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Portland Archdiocese loses key property ruling

/ Source: The Associated Press

A bankruptcy judge ruled Friday that the Archdiocese of Portland, not its parishes, owns church assets, dealing a major blow to its efforts to protect church property from lawsuits filed by alleged victims of priest sex abuse.

U.S. Bankruptcy Judge Elizabeth Perris, in a pair of opinions, ruled that church property and real estate is under the control of the archdiocese, not its individual parishes, as attorneys for the archdiocese had argued.

She rejected the archdiocese’s claim that applying federal law instead of church law could violate its First Amendment right to religious freedom by disrupting the internal governance of the church.

“There is no First Amendment impediment to this court’s jurisdiction,” Perris wrote.

The ruling does not necessarily mean that the archdiocese would be forced to sell off church property to pay settlements or court awards to sex abuse victims. Perris left open the question of whether the sale of individual church properties could pose an unfair burden on the practice of religion under the Religious Freedom and Restoration Act of 1993.

Churches at stake
The Portland Archdiocese became the first in the nation to declare bankruptcy when it filed for protection from creditors in July 2004, just before the scheduled start of jury trials for victims seeking more than $155 million in damages.

Since then, the archdiocese has been trying to protect church buildings throughout western Oregon from being included in settlements with alleged victims, arguing that the properties are owned by individual parishes, and not the archdiocese.

Dozens of abuse claims are still pending against the archdiocese, seeking at least $400 million in damages.

Perris ruling mirrors an earlier decision in the bankruptcy of the Diocese of Spokane, Wash., which sought protection from creditors shortly after the Archdiocese of Portland. A judge in that case said Spokane Bishop William Skylstad agreed to abide by federal law when he voluntarily entered the diocese into bankruptcy, and cannot claim that ownership must decided by church law.