Spokane Diocese Appeals Bankruptcy Ruling
By NICHOLAS K. GERANIOS - The Associated Press
September 7, 2005
SPOKANE, Wash. (AP) Victims of sexual abuse by priests were
sharply critical on Wednesday of the Catholic Diocese of Spokane
for appealing a bankruptcy judge's ruling that churches and parochial
schools can be sold to pay claims filed by victims.
In an appeal filed late Tuesday in U.S. District Court here, lawyers
for Bishop William Skylstad wrote that U.S. Bankruptcy Judge Patricia
C. Williams erred in her analysis in 11 areas and wrongly ignored
evidence and centuries of religious law.
Lawyers for individual parishes facing potential loss of churches
and schools joined in the appeal. Skylstad is the head of the U.S.
Conference of Catholic Bishops, and the outcome of the Spokane case
is likely to have national implications.
"Sadly, Skylstad is choosing combativeness over compassion,
delay over closure, hardball over healing, and his own selfish needs
over the needs of his diocese and its child sex abuse victims,"
said David Clohessy, national director of Survivors Network of Those
Abused by Priests, an advocacy group for victims.
Skylstad was out of town Wednesday and not available for comment,
his office said. He said previously that he had to appeal because
he has an obligation to the parishioners to continue the ministry
of the Spokane Diocese.
Skylstad's decision to file for bankruptcy is being closely watched
by other dioceses that are facing lawsuits in the national clergy
sex abuse scandal.
The Spokane Diocese contends that Skylstad does not own or control
more than 80 individual parish churches and other Catholic institutions
in his diocese, and cannot sell them to raise money to pay victims.
An editorial in the National Catholic Reporter this week sharply
criticized the Diocese of Spokane and the Archdiocese of Portland,
Ore., for seeking bankruptcy protection and for trying to limit
the size of the pot of money available to victims.
"Power in the U.S. church, ownership if you will, clearly
resides with individual bishops in their dioceses," the editorial
said. "It is disingenuous to say that it doesn't exist. Bishops
answer to Rome and, presumably, to God, but not to their pastors
and certainly not to the people in the pews."
In a related development, the Roman Catholic Diocese of Tucson,
Ariz., plans a series of meetings next month for parishioners and
parish leaders that will pave the way for separately incorporating
parishes, a move aimed at protecting them from being sold off to
pay diocesan debt.
The Tucson diocese filed for bankruptcy reorganization last year,
and recently settled with victims.
At least seven other U.S. dioceses have already made their parishes
separate, corporate entities. They include the archdioceses of New
York and Milwaukee, and the dioceses of Rhode Island; Davenport,
Iowa; Stockton, Calif.; Lincoln, Neb.; and Baker, Ore.
In Portland, where the archdiocese was the first in the nation
to file for Chapter 11 protection because of sexual abuse claims,
a bankruptcy judge has ordered mediation to try to resolve the lawsuits
without ruling on the ownership of churches and schools.
The Diocese of Spokane, which serves more than 90,000 Catholics
in more than 80 Eastern Washington parishes between British Columbia
and Oregon, sought Chapter 11 protection in December, listing $11.1
million in assets and $81.3 million in liabilities, mostly sexual
Church officials believe the diocese also can muster about $15
million from insurance policies to pay claims.
After two months of deliberation in a largely uncharted area of
the law, Williams on Aug. 26 ruled that all of the real estate under
the control of the Spokane Diocese could be available to victims
who have sued the church. The value of that real estate has been
estimated at some $80 million, although formal appraisals have not
The judge had previously acknowledged that she expected her decision
to be appealed.
Shaun M. Cross, a lawyer for the diocese, said the outcome of the
Spokane case will have major implications.
"Whether the assets of the parishes and schools are property
of the bankruptcy estate is an issue of national significance,"
the appeal said.
Moreover, the Spokane Diocese cannot produce a detailed plan to
emerge from bankruptcy, which is due in mid-October, without a clear
determination of the value of the estate that would be available
to creditors, the appeal said.
Cross said that filing for bankruptcy protection was likely inevitable,
because there are 19 lawsuits scheduled for trial in state courts
and at least one judgment likely would have attached parish ownership
to the diocese anyway.
But victims and their lawyers said the appeal smacked of intimidation.
"The diocese has threatened to delay justice and healing for
years, taking full advantage of the appellate process," attorney
James I. Stang of Los Angeles said in a written statement. "Skylstad's
'take no prisoners' strategy is misguided and ultimately will fail."
Copyright 2005 Associated Press. All rights reserved.