Ruling Protects Cemetery Trust in Bankruptcy

By Roewe, Brian | National Catholic Reporter, August 16, 2013 | Go to article overview

Ruling Protects Cemetery Trust in Bankruptcy


Roewe, Brian, National Catholic Reporter


A federal judge's decision that creditors cannot access funds in a separate cemetery trust as part of the Milwaukee archdiocese's bankruptcy proceedings could have a wide range of implications, should it outlast a possible appeal.

U.S. District Judge Rudolph T. Randa ruled July 29 that including the archdiocese's cemetery trust in its bankruptcy process "would substantially burden the Trustee's free exercise of religion," given that the perpetual care of cemeteries represents a core belief of the Catholic faith.

"By administering and holding funds for the ongoing care of the Milwaukee Catholic Cemeteries, the Trust and Trustee assume canonical and moral responsibility for that perpetual care," he wrote.

But lawyers for the creditors, primarily alleged victims of clergy sex abuse, have questioned Randa's ruling and cite a possible conflict of interest because his parents and other family members are buried in the archdiocese's cemeteries.

"It was our view that there had to be something else going on," Marci Hamilton, counsel to the creditors' committee and a law professor at Yeshiva University, told NCR. "And when we looked, we learned for the first time that many of his family members are buried in the very cemeteries that were the subject of the opinion."

The creditors' committee filed an emergency motion Aug. 2 for documents (to see if Randa or his wife has burial space agreements in the cemeteries) ahead of a possible recusal motion or appeal to the 7th Circuit Court, required by the end of August.

Should the Randa decision hold up, legal observers remain uncertain about its ramifications for other cases, both in and outside of bankruptcy From a legal standpoint, it lacks binding authority outside its jurisdiction because it came from a district court. But the opinion may hold persuasive value for other cases.

The ruling came on the backs of two religious liberty laws: the Religious Freedom Restoration Act and the First Amendment's free exercise clause. In restricting the cemetery fund's use in bankruptcy claims, Randa stated that first, the claimants represented government actors in the proceedings "under color of law" for Religious Freedom Restoration Act purposes, and that second, depleting the funds would "substantially burden the Trustee's [Archbishop James Listecki's] free exercise of religion."

Thomas Berg, a law professor at the University of St. Thomas School of Law, said the restoration act requires that the government have a compelling interest in putting a burden on an entity's right to religious exercise. That the diocese owes money to creditors, which include sex abuse victims, could satisfy that rule, he said, but on the other hand, federal bankruptcy laws allow numerous property exclusions from the reachable estate. …

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