Judge rules parishes don't own property.

Byline: Susan Palmer The Register-Guard

In a decision that derails church efforts to protect property from lawsuits filed by victims of priest sex abuse, a bankruptcy judge ruled Friday that the Archdiocese of Portland - and not its parishes - owns church assets.

In a related ruling, the same judge approved questions that attorneys for the victims plan to ask Archbishop William Levada next Friday when he becomes the highest-ranking Vatican official to testify in a deposition.

Local religious leaders believe that it will be years before they'll feel the effects of the decision on ownership of church assets.

"I have a dozen years before I retire, and I'll be retired before this is settled," said the Rev. Tom Yurchak of St. Jude Catholic Church in Eugene.

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 filing for bankruptcy protection, the archdiocese has tried to limit the list of its assets by claiming that under church law, Oregon's churches and schools belong to local parishes.

Among its most valuable properties is Marist High School in Eugene, with a market value of $15 million. Efforts to reach Marist Principal Perry Martin for comment on Friday were unsuccessful.

The rulings by U.S. Bankruptcy Judge Elizabeth Perris settle one of the main questions on the bankruptcy: whether accepting the jurisdiction of a federal court might violate the First Amendment rights of the church to the ``free exercise'' of religion by forcing it to ignore church law on ownership.

``There is no First Amendment impediment to this court's jurisdiction,'' Perris wrote.

The ruling means that in principle, the archdiocese could be forced to sell church properties to pay settlements or court awards to sex abuse victims.

Perris' decision 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.

Her ruling supports an earlier decision in the bankruptcy of the Diocese of Spokane, which sought protection from creditors shortly after the Archdiocese of Portland.

In the Washington case, U.S. Bankruptcy Judge Patricia Williams 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 be decided by church law.

Perris also rejected archdiocese arguments that church law - canon law - should trump federal law when determining ownership of assets.

The archdiocese had claimed that applying federal law could violate the First Amendment by disrupting the internal governance of the church.

Attorneys for the victims praised the ruling, saying it should allow the bankruptcy case to move forward.

``It's a clear victory,'' said Erin Olson, who represents some of the victims.

In a prepared statement Friday afternoon, the archdiocese questioned whether the ruling would hold up under review by higher courts.

"We feel strongly that this decision is not supported by the facts or the law, and believe it infringes on (the) Archdiocese's right and the parishioners' rights to freely exercise their religion. We will review our options to appeal and evaluate the impact of this ruling on this litigation and other aspects of the bankruptcy case," the statement said.

The archdiocese will continue to focus on settling and paying valid claims, and will defend against invalid claims, the statement said.

The archdiocese has paid $53 million to settle 130 claims of priest abuse. It faces an additional 118 unresolved claims, spokesman Bud Bunce said. The amount of the outstanding claims is incalculable, Bunce said.

In her separate ruling on the deposition scheduled next Friday in San Francisco, Perris ruled that attorneys for alleged victims can ask how much Levada knew about sex abuse claims when he was archbishop in Portland from 1986 to 1995.

Perris said the attorneys can ask Levada about ``policies, practices and procedures regarding the manner of responding to allegations of, or to any information suggesting, that a member of the clergy has or may have engaged in sexual misconduct.''

Vatican lawyers had tried to limit the scope of the questions planned at the deposition.

But the judge ``has basically allowed us to ask everything we wanted to,'' said Olson, who will question Levada with Kelly Clark, another Portland lawyer who represents alleged abuse victims.

In Eugene, Yurchak, the St. Jude priest, said he expects to speak about the property issue in Sunday services, mainly to calm anxious parishioners:

`From my parishioners' standpoint, there may be some panic that we'll immediately put up `for sale' signs.' That won't happen, he said. As he learns more about the court ruling, he expects to hold a meeting for parishioners who have questions, he said.

At O'Hara Catholic School, Principal Dianne Bert said the focus remained on education, not the court ruling. Like Yurchak, she expects a lengthy court battle.

"We'll continue to provide the quality Catholic education we've provided for 117 years," she said.

In Lane County, the archdiocese assets include 12 churches, three schools, a cemetery and miscellaneous property that as of 2004 had a total value of more than $41 million.

The Associated Press contributed to this report.