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More Money Problems for San Diego Diocese

The Roman Catholic Diocese of San Diego could face a huge new money problem in its bankruptcy case. KPBS reporter Alan Ray has the story.

The Roman Catholic Diocese of San Diego could face a huge new money problem in its bankruptcy case. The story from KPBS reporter Alan Ray.

The residential developer Lyon Homes wants to pull out of a deal with the Diocese to buy 14 acres near the University San Diego for condominium development. If Lyon were allowed to walk away from the deal, the Union-Tribune reports the Diocese would lose about $65 million. That's money the diocese has been counting on to help pay settlements to about 150 victims of sex abuse by priests.

An attorney for the developer told Judge Louise DeCarl Adler yesterday that the diocese had failed to meet a contract deadline, so the deal for land in Linda Vista is void.

In one of the few times they have agreed, lawyers for both the Diocese and the abuse victims argued that there was no such failure, and the contract must be honored.

The judge allowed escrow on the deal to be finalized, but said the question of whether the contract was void would have to be decided in a yet another trial.

Alan Ray, KPBS News.