August 27, 2005

Spokane Judge Lifts Diocese's Bankruptcy Shield

WASHINGTON
Los Angeles Times

By Sam Verhovek and Jean Guccione, Times Staff Writers

SEATTLE — Handing a major legal victory to victims of sexual abuse by Catholic priests, a federal bankruptcy judge said Friday that churches, parochial schools and other assets belonged to a diocese — not individual parishes or trusts — and thus could be liquidated if necessary to pay victims.

The ruling applied specifically to the bankrupt Diocese of Spokane, Wash., which is facing settlement of lawsuits brought by 58 people who said they were sexually abused by priests.

The diocese said it would file an immediate appeal. But if the ruling is upheld, it could have broad implications for other dioceses staggering under the weight of sexual-abuse lawsuits, because it undercuts the Roman Catholic Church's claim, reiterated in a Vatican finding this month, that most assets in individual dioceses cannot be put up for sale to settle claims.

The Vatican said investments and real estate such as churches and schools belonged to individual parishes.

But in Friday's ruling, U.S. Bankruptcy Judge Patricia Williams of Spokane appeared to take issue with that claim.

Posted by kshaw at August 27, 2005 08:57 AM