Creditors contest Milwaukee archdiocese ruling

Creditors for the Archdiocese of Milwaukee have asked a federal judge to set aside a key ruling in its bankruptcy case and step down because of what they say is a conflict of interest.

The archdiocese filed for bankruptcy in 2011, saying pending sexual abuse lawsuits could leave it with debts it couldn’t pay. Its creditors include hundreds of people who were sexually abused by clergy and have accused the archdiocese of transferring predator priests to new churches without warning parishioners.

U.S. District Judge Rudolph T. Randa ruled last month that more than $55 million is off-limits from those victims and other creditors because the money is in a cemetery trust fund protected by the First Amendment’s guarantee of religious freedom.

The cemetery fund has been a point of contention because victims’ lawyers see it as one of the few big pools of money that could potentially be available for settlements. The creditors’ committee said in documents filed Monday that Randa’s decision should be set aside because at least nine of his relatives, including his parents, are buried in cemeteries operated by the archdiocese.

“This fact alone creates the appearance of partiality in favor of the Cemetery Trust in this action and establishes strong grounds for recusal,” the committee said.

In addition, the committee noted, Randa bought his parents’ burial plots, which gives him an interest in how the money is used.

The law firm representing the cemetery trust fund said it would file a response by Sept. 3.

“It is sad that the Committee’s lawyers now, after many hearings and months and in the face of a single, adverse decision, take the extraordinary step of impugning the integrity of a respected federal judge,” attorney Timothy Nixon said in an email. “Earlier, when the court was issuing decisions in their favor, they praised the judge and stated their high regard for ‘Judge Randa’s experience with bankruptcy appeals and procedure.'”

The archdiocese maintains that money in the cemetery fund was given specifically to maintain cemeteries and burial plots and to use it for other means would be a violation of trust. Sexual abuse victims dispute that, saying the trust was created solely to hide money from them.

The cemetery trust was formed in 2007 by New York Cardinal Timothy Dolan, who was then archbishop of Milwaukee. The archdiocese had agreed to a $16 million settlement the year before with nine people abused by Wisconsin priests while the priests were living in California. In a letter to the Vatican, Dolan said the trust would provide “an improved protection of these funds from any legal claim and liability.”

The trust provides money for the perpetual care of eight cemeteries owned by the archdiocese as well as a ninth property that could be developed as a cemetery, said Jerry Topczewski, chief of staff for Milwaukee Archbishop Jerome Listecki. The cemeteries cover nearly 1,000 acres in which 500,000 people are buried. About 3,000 new burials take place each year, he said.