Milwaukee Archdiocese’s creditors want ruling halted, judge off case

The Archdiocese of Milwaukee’s creditors have filed motions asking the federal judge in the church’s bankruptcy case to set aside a key ruling and recuse himself from the case over a potential conflict of interest.

U.S. District Judge Rudolph T. Randa ruled in late July that forcing the archdiocese to tap the $50 million-plus it holds in a trust for the perpetual care of cemeteries would substantially burden its free expression of religion under the First Amendment and a 1993 federal law aimed at protecting religious liberty.

Then Aug. 2, lawyers representing the archdiocese’s creditors — primarily sex abuse victims — asked U.S. Bankruptcy Judge Susan V. Kelley to compel the release of any records showing whether Randa and his wife, Melinda, have purchased any plots or crypts in one of the archdiocese’s cemeteries, or whether they have any interest as heirs or beneficiaries of several relatives known to be buried in them.

In motions filed Monday — one to set aside the ruling and the other asking Randa to recuse himself — the creditors said they “discovered that at least nine of Judge Randa’s relatives (including his mother, his father and his wife’s parents) are buried in cemeteries owned and operated by” the archdiocese.

“This fact alone creates the appearance of partiality,” the motion states. They add that Randa, by purchasing burial rights, entered into a contract with the archdiocese, further supporting the call for him to step down from the case.

“Judge Randa should have disqualified himself from presiding over any aspect of this adversary proceeding. Yet, he did not do so,” the motion reads. ” Nor did he disclose the facts to the parties at any time during the case.”

After the Aug. 2 motion, Timothy Nixon, an attorney for the cemetery trust and its sole trustee, Milwaukee Archbishop Jerome Listecki, called such claims desperate and an “attack on a federal judge.”

Both sides have called the developments unusual — and possibly the first time a judge has been asked to recuse himself in the several Catholic Church bankruptcies around the country.

The creditors again dispute Randa’s conclusion. “The District Court essentially held that the Cemetery Trust is not subject to the fraudulent conveyance laws because it is religious. Under the District Court’s ruling, a debtor can fraudulently convey funds to a trust and avoid its obligations to its creditors because of its religious status. No other court has ever reached such a conclusion,” the motion reads.

The cemetery decision was a key victory for the archdiocese, because it eliminated one of the last major assets available for a settlement with sex abuse victims who filed claims in the bankruptcy. If it stands, the ruling could have far-reaching implications for other religious institutions considering bankruptcy.

Before Randa’s ruling, Kelley had found that the First Amendment did not protect the cemeteries trust fund.

The creditors’ committee makes clear that it does not seek Randa’s ouster because he is Catholic, noting that several other judges in other Catholic diocese bankruptcies, as well as Kelley in Milwaukee, are Catholic, and none has ever been accused of a potential conflict of interest or been subject to recusal requests despite rulings adverse to creditors.

Randa was in court Wednesday morning and a message seeking comment was left with his staff.

Exactly what the cemetery trust covers and doesn’t cover is unclear, at least to abuse survivors, said Father James Connell, a Sheboygan priest and former vice chancellor of the Archdiocese of Milwaukee, who has become a vocal advocate for those abused by priests.

During remarks Tuesday at the Milwaukee Press Club’s Newsmaker Luncheon, Connell said the diocese says it operates eight cemeteries, all in Milwaukee County.

Catholic cemeteries in surrounding counties — also within the Archdiocese of Milwaukee — are not covered by the cemetery trust, Connell said.

While the diocese says the trust is intended to fund perpetual care of the eight cemeteries in Milwaukee County, “we don’t have a perpetual care agreement in Sheboygan,” Connell said. “They got rid of them.”

“The trust fund says nothing about perpetual care,” Connell said. “All of that needs to be studied. What is and isn’t covered has to be better defined.”

If the church can fulfill its moral responsibility to care for the eight cemeteries with a portion of the cemetery trust, the rest of the money “should go for common good,” Connell said, referring to victims of clergy sexual abuse.