Tuesday, May 30, 2023

Sex Abuse Claims Arising Before Diocese Was Formed Are Disallowed in Bankruptcy Case

In In re Roman Catholic Diocese of Rockville Centre, New York, (SD NY Bkrptcy., May 26, 2023), a New York federal bankruptcy court disallowed nine sex-abuse claims filed in the bankruptcy reorganization of the Rockville Centre Catholic Diocese because they occurred before the Rockville Centre Diocese was formed and in territory which, at the time of the alleged abuse, belonged to the Diocese of Brooklyn. The court allowed claims by four other individuals to be filed in amended form because while they occurred before the Rockville Centre Diocese was incorporated in New York, they occurred after the Vatican formed the Diocese. The court said in part:

First, the Court finds that the First Amendment, and its intersection with canon law, is not a bar to the Court's ruling on this Objection. Second, the Court finds that the Objection must be sustained for Pre-Establishment Claims because the Diocese i) did not assume the prior liabilities and ii) the de facto merger exception does not apply. Finally, the Court finds that fairness requires allowing the Post-Establishment Claimants an opportunity to amend their claims.