Portland Archdiocese Vows to Continue Work Despite Court Ruling

By Ed Langlois
Catholic News Service
January 4, 2006

PORTLAND, Ore. -- Despite a court ruling that could significantly boost the amount the Portland Archdiocese must pay for sex-abuse settlements, archdiocesan leaders said the local church and its work will endure.

"The archdiocese is committed to continuing its religious and charitable mission to Catholics and others, including thousands of schoolchildren, its parishioners, and the poor and dispossessed, as it has for its 157-year history in Oregon, no matter what obstacles confront it," said an archdiocesan statement issued after the Dec. 30 decision by U.S. Bankruptcy Judge Elizabeth Perris.

In a ruling that asserted the primacy of secular law over church law in the matter of bankruptcy, Perris said the archdiocese is the owner of parish and school properties.

That means parish and school real estate worth hundreds of millions of dollars can be tallied when the court decides how much claimants will be paid. The archdiocese has 124 parishes, 40 of them with elementary schools, and three archdiocesan high schools.

In July 2004, when the archdiocese became the first in the United States to file for bankruptcy protection, Archbishop John G. Vlazny of Portland said that church law forbids him from seizing parish assets.

"Parish property belongs to the parishes," he said.

Perris cast aside arguments based on canon law, writing, "No First Amendment issue arises when a court resolves a church property dispute by relying on state statutes." She also wrote that the archdiocese could have separately incorporated parishes when it formed, but chose not to.

A similar decision last August against the Diocese of Spokane, Wash., is now under appeal, and Portland archdiocesan attorneys are studying appeal options.

"We believe that this ruling will not stand up under eventual review by higher courts," said the archdiocese's statement.

"We feel strongly that this decision is not supported by the facts or the law, and believe it infringes on the archdiocese's right and the parishioners' rights to freely exercise their religion," the statement added.

Faced with questions about why property titles have the archdiocese or archbishop listed as owner, church attorneys argued that the property is held in trust for the use of the parishes and schools.

Including parishes and schools in the asset tally does not mean those institutions will be sold off automatically to pay settlements. In her decision, Perris left open the question of whether such liquidation would be an undue burden on freedom of religion for western Oregon's 400,000 Catholics.

The archdiocese in November offered a plan that would provide a fund of about $40 million for settlements, relying on borrowing. Now, with the parish and school properties counted in the archdiocese's estate, there is much more at stake.

A hearing on the archdiocese's $40 million proposal is set for Feb. 14. Church leaders say the plan offers fair settlements. But claimants must approve the plan, a result that seems doubtful in the wake of the property decision.

In 2004, a federal bankruptcy attorney who asked to remain anonymous predicted in an interview with the Catholic Sentinel, Portland archdiocesan newspaper, that the archdiocese would have a big job stating its case in bankruptcy court.

The federal definition of what is the property of a bankrupt estate is "very broad and expansive," the attorney said.

But Dan Murray, a Chicago bankruptcy attorney and law professor at the University of Notre Dame, told the Sentinel that property issues in the case could be complicated for higher courts because the bankrupt entity is a church with long-standing practices.

Murray cited a case, Serbian Orthodox Diocese v. Milivojevich, that the U.S. Supreme Court in 1976 decided in favor of the diocese.

The question was to what degree a civil court can sit in review of decisions of church authorities and a church court. The U.S. Supreme Court held that the Illinois Supreme Court had run afoul of religious freedom and due process when it interfered with the Serbian Orthodox Church's decisions on personnel and church property.

"The fallacy fatal to the judgment of the Illinois Supreme Court is that it rests upon an impermissible rejection of the decisions of the highest ecclesiastical tribunals of this hierarchical church upon the issues in dispute and impermissibly substitutes its own inquiry into church polity and resolutions," said Justice William Brennan, author of the high court's majority opinion. "For where resolution of the disputes cannot be made without extensive inquiry by civil courts into religious law and polity, the First and Fourteenth Amendments mandate that civil courts shall not disturb the decisions of the highest ecclesiastical tribunal within a church of hierarchical polity, but must accept such decisions as binding on them, in their application to the religious issues of doctrine or polity before them."

When it filed for Chapter 11 protection, the archdiocese was facing imminent trials in two clergy sex abuse lawsuits that together sought a total of $155 million in damages.

Before the bankruptcy, the archdiocese and its insurers already had paid $53 million to settle more than 130 claims.

"Throughout the bankruptcy proceedings, the focus of the archdiocese has always been on settling and paying valid claims," the archdiocesan statement said. "The archdiocese has and will continue to resolve claims fairly, justly and equitably and will defend against those claims that are not valid."


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