A federal judge ruled Thursday that individual parishes of the Catholic Diocese of Spokane are not owned by the bishop and thus cannot be sold by him to pay victims of clergy sex abuse.

The ruling by Judge Justin Quackenbush overturned a decision made in August by a bankruptcy judge who had ruled that the bishop held title to all parish assets.

It appeared to be a victory for about 80 parishes that had been at risk of losing churches, schools and other property to pay victims' claims. It could be a loss for plaintiffs, who for now would be left with only the much smaller assets of the bishop to divide in any court settlement.

Quackenbush sent the case back to bankruptcy court for a determination on the status of individual parishes.

"It reduces the pot at this point," said Gayle Bush, an attorney representing victims. "The judge strongly encouraged the parties to settle their differences."

The diocese filed for bankruptcy protection in 2004, citing claims by 185 alleged abuse victims seeking $81.3 million. The church listed assets of $11 million.

Shaun Cross, a lawyer for the diocese, praised the ruling, saying the parishes paid for their own land and operating expenses "and held a resulting trust."

"Yes, the bishop has legal title, but the beneficial interest is held by each of the parishes," he said. Cross predicted the ruling would lead to serious settlement talks during a mediation session set for July 7.

Attorney James Stang, who represents many alleged abuse victims, said the ruling might require a trial to determine the status of parish assets.

"We have to try to figure out what kind of values the parish properties will contribute to an overall settlement of claims," Stang said.

Parishes could volunteer money to a settlement, or a trial might compel them to contribute, Stang said.

"We are looking forward to trying to reach a resolution," he said.

Spokane Bishop William Skylstad had argued last year that he did not control individual parishes and thus they were not available to cover settlement costs.

Skylstad, president of U.S. Catholic bishops, was among clergy accused of sexual abuse. He has denied the allegation.