In In re Roman Catholic Church of the Diocese of Santa Fe, (NM Bkruptcy., Sept. 17, 2021), a New Mexico federal bankruptcy court refused to lift the Bankruptcy Code's automatic stay of suits which the Diocese of Santa Fe enjoys while going through bankruptcy reorganization proceedings. Rudy Blea, a former lay minister in the Catholic Church, sought to bring a state court defamation action against the Diocese for wrongfully placing him on a list of "Priests, Deacons, and Religious Accused of Sexual Abuse of Children." He claims that his lay position places him outside the description of those included in the list. He also contends that a relationship he had when he was 19 with 17 year old Gary House was consensual. Subsequently Blea settled a suit against him brought by House. Now the bankruptcy court said in part:
[T]he Court finds that Blea has not carried his burden of showing that cause exists to modify the automatic stay. Blea has an uphill battle to win his defamation claim and get money damages. His chance of obtaining his desired equitable relief from this Court is vanishingly small, for the reasons outlined above. It makes no sense to allow Blea to tilt at this windmill, nor to force Debtor (and other creditors) to incur the expense of defending the charge.
The court did however hold that the Bankruptcy Court:
has jurisdiction to hear Blea’s defamation claim and award money damages if appropriate, applying neutral principles of law. It also has jurisdiction to enjoin further publication of defamatory statements, if defamation is proved. It does not have jurisdiction, however, to order that Blea be removed from the List, nor to adjudicate Blea’s challenge to Debtor’s decision that he was close enough to the church in 1970 to warrant inclusion on the List.
