Catholic Diocese of Spokane, Washington
Official News Magazine of the Diocese of Spokane
P.O. Box 48, Spokane WA 99210
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Association of Parishes also will file appeal of judge’s ruling
by Robert Hailey and Father Michael Savelesky, for the Inland Register
(From the Sept. 8, 2005 edition of the Inland Register)
The Association of Parishes (AOP) was created by the pastors and parish administrators of the diocese last fall in anticipation of Bishop William Skyl-stad’s then-pending decision to file for protection under Chapter 11 of the U.S. Bankruptcy Code. The filing, which took place last December, was in response to litigation over the sexual abuse by priests of the diocese.
The primary work of the AOP has been the legal defense of parish assets (both real estate and personal property) placed at risk by this litigation. It shares the same pastoral goals as the diocese: namely, just settlements for victims of abuse and the continuation of the Church’s mission. Once drawn into litigation by the diocese’s decision to file bankruptcy, the parishes participating in the Association have defended their canonical independence and the integrity of their assets.
Bishop Skylstad often has remarked that the diocese now navigates “uncharted waters.” Judge Patricia Williams’s Aug. 26 decision on the Property of the Estate emphasizes that in this matter, as in many legal matters, there is rarely certainty and almost always risk. Bishop Skylstad has announced that the diocese will appeal the judge’s decision, a move which she herself anticipated when she heard oral arguments on the issue last June.
The AOP also will file an appeal.
Judge Williams’s ruling does not apply to all facets of the current Chapter 11 proceedings.
Her ruling focuses on a lawsuit within these proceedings, regarding the extent of the bishop’s estate – assets available to him for financial settlement of abuse claims. Technically, only the real estate titles of 22 parishes specifically named in the lawsuit were the focus of that lawsuit. However, future motions by plaintiffs could well raise the same legal argument concerning the real estate holdings of the other 60 parishes in the diocese.
The judge’s ruling affirms the plaintiffs’ argument that the bishop, as Corporation Sole, holds legal title to these properties and that they are held in trust for the benefit of the diocese as a whole, rather than for the benefit of the individual parishes, as argued by attorneys for the diocese and for the AOP. Unless the judge’s decision is overturned on appeal, the financial value of these properties as of Dec. 6, 2004 – the date of the filing for Chapter 11 Reorganization – must be taken into consideration as the bishop presents a Plan of Reorganization for the vote of creditors and the approval of the court.
Perspective is crucial. Contrary to media-fanned panic, parishes and schools are not in immediate danger of being sold. Catholic schools are extensions of the ministry of their respective parishes; they are not stand-alone entities. The threat against them is only as great as the threat against the individual parish. It could well take years for all legal appeals to be addressed.
If and when it becomes necessary to realize the value of parish real estate for implementation of the bishop’s plan, one possible scenario would be some form of loan against each parcel of parish property, secured by a mortgage. Such mortgages could provide a structure for money-raising efforts that fund an agreed-upon settlement of this current litigation.
Neither does the judge’s decision apply to “personal property,” such as Sunday collections, or investments held in parish bank accounts in the diocese’s Deposit and Loan Fund, although this does not mean that the plaintiffs will not try to reach these as well. Judge Williams’s ruling acknowledges that there are “issues of fact” involved here – namely, that parishes may well have a rightful claim to this personal property, respectful of the intention of donors.
Affidavits and testimonies have been submitted to the Court in this regard, through the AOP – invaluable pieces of evidence. Until and unless determined to the contrary by the Court, all parish personal property belongs to the parish.
In a separate decision, Judge Williams has stipulated that the bishop has 45 days from Aug. 26 to submit a Plan of Reorganization, showing how creditors will be paid as the diocese continues to minister. Absent the timely submission of this plan, either the Association of Parishes or any creditors’ committee has a right to submit a plan of their own. Whatever plan eventually is presented must be approved by all parties and receive sanction from the Court. The Court in turn possesses certain means for moving the parties toward resolution.
In the next few weeks, as the bishop formulates the required Plan of Reorganization, the AOP will continue working in collaboration with the diocese to assure that plan includes elements of ongoing concern to the parishes. Primary among them is the determination of some form of legal protection against any involvement of parishes in future litigation against the Corporation Sole. The AOP also will seek clearer legal protection regarding the management of the diocese’s Deposit and Loan Fund and the oversight of parish ministries like Catholic schools.
In the meantime, the Association of Parishes will continue to serve its constituent parishes by supporting efforts which will move the present litigation toward such a settlement, while defending responsibly the legal rights of parishioners and parishes as they purse the continuation of the ministries of the Church throughout the Diocese of Spokane.
Every parish in the Diocese of Spokane holds membership in the AOP. Parishioners are encouraged to address their concerns or inquires to their respective pastors (or parish administrators) and/or the lay representative which each parish has had opportunity to identity.
(Robert Hailey is the lay co-chair and Father Savelesky is the priest co-chair of the Association of Parishes.)