Bid to Freeze Diocese Assets Is Rejected
No Standing Seen in Sex-Abuse Cases
By Onell R. Soto
October 6, 2004
A Los Angeles judge has rejected claims that the Roman Catholic Diocese of San Diego transferred property worth millions of dollars to an educational corporation to escape liability in sexual abuse lawsuits. The judge ruled yesterday that a lawyer for people who say they were abused by priests doesn't have the standing to ask for church assets to be frozen pending the outcome of the cases.
The lawyer said she would continue fighting.
A diocesan spokesman said church officials feel "vindicated" by the ruling.
The property in question includes the 16.7-acre campus of University of San Diego High School in Linda Vista and the 49-acre future grounds of Cathedral Catholic High School in Carmel Valley.
The Linda Vista school is scheduled to close next spring, and its staff, faculty and students are moving to Carmel Valley.
Church officials transferred the property to an educational nonprofit they control, Catholic Secondary Education – Diocese of San Diego Inc.
San Diego lawyer Andrea Leavitt asked the judge last month to bar the church from getting rid of any assets it held in October 2002, when people, including her clients, began suing it with accusations of harboring pedophiles and ignoring problem priests.
She said the school properties are worth something between $30 million to $325 million.
The judge called those estimates "highly speculative."
Leavitt also claimed church officials lied last year while seeking investors for a $30 million tax-free construction bond. The church was in court on the sexual abuse cases when it said in documents for investors that it was not facing any lawsuits, she said.
Church officials were happy with the judge's ruling.
"The diocese has been vindicated in this action," said diocesan Chancellor Rodrigo Valdivia. "The transactions which the diocese has effected have been proven to be lawful and appropriate."
In his ruling, Los Angeles Superior Court Judge Haley Fromholz said he had never heard of the "steering committee" which Leavitt said she was representing.
The judge also rejected her claim that the church was hiding its assets by transferring them to the educational nonprofit because he considers that a wholly owned subsidiary of the church.
He said she didn't prove the transfers would keep any creditors – her clients, should she win – from collecting on judgments.
Fromholz is overseeing hundreds of church sexual abuse cases filed in Southern California, including those from San Diego.
Leavitt said yesterday afternoon that the judge's ruling may not be the final word.
"These are very hard motions to win, we knew it was an uphill battle," she said. "That's not to say the motion will not be brought again at a later date."
Her clients, she said, "are not content to permit the diocese to launder and dump assets, drain out equity and later cry insolvency."
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