As lawsuit looms, Diocese of Nashville transfers ownership of properties

Diocese being sued over abuse puts assets into parishes' hands

By SHEILA BURKE - Staff Writer
The Tennessean
Sunday, August 21, 2005

The Catholic Church has shifted ownership of nine Midstate properties, an action critics say was calculated to protect assets from the kinds of huge settlements that have been awarded to victims of priest abuse.

Diocese of Nashville officials filed paperwork so that eight churches and one school would be owned by the parishes or school instead of the bishops who had owned the properties for decades.

The diocese is being sued for $68 million by two victims of abuse. The parishes are not named as defendants.

The lawsuits were filed in January 2000 and later merged, and the nine property transfers all have taken place since.

Seven of them happened in the past 15 months, during which time the state Supreme Court was considering reviving the lawsuit, which had been dismissed by a lower court. The suit was revived in January.

Officials with the Roman Catholic Diocese of Nashville say the church is not doing anything untoward. They say the diocese has been engaged in an effort to ensure that property deeds accurately reflect the true owners of the property.

Critics say the Nashville diocese's move to distance itself financially from individual parishes mirrors legal strategies employed in recent years by dioceses in Portland, Ore., and Spokane, Wash. All three dioceses are in legal battles with alleged victims who have argued that the parishes are part of the dioceses.

"A blind, dumb man can figure out what they're doing," said David Brown, a 58-year-old Memphis man who says he was raped as a teenager by former Nashville priest Paul Haas, who has since died. The diocese settled Brown's case for $5,700, the cost of his therapy. "I can understand a corporation doing this, (but) these are men of God."

The courts' decisions are being closely watched across the country, and some experts suspect that the effects of the rulings could be felt in priest molestation lawsuits nationwide.

"Many dioceses are waiting to see how the courts rule in Spokane and Portland because right now it's uncharted territory," said Charles Zech, an expert on church finances at Villanova University.

At stake are millions of dollars to plaintiffs. The value of the diocese would be among the factors considered by a jury determining how much to award in damages.

Lawyers for the alleged victims in the Nashville case have argued in court documents that the Catholic Church is trying to reduce its value to minimize the amount it would have to pay if it loses at trial, scheduled for March 2006.

"Why is only some of the parish property transferred … And why did the transfers occur after the (lawsuit) was filed?" the lawyers asked in court records.

Attorneys for the plaintiffs — known only as John Doe 1 and John Doe 2 — and lawyers for the church declined to comment for this story, citing a request by the trial judge that they not talk.

Because the church pays no taxes — and therefore its properties are not assessed — it's impossible to know the value of the Tennessee properties that have changed hands.

Real estate agents estimated that Father Ryan High School alone is worth at least $5 million.

"It's certainly millions and millions of dollars," said David Huddleston with the commercial real estate firm of Grubb & Ellis/Centennial.

Catholic Church officials have said that the transfers of deeds to the parishes has been a decade-long process and that the timing had nothing to do with the filing of a lawsuit.

But The Tennessean's review of ownership records for the 29 Midstate parishes in Cheatham, Davidson, Maury, Montgomery, Robertson, Rutherford, Sumner, Williamson and Wilson counties found that seven transfers occurred during the past 15 months. Another church was transferred in 2002. A high school was transferred in 2001, the year after the lawsuit was filed.

In all, there are 54 parishes and missions in 38 counties that encompass the Diocese of Nashville, and it was unclear whether some of those outlying properties may have been transferred in years past.

The transferred properties were all formerly titled in the name of the Roman Catholic Diocese of Nashville or the bishops who headed it.

The deeds on the parish properties now say that the churches are the owners. For example, ownership of Nashville's Father Ryan was transferred in August 2001 from the bishop to Father Ryan High School Inc.

The church maintains that the parish properties are merely held in trust by the bishops.

The issue of transferred properties surfaced earlier this year when the Diocese of Nashville furnished court-ordered financial records to the lawsuit plaintiffs. The parishes were not included in the disclosures.

The plaintiffs' lawyers also accused the diocese in court documents of failing to disclose that it controls corporations that could be valued at up to $100 million.

While ordering the church to turn over financial records about the parishes and businesses to the plaintiffs, Davidson County Circuit Court Judge Walter Kurtz has put off a decision on whether a jury can consider them assets of the diocese.

Kurtz noted that other courts were grappling with the same issue.

Facing lawsuits seeking $155 million in damages, the Archdiocese of Portland sought federal bankruptcy protection to work out settlements in roughly 60 sex abuse cases. It was the first time a Catholic diocese filed for bankruptcy.

The Diocese of Spokane filed for Chapter 11 bankruptcy in the face of lawsuits by 58 plaintiffs.

In both cases, the Catholic Church is arguing that only the assets of the diocese can be considered to pay creditors — the plaintiffs — because the parishes are separate entities.

A decision in the Spokane case is expected this month.

"What's happening here and why Spokane has kind of jumped out of the radar screen is because we're the first court that could possibly make a decision on this issue," said Shaun Cross, a lawyer for the Diocese of Spokane.

An appeal is likely no matter the decision, he said. Some experts think the issue ultimately will land before the U.S. Supreme Court.

Though the cases in the Pacific Northwest involve bankruptcies, the central underlying issue is identical, said Marci Hamilton, a lawyer representing abuse victims in both Portland and Spokane.

"It's exactly the same principle: You reduce the amount of money that could be on the table as part of a negotiated settlement," she said.

Lawyers for plaintiffs in all three cities say that ownership should be determined by who controls the parishes. The Catholic Church hierarchy is structured so that the bishop has near control over every aspect of parish operations, the plaintiffs argue.

"He's got total, total control," said Ann Brentwood, a former nun and one of the founders of Tennessee Survivors Network of those Abused by Priests, or SNAP. "If somebody does something the bishop doesn't like and doesn't want done, he can call a halt to it at any time, and that's spiritually and financially."

Patout Burns, a professor of Catholic studies at the Vanderbilt University Divinity School and board member at Hendersonville's Pope John Paul II High School, disagrees.

"Just because you're a Catholic institution recognized as such and operating as such does not mean you have something that's under control of the bishop," he said.

Cross, the lawyer representing the Diocese of Spokane, said that ultimately the church supports compensating abuse victims.

"But the issue is at what cost?" he said. "It (the church) shouldn't be destroyed. Its mission shouldn't be taken away."

Published: Sunday, 08/21/05