Creditors of Portland Archdiocese Can Reach Parish Properties

Yesterday, U.S. Bankruptcy Judge Elizabeth Perris in Portland, Oregon, issued three separate opinions in Roman Catholic Archbishop of Portland v. Tort Claimants Committee. The two major opinions held that parish church, school and cemetery properties are part of the assets of the Archdiocese and that at least some of those properties are available to creditors of the Archdiocese to satisfy their claims in the Archdiocese bankruptcy proceedings.

In the major opinion, the court rejected First Amendment challenges to its jurisdiction, holding that a determination of whether parish properties are part of the bankruptcy estate does not involve its deciding a theological or doctrinal matter. Finding that the Archdiocese had not separately incorporated its parishes or schools, the court said:

What defendants ask this court to do in the name of religious freedom is to disregard the choice debtor has made about how to hold property under civil law, because of their argument that the choice leads to a result not consistent with canon law. It is not for the civil courts to enforce canon law if the actions of the religious organization under applicable civil law do not effectuate what canon law requires.

However, the court had more difficulty with the Archdiocese claim that the Religious Freedom Restoration Act protected it from having church and school properties sold off to satisfy creditors' claims. In its second opinion, focusing on the bankruptcy trustee's right to ignore claims of parishes and schools to the properties, the court said:

that there is a question of fact whether application of the avoidance powers under Sec. 544(a)(3) might substantially burden the exercise of religion in violation of RFRA, if it were to result in the loss of so many parish churches and Archdiocesan high schools that it would leave defendants with no place to worship and study.

However the court left that determinationn to future litigation, suggesting that it might limit the number of properties that could be sold off.

Finally, a third opinion focused on the scope of questioning that the Tort Claimants Committee could engage in when taking the depositions of the Archbishop and other witnesses. Among other things, the court held that the First Amendment does not protect against questions about internal church governance where that is relevant to the Church's patterns, practices, and policies in addressing priest sexual misconduct with minors.

The Associated Press, reporting on the opinions, points out that they mirror an earlier decision in the bankruptcy of the Diocese of Spokane, Washington.