No decision yet on the inclusion of school, parish assets in Church bankruptcy case

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District Court Judge Frances Tydingco-Gatewood on Friday heard the arguments in a motion to include the assets of Catholic schools and parishes in the Archdiocese of Hagatna’s bankruptcy case to help pay for clergy sex abuse claimants.

Both parties to the case were expecting Tydingco-Gatewood to render her decision today. The Archdiocese of Hagatna even organized a news conference scheduled after the hearing so that its bankruptcy legal counsel, Atty. Ford Elsaesser, can give his comments on whatever decision is reached.

Judge Tydingco-Gatewood, however, said she will not rule on the case today and would keep it under advisement instead.

The Guam district court is being asked by the Committee for Unsecured Creditors (those seeking damages in the clergy sexual abuse cases) to grant partial summary judgment on the question of whether the parishes and schools are separate entities that can hold property, including beneficial interest in a trust, independent of a debtor.

Specifically, the committee wants the court to rule that the parishes and schools are not separate legal entities and cannot hold title or property or be the beneficiaries of a trust.

With no decision issued on this partial summary judgment, the mediation proceedings with the Committee for Unsecured Creditors before U.S. Bankruptcy Judge Robert Faris remains pending as well.

This mediation is dependent on a decision being reached on whether the assets of Catholic schools and parishes can be included in the bankruptcy proceedings.

During the hearing, Atty. Edwin Caldie, representing the Committee for Unsecured Creditors, said the question before the court is if the Catholic Church on Guam is one unified operation, or is it 33 different entities (referring to the Catholic parishes and schools on island), operating separately from the committee’s perspective and from the perspective of neutrally applied civil law.

“The answer is very clear. There’s only one Catholic operation on Guam, and that operation is overseen and run by the Archbishop,” Caldie said.

Just like Kmart

Caldie likened the Archdiocese’s situation to that of Kmart, saying every single Kmart location on the planet has separate financials and every branch has some level of autonomy.

“And every single Kmart store on the planet strives to receive no money from Kmart corporate headquarters because that is not how their revenue model works. Much like the church, the revenue comes INTO the Kmart location and then sent to corporate headquarters. That’s the same way with the archdiocese and the parishes,” Caldie said.

But Atty. Ford Elsaesser, the legal counsel for the Archdiocese, said the Kmart analogy is faulty.

“Your honor, we are so not Kmart … The corporation statutes of Guam are consistent in recognizing that canon law created a trust relationship. The key thing is that the Archbishop has no rights on any parish property. That is the key difference,” Elsaesser said.

Atty. Vince Camacho, who represents the 33 Catholic schools and parishes on island, also presented his arguments during the hearing, saying that even canon law requires compliance with civil law with regard to the ability of the Archdiocese to hold properties solely in trust for the benefit of parishes and schools, and not for the benefit of the Archbishop or the Archdiocese.

“We are opposed to this motion for summary judgment and ask the court to find that parishes and schools are, in fact, beneficiaries of this resulting trust as permitted by Guam law,” Camacho said.

Succinct

After the presentation of the arguments, Judge Tydingco-Gatewood praised all the lawyers for their “succinct” arguments, saying that their compelling arguments is one reason why she needs more time to think the case through.

“I don’t think I can today (issue a decision). I wanted to, and I feel like I need to. But to be honest with you, I need to sit down and go over my notes. I’m holding the matter under advisement and I will issue a ruling as soon as I can,” Judge Tydingco-Gatewood said.

She added: “And I know that it’s important to all of you but I also want to be very careful.”

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