In Bankruptcy Case Diocese Asks to Appraise Landmark Properties

By Elizabeth Hardin-Burrola
Gallup Independent
January 14, 2015

http://gallupindependent.com/

GALLUP – As the Diocese of Gallup begins a year-long celebration of its 75th anniversary, local Catholics are left to wonder what the future will hold once the diocese finally emerges from bankruptcy.

One question that probably few have considered was hinted at in a startling motion filed in bankruptcy court last week.

Could the Gallup Diocese operate in Gallup without its chancery office, its scenic retreat center and its 100-year-old Catholic school?

Although that seems like an unlikely scenario, diocesan attorneys filed a motion Wednesday, asking U.S. Bankruptcy Judge David T. Thuma for authorization to hire Estate Valuation Consultants, Inc. of Albuquerque to appraise five key properties in Gallup and Thoreau.

The Gallup properties include the diocese’s chancery office, located at 711 S. Puerco Dr., the Sacred Heart Retreat Center, located about two miles south of the city, and Sacred Heart Catholic School, 515 Park Ave., which diocesan attorneys continue to call by its former name of Gallup Catholic School.

These three properties were listed as part of the Diocese of Gallup’s estate when diocesan officials filed their Chapter 11 petition on Nov. 12, 2013. But would the diocese actually sell such landmark properties?

As is their usual practice, diocesan attorneys did not answer questions about the appraisal plans. Susan G. Boswell, the diocese’s lead bankruptcy attorney, did not respond to an emailed request for comment. Neither did her colleagues Elizabeth S. Fella and Lori L. Winkelman, fellow attorneys at Quarles & Brady.

Possible scenarios

According to the diocese’s motion, it needs to discover “the value of the assets that might, as part of a plan of reorganization, be liened, liquidated, orotherwise used” to pay for clergy sex abuse claims as well as other claims.

It is hard to imagine the Gallup Diocese actually liquidating such property to pay for sex abuse claims when it has nearly 100 pieces of real property in Arizona and New Mexico, many of which do not play a role in the diocese’s religious mission. A more likely scenario would seem to involve the diocese borrowing funds on the property’s value.

Another possible option might involve one of the diocese’s nonprofit organizations buying the properties and letting the diocese continue to use them. Although the Catholic People’s Foundation and the Southwest Indian Foundation were originally founded by chancery officials, the Gallup Diocese has claimed those organizations are separate from the diocese. Either organization could possibly purchase some or all of the properties.

For example, the Catholic People’s Foundation now owns Gallup property that houses the bishop’s private residence, his private chapel and his “House of Discernment.” The property was once owned by the Franciscan Missionary Sisters of Our Lady of Sorrow of Oregon and was supposed to revert to diocese ownership. Instead, it was transferred to the Catholic People’s Foundation. According to bankruptcy documents and testimony, the diocese is renting the property from its own nonprofit organization.

Thoreau dispute

Appraising the Thoreau properties poses another thorny situation. The listed properties include St. Bonaventure Mission and School and the “Smith Lake Property,” which is not described in further detail other than being located in Thoreau.

However, St. Bonaventure has already been at the center of a brief dispute in the bankruptcy case. Last January, Albuquerque attorney Charles R. Hughson, legal counsel for St. Bonaventure, filed an adversary proceeding arguing that property listed as belonging to the diocese actually belongs to the mission school. Hughson also claimed a former chief executive of the school transferred St. Bonaventure property to the diocese without authorization.

Less than three weeks later, Hughson voluntarily dismissed his adversary proceeding. The dismissal, however, was without prejudice, meaning it could be filed again.

Hughson’s law firm, Rodey, Dickason, Sloan, Akin & Robb, is a previous client of Estate Valuation Consultants, Inc. or its affiliate American Property Consultants & Appraisers, Inc., according to information provided by Shane LeMon, owner of the appraisal company.

Pinnacle Bank, which loaned the Gallup Diocese $200,000 in 2011, is also a previous client of the appraisal firm. John Dowling, president of Pinnacle Bank in Gallup, also happens to be the vice president and a director of the Southwest Indian Foundation, according to records with the New Mexico Office of the Secretary of State.

In its motion, the Gallup Diocese proposes that Estate Valuation Consultants, Inc. will be retained for a “flat fee of $22,100.00, inclusive of expenses and New Mexico gross receipts tax” for producing appraisal reports in a summary format for all five properties.

Any party who objects to the diocese’s plan to hire the appraisal company must file an objection with U.S. Bankruptcy Court by Feb. 2.

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Diocese of Gallup sidebar: Published Jan. 14, 2015

Property owned by the Diocese of Gallup

Soon after the Diocese of Gallup filed its Chapter 11 petition on Nov. 12, 2013, diocesan attorneys submitted financial information to U.S. Bankruptcy Court that included lists of the diocese’s nearly 200 property holdings in Arizona and New Mexico.

The properties are divided between the Gallup Diocese’s two separate corporations: the Bishop of the Roman Catholic Church of the Diocese of Gallup, an Arizona corporation sole, and the Roman Catholic Church of the Diocese of Gallup, a New Mexico corporation sole.

Some of the property is classified as trust property, or property that the diocese claims it is holding for other entities, such as its parishes. The other is classified as real property, or property in which the diocese holds legal interest. Some properties include just one parcel of land, while others include multiple or even dozens of land parcels.

Arizona Trust Property:

¦Apache County: 27 pieces of property

¦ Coconino County: 4 pieces of property

¦ Mohave County: 1 piece of property

¦ Navajo County: 17 pieces of property

NM Trust Property:

¦ Catron County: 4 pieces of property

¦ Cibola County: 8 pieces of property

¦ Cibola or McKinley: 2 pieces of property

¦ McKinley County: 16 pieces of property

¦ Rio Arriba County: 2 pieces of property

¦ Sandoval County: 1 piece of property

¦ San Juan County: 24 pieces of property

Arizona Real Property:

¦ Apache County: 5 pieces of property

¦ Navajo County: 8 pieces of property

¦ Valencia County: 2 pieces of property

New Mexico Real Property:

¦ Catron County: 6 pieces of property

¦ Cibola County: 15 pieces of property

¦ Luna County: 2 pieces of property

¦ McKinley County: 33 pieces of property

¦ Rio Arriba County: 1 piece of property

¦ Sandoval County: 6 pieces of property

¦ San Juan County: 9 pieces of property

¦ Socorro County: 1 piece of property

¦ Taos County: 2 pieces of property