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	Diocese to Appeal Bankruptcy Court Decision That Parishes Are Assets Catholic News Service [Spokane WA] August 29, 2005 SPOKANE, Wash. (CNS) -- Citing the "national consequences," Bishop William S. Skylstad of Spokane said he will appeal a federal bankruptcy court's ruling that parish properties must be included in the Spokane diocesan assets used to settle millions of dollars in clergy sex abuse claims. U.S. Bankruptcy Judge Patricia Williams of Spokane ruled Aug. 26 that civil property laws prevail in a bankruptcy proceeding despite any internal church laws that might bar a bishop from full control over parish assets. Diocesan lawyers had argued that in church law parish assets belong to the parish itself, not to its pastor or to the bishop. They said that, while the diocesan bishop was nominally the owner in civil law, even in civil law he only held those properties in trust for the parishes themselves. "It is not a violation of the First Amendment," Williams wrote, "to apply federal bankruptcy law to identify and define property of the bankruptcy estate even though the Chapter 11 debtor is a religious organization." Her ruling, if upheld, would vastly increase the diocesan assets subject to the abuse claims and would up the ante nationwide for any other diocese considering that approach to resolving sexual abuse claims against its clergy. Last December the Spokane Diocese filed for bankruptcy protection under Chapter 11 of the federal Bankruptcy Act, citing $11.1 million in assets and $83.1 million in liabilities, mostly from people seeking recompense for childhood sexual abuse by priests. It did not include parishes, parish schools or cemeteries in its list of assets. Victims' lawyers claimed that the bishop had more than $80 million in assets under his control if he included the diocese's 82 parishes, 16 diocesan and parochial schools, and various cemeteries and other properties that he claimed he held only in trust. Spokane was the last of three dioceses that made a Chapter 11 filing last year, but it was the first to receive a court decision on the question of diocesan ownership of parish properties. The Archdiocese of Portland, Ore., filed for Chapter 11 in July 2004, citing some $300 million in claims. At the time of the Spokane decision the bankruptcy court in Portland was still hearing opposing arguments about the status of parishes as separately owned properties or diocesan assets. The Diocese of Tucson, Ariz., which filed for Chapter 11 in September 2004, earlier this summer reached a reorganization agreement under which it set up a $22.2 million fund to settle all current and future claims against it. A key element in the negotiations in Tucson was an agreement by the parishes to contribute $2 million toward that fund in return for avoiding protracted litigation over the issue of who owned the parishes. Bishop Skylstad, who was traveling in Eastern Europe when the ruling was announced, said in a statement that the diocese would "appeal this decision because we have a responsibility not only to victims but to the generations of parishioners ... who have given so generously of themselves" to build up the church in eastern Washington. In his statement, read to reporters by diocesan vicar general Father Steve Dublinski, the bishop said, "The court's decision has national consequences. Its impact will be felt not just by Catholic communities but by many other church communities of any denomination, of any faith expression." He said that during the legal arguments about parish ownership two months earlier "Judge Williams herself stated that she fully expected her decision to be appealed no matter which way she ruled."
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