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Bankruptcy Judge Rules on Ownership of Property in Catholic Diocese Bankruptcy Case

September 9, 2005

In a ruling that could have wide ramifications for church-related litigation nationwide, Judge Patricia Williams of the U.S. Bankruptcy Court for the Eastern District of Washington has held that parish property should be included in the estate of the bankrupt Catholic Diocese of Spokane. The ruling may dramatically increase the pool of assets available for creditors, including those who claim they were sexually abused by clergy members. The diocese argued that applying civil law instead of canon law to determine ownership of the assets interfered with the free exercise of religion. The court disagreed. "It is not a violation of the First Amendment to apply federal bankruptcy law to identify and define property of the bankruptcy estate even though the Chapter 11 debtor is a religious organization," the judge wrote. The official committee of tort litigants, who brought the suit resulting in the opinion, is represented by PSZYJW attorneys James Stang, John Fiero, Hamid Rafatjoo, Gina Brandt, Gillian Brown and Rudy Freeman.