Deliver Us from Evil: Why Bankruptcy Judges May Properly Rely on the Free Exercise Clause & RFRA to Protect Church Property from the Grasps of Tort-Creditors

29 Pages Posted: 15 Sep 2008 Last revised: 1 Jun 2010

See all articles by Nicholas M. Gaunce

Nicholas M. Gaunce

Post & Schell, P.C.

Robert Luther

George Mason University - Antonin Scalia Law School, Faculty

Date Written: Fall , 2009


In January of 2002 the Boston Globe reported that the Boston Archdiocese of the Roman Catholic Church had knowingly transferred at least one sexually abusive priest between several parishes within the region. This report lit a powder keg of sexual abuse allegations against Roman Catholic clergy throughout the country. Reports have indicated that the Catholic Church has spent over a billion dollars to settle claims brought by alleged sexual abuse victims. As a result of this unexpected financial upheaval, several dioceses threatened to file for bankruptcy. However, only three dioceses - the dioceses of Tucson, Arizona, Portland, Oregon, and Spokane, Washington - actually filed Chapter 11 bankruptcy petitions. This article challenges the decisions of the Oregon and Washington bankruptcy courts and argues that there are two separate bases for bankruptcy judges to utilize a heightened level of scrutiny when they are tasked with applying traditional legal principles to render decisions that will have a substantial effect on church property.

First, this article challenges the application of Employment Division v. Smith's general rule for the resolution of bankruptcy disputes; in particular, this article asserts that the bankruptcy system is a system of individualized exemptions which requires bankruptcy courts to apply strict scrutiny when deciding matters of church property. Secondly, this article challenges the Oregon court's assertion that RFRA does not apply to bankruptcy judges when making state law determinations. In part, we assert that RFRA applies to bankruptcy judges based on Congress' power under the Bankruptcy Clause of Article I.

The authors recognize that some may be reluctant to extend strong protection to the Roman Catholic Church - or any religious entity - in view of the circumstances that surround the Church's bankruptcy proceedings. However, we must not allow the factual predicate of this case to pervade our legal thought. Here, bankruptcy courts have been presented with bona fide debtors strained by the mistakes of their pasts. This is the exact type of case the bankruptcy system was designed to address.

Ultimately, the aforementioned proposal is preferable because it allows the Church to attain the benefits of this system without requiring it to sacrifice all semblances of internal autonomy. In any event, if dioceses are forced to cease operations, it is not the Church that will be most harshly affected; rather, it is the Church's congregation who can no longer carry on the mission of that organization that will bear the brunt of the consequences. Considering the number of people who would be affected if a diocese was required to distribute all its assets to satisfy debts, it makes sense for a tort-creditor to bear the burden of proving a compelling justification for enforcing the debt before he or she holds a great number of innocent individuals responsible for the harm caused by a few.

Keywords: First Amendment, Church Property, Bankruptcy, RFRA, Catholic Church, Tort-Creditors, Free Exercise Clause, Article I powers

Suggested Citation

Gaunce, Nicholas M. and Luther, Robert, Deliver Us from Evil: Why Bankruptcy Judges May Properly Rely on the Free Exercise Clause & RFRA to Protect Church Property from the Grasps of Tort-Creditors (Fall , 2009). Valparaiso University Law Review, Vol. 43, p. 641, 2009. Available at SSRN:

Nicholas M. Gaunce

Post & Schell, P.C. ( email )

Overlook Center, 100 Overlook Drive
Princeton, NJ 08540
United States

Robert Luther (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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