CHICAGO (AP) — Federal judges on Monday peppered attorneys with questions about how much the bankrupt Archdiocese of Milwaukee spends to maintain its cemeteries and whether there is a strong interest in making maintenance funds available to compensate victims of clergy sexual abuse.
Lawyers representing clergy sexual abuse victims want about $55 million in a cemetery trust fund to be made available to compensate their clients. A lawyer for the trust fund said the Catholic faith requires the money to be used to maintain cemeteries.
A federal judge in Milwaukee previously ruled the fund off-limits, saying it was protected by the 1993 Religious Freedom Restoration Act and First Amendment freedom of religion. A decision in the case could have a broad impact on other cases involving gay marriage, health care and religion.
Judge Joel Flaum of the 7th U.S. Circuit Court of Appeals in Chicago asked the attorney for the trust fund whether court documents show how much the archdiocese spends to maintain its cemeteries. Attorney Brady Williamson said they don't. Earlier Judge Robert Dow had asked whether all $55 million was needed. Attorney Marci Hamilton, who represents clergy sexual abuse victims and others owed money by the archdiocese, said it was impossible to say because the lower court judge ruled before hearing any evidence.
The trust fund has been a focal point of the Milwaukee archdiocese's increasingly bitter and contentious bankruptcy case. Sexual abuse victims believe New York Cardinal Timothy Dolan created the fund to hide money from them when he was archbishop of Milwaukee. Church leaders maintain creation of the trust was a mere formality because the money was donated to care for the archdiocese's cemeteries and always used for that purpose.
Hundreds of sexual abuse victims have filed bankruptcy claims against the archdiocese, and without the trust money, it has relatively few assets. A proposed bankruptcy reorganization plan would provide about $4 million to compensate about 125 victims, but it would give nothing to many more.
The Milwaukee case is unusual among church bankruptcies because of the large number of victims, as well as its length and a lack of insurance coverage, which has made it more difficult to settle, said John Manly, a California attorney who has represented clergy sexual abuse victims in other cases.
Many other U.S. dioceses also have money in trust, but in most church bankruptcy cases, victims have been able to gain some access to that money, Manly said.
"Milwaukee, the archdiocese there, seems to be bucking the trend," he said.
The scope of the Religious Freedom Restoration Act has been an issue in gay marriage cases and Hobby Lobby's challenge of the federal health care law's birth control mandate. The federal law protects religious organizations from government intervention, and in some cases, the mere use of courts to enforce laws or resolve disputes between private parties has been enough to trigger it, said Marc Stern, a lawyer for the American Jewish Committee.
Questions remain, lending the Milwaukee archdiocese case great interest, he added.
"It's sort of a sad case," Stern said, noting that the bankruptcy case pits sexual abuse victims against donors who gave money to keep up cemeteries. "There really are two sets of innocent parties, and somebody walks away harmed."
The case is the first church bankruptcy to reach a federal appeals court with questions about the use of trust funds and the Religious Freedom Restoration Act, attorneys said. Any decision will likely be appealed to the U.S. Supreme Court.