition also can include questions about legal advice Levada received from Robert McMenamin, former legal counsel to the archdiocese.

Attorneys for alleged victims have said they believe McMenamin advised Levada to be more aggressive about dealing with abuse claims during his tenure in Portland.

The ruling on the property issue, meanwhile, could force the archdiocese to sell off church properties to pay settlements or court awards to sex abuse victims. However, Perris left open the question of whether the sale of individual church properties could pose an unfair burden on the practice of religion under the Religious Freedom and Restoration Act of 1993.

Her ruling supports an earlier decision in the bankruptcy of the Diocese of Spokane in Washington state, which sought protection from creditors shortly after the Archdiocese of Portland.

In the Washington case, 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.
http://www.tdn.com/articles/2005/12/31/area_news/news07.txt