Right Coast blawgger Tom Smith is worried that Judge Louise De Carl-Adler, the bankruptcy court judge in charge of the bankruptcy of the San Diego Roman Catholic Diocese, may be prejudiced against the Church.

... she strongly supports causes which promote and protect the education, health, and the reproductive freedom of women.

(Emphasis added.)  Of course, just because somebody is a big supporter of abortion rights does not mean they have anything against the Catholic Church.  But the Diocese has, to say the least, been getting a rather hard time from the judge, which is not to say it does not deserve the same; I haven't followed the case closely enough to really know:

SAN DIEGO – In a blistering, six-page statement, a judge is threatening to throw the San Diego Catholic diocese's bankruptcy case out of court because of a financial report that found problems ranging from parishes withholding money to the diocese failing to report the fair market value of properties.

I am just wondering out loud here whether Judge De Carl-Adler might not be the biggest fan in the world of the Catholic Church, and whether that makes a difference in this case. 

Tom continues:

Having raised this delicate subject, I will note more substantively that my problem is also that not much weight seems to be given, in the press accounts at least, and as far as I can tell, to the substantive fact that the assets of the parishes really are separate from one another and the diocese, in practice, though perhaps not in law.  At least they are supposed to be. 

For example, I gave some modest (and I mean modest) amount of money to help build an education building at my parish and another sum of money to build some building or other at the parish my kids go to school at.  In each case, I was to get a brick with my name on it.  But now I am given to understand that that money is just gone, poof, sucked into the maw of this case.  I suspect any effort by the parishes to stop this from happening is part of what the judge and her independent expert are outraged about, though possibly less benign maneuvers as well.  But, if we assume the Diocese is not supposed to start closing down some of the best schools in this educationally-challenged county so as to pay the sex abuse victims, and their lawyers, just how exactly is that aspiration to be accounted for?

I addressed many of the relevant legal issues in my article The Bishop's Alter Ego: Enterprise Liability and the Catholic Priest Sex Abuse Scandal:

Abstract: Since 1950, more than 11,500 sex abuse claims have been filed against priests and other agents of the Roman Catholic Church. The eventual direct costs to the Catholic Church of the priest abuse litigation are predicted to range from $2 to $3 billion.

The corporate structure of the Church under civil law can have a substantial impact on the ability of priest sex abuse claimants to recover on favorable judgments or settlements. In many U.S. dioceses, all Church assets are owned by a single corporation, typically a corporation sole, by virtue of which the local bishop becomes the legal titleholder of all Church-affiliated property in the diocese. The dominant view is that all assets of such dioceses, including those of individual parishes and other so-called juridic persons, are available to satisfy tort judgments against the diocese.

Some dioceses, however, long have separately incorporated at least some of their affiliated juridic persons. In response to the priest sex abuse liability crisis, there is a growing trend for diocesan assets to be divided among multiple incorporated entities. Although separate incorporation of diocesan assets implicates a number of legal doctrines, alter ego claims likely will play a central role in any litigation seeking to reach the assets of such corporations for the benefit of diocesan creditors.

There is no constitutional bar to a court using the alter ego doctrine to treat a diocese and its separately incorporated parishes as a single enterprise for liability purposes in the priest sex abuse scandal litigation (or any other dispute, for that matter). The analysis in this paper, however, suggests that appropriate cases for invoking the alter ego doctrine in this context will be few and far between.

Two entities will be treated as alter egos where (1) one entity exercises such a high degree of control that the other has effectively lost its separate existence and (2) the controlling entity has abused its power of control in an unjust or inequitable manner. As to the former prong, a diocesan bishop who comports himself in accordance with the requirements of canon law is unlikely to exercise the requisite degree of day to day control over a separately incorporated parish. As to the latter prong, the courts have discretion to consider the potentially severe deleterious impact of liability on the ability of innocent parties to exercise religious practices implicating constitutionally protected values. In other words, while the Free Exercise and Establishment clauses do not bar judicial application of the alter ego doctrine to churches, the values protected by those provisions appropriately may be weighed in the balance. Given the ready availability of alternative doctrines better suited to the problems at hand, particularly fraudulent transfer law, there case against invoking alter ego in this context thus becomes quite strong.

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