Can Catholic parishes and schools and their holdings be counted when the court tallies the archdiocese’s assets?

The answer could make a huge difference in the amount the court requires the archdiocese to pay plaintiffs pressing sex-abuse claims.

Citing canon law, Portland Archbishop John Vlazny says he cannot seize parish assets, which belong to the parishes alone.

Attorneys for sex-abuse plaintiffs, working from a corporate model of parent companies and subsidiaries, say the parishes and schools should be counted as being owned by the archdiocese.

The difference is huge. By the archdiocese’s calculations, it is worth about $50 million. Plaintiffs say the number is about $500 million.

The issue of calculating assets is not really a matter of church-state conflict, says Richard Hagedorn, a professor at the Willamette University College of Law in Salem.

Parishes and schools are likely not to be counted in the assets equation, Hagedorn says, simply because property held in trust for others cannot be understood as being owned by the debtor.

“That argument may make some sense to the bankruptcy court, if they can conclude that the interest of the archdiocese in the parish property is merely that of a trustee,” says Hagedorn, a member of Queen of Peace Parish in Salem.

Even if the archdiocese has historically asserted authority over the property — by passing chop on land sales and building, for example — that is normal protocol for trustees.

“The church says by tradition it has acted just as a trustee,” Hagedorn says. “A trustee generally has a fiduciary responsibility to manage the money. The counter-argument may be that if you assert so much authority over the property you may become the de facto owner.”

To build or buy property, parishes in general raise their own money.

When bankruptcy was being discussed in Boston two years ago, lawyers for the Archdiocese of Boston and sex-abuse victims reached an accord early in the process that parish buildings and Catholic schools would not be counted as assets of the archdiocese. The archdiocese did sell off 43 acres of a seminary to Boston College, getting more than enough to pay off $85 million in sex-abuse settlements.

The Archdiocese of Portland filed for bankruptcy July 6 in the face of trials for two plaintiffs who sought a combined $155 million. The archdiocese has already made $53 million in settlements.

There are 60 sexual abuse claims pending against the archdiocese. All were put on hold by the bankruptcy filing, and all are expected to be settled during the proceedings.

In Chapter 11 bankruptcy, the debtor at first files a plan for reorganization and payment to creditors. Creditors are placed in different classes, and they may submit their own payment plans. Creditors vote on the plans, but the bankruptcy court has the final say.

Dan Murray, a professor at the Law School at the University of Notre Dame, says part of the reorganization plan could be legal action to get the archdiocese’s insurers to pay the claims.

In a column placed in the Oregonian last week, Portland Archbishop John Vlazny called the bankruptcy a chance to protect children in the future and provide healing and reconciliation for past victims.

“The Catholics of this state want to compensate victims justly and to continue the mission of the church,” the archbishop wrote. “Bankruptcy offers a way out of our current conundrum. In the long run, it can prove positive for victims and the church.”

The archdiocese has settled more than 130 claims involving sexual abuse of children, spending more than $53 million in settlements. Half of that money came from insurance companies, and the other half from archdiocesan funds.

“Should our outreach to the poor and vulnerable, the education of our children and the worship of our people be placed in jeopardy to punish the church?” the column said. “Catholic people think not.”

Unlike the law in some states, Oregon allows punitive damages against not-for-profit corporations.

The archbishop again apologized for the “terrible crimes” priests committed against victims. He also countered arguments that the bankruptcy was a ploy to avoid bad publicity.

“The church has already faced years of bad publicity about this subject,” the archbishop wrote. “We have all read and heard and viewed reports like those that would have been presented during the trials many times. The church has been humiliated again and again and again. These two plaintiffs were willing to settle out of court for millions of dollars one week before trial. Frankly, if the church were seeking to avoid public scrutiny, settlement at all costs would have been our strategy. Reasonable compensation, yes. Blackmail, no.”

Meanwhile, St. Juan Diego Parish must delay plans to build its own church in Washington County.

For the time being, Masses will continue in the Portland Community College gym, a nearby Episcopalian church and in the home of the pastor, Father John Kerns.

Members of St. Mary, Our Lady of the Dunes were also ready to break ground on a new house of worship. An August groundbreaking has been postponed indefinitely.

The Diocese of Tucson has said it may declare bankruptcy this fall.

The Diocese of Santa Rosa in northern California has made a similar disclosure. The diocese faces trials for 10 sexual abuse lawsuits and could be forced into bankruptcy if verdicts go against it, the diocese’s attorney says.

Santa Rosa has paid $8.6 million in settlements and the trials could mandate an estimated $20 million to $40 million more.