The continuing litigation over acts of clergy sexual abuse is establishing new law in the United States over who owns church property. By gambling that filing bankruptcy would reduce the amount paid out to victims, the bishops of Spokane and Portland have allowed secular courts to consider this issue and now appear to be on the losing end.
On August 26, 2005, the bankruptcy judge hearing the Spokane diocesan case ruled that parish churches are owned by the diocese and can be sold to pay settlements to sex-abuse victims. She rejected the argument that the bishop only holds those assets in trust for the parishioners. The Spokane diocese is appealing the decision which will ultimately make its way to the U.S. Supreme Court.
Ironically, the Vatican recently told the Boston diocese that it could not take the assets of closed parishes and put the money in the general fund of the diocese. Under canon law, the assets must follow where the parishioners of the closed parishes end up. Because of these issues, a number of dioceses (including Milwaukee) have been separately incorporating parishes to avoid future exposure to lawsuits against the dioceses. But this raises another issue: what happens to the assets of a parish if a bishop tries to close one of these legally independent parishes? The answer will probably be still more litigation.