Snow v. Lindberg

• Decision Date: 12 March 2013
• Docket Number: No. 20091006.,20091006.
• Citation: 299 P.3d 1058,730 Utah Adv. Rep. 68
• Parties: SNOW, CHRISTENSEN & MARTINEAU, Raymond Scott Berry, Willie Jessop, Dan Johnson, and Merlin Jessop, Petitioners, v. Honorable Denise P. LINDBERG, District Court Judge, Respondent.
• Court: Utah Supreme Court

299 P.3d 1058

730 Utah Adv. Rep. 68

SNOW, CHRISTENSEN & MARTINEAU, Raymond Scott Berry, Willie Jessop, Dan Johnson, and Merlin Jessop, Petitioners,

v.Honorable Denise P. LINDBERG, District Court Judge, Respondent.

No. 20091006.

Supreme Court of Utah.

March 12, 2013.

Michael D. Zimmerman, James C. Bradshaw, Mark R. Moffat, Troy L. Booher, M. Lane Molen, Salt Lake City, for petitioners.

John E. Swallow, Att'y Gen., Bridget K. Romano, Asst. Att'y Gen., Brent M. Johnson, Salt Lake City, for respondent.

Justice PARRISH, opinion of the Court:

INTRODUCTION

¶ 1 This case requires us to determine whether an attorney-client relationship that existed between the United Effort Plan Trust (UEP Trust or Trust) and its attorneys at the law firm Snow, Christensen & Martineau (SCM) continued after the Trust was reformed cy pres.¹ Specifically, we must determine whether the district court's reformation of the UEP Trust altered the Trust to such an extent that it can no longer be considered the same client for purposes of the attorney-client privilege and rule 1.9 of the Utah Rules of Professional Conduct. The district court determined that reformation of the UEP Trust did not sever the attorney-client relationship and it therefore ordered SCM to disgorge privileged attorney-client information to the reformed UEP Trust (Reformed Trust). Additionally, it disqualified SCM under rule 1.9 of the Utah Rules of Professional Conduct from representing clients Willie Jessop, Dan Johnson, and Merlin Jessop (Movants) in substantially related matters in which the Movants' interests were materially adverse to the Reformed Trust.

¶ 2 We hold that the UEP and the Reformed Trust were not the same client. Therefore, there was no attorney-client relationship between SCM and the Reformed Trust. As a result, the district court erred when it disqualified SCM from representing Movants and ordered SCM to disgorge privileged attorney-client information to the Special Fiduciary of the Reformed Trust.

BACKGROUND

¶ 3 The UEP Trust was created in 1942 by the predecessors of a religious group known as the Fundamentalist Church of Jesus Christ of Latter–Day Saints (FLDS Church). The UEP Trust's stated purpose was primarily “charitable and philanthropic.” Membership in the UEP Trust was established by “consecrating” property to the Trust “in such amounts as shall be deemed sufficient by the Board of Trustees.”

¶ 4 In 1987, the Trustees of the UEP Trust were sued by Trust land residents. The suit alleged several causes of action, including a claim for breach of fiduciary duty. The district court dismissed these claims because it found that the UEP Trust was charitable and the plaintiffs therefore lacked standing. But in Jeffs v. Stubbs, we reversed the district court's decision and held that the UEP Trust was not charitable because it benefitted specific individuals. 970 P.2d 1234, 1252–53 (Utah 1998). In response to our decision, the sole surviving beneficiary of the UEP Trust, Rulon Jeffs, acting for himself and as the president of the Corporation of the FLDS Church, and other trustees amended and reinstated the UEP Trust. It is undisputed that the amended UEP Trust is a charitable trust. Unlike the original trust documents, which essentially limited the class of beneficiaries to the UEP Trust founders, the 1998 restatement substantially broadened the class of beneficiaries to include FLDS Church members who “consecrate their lives, times, talents, and resources to the building and establishment of the Kingdom of God on Earth under the direction of the President of the [FLDS] Church.”

¶ 5 The primary purpose of the UEP Trust was religious. The 1998 UEP Trust's declaration expressly states that it “is a religious and charitable trust,” and “a spiritual ... step toward[s] living the Holy United Order.” The Trust further provides that the Holy United Order is a “central principle of the Church” that “requires the gathering together of faithful Church members on consecrated and sacred lands to establish as one pure people the Kingdom of God on Earth under the guidance of Priesthood leadership.”

¶ 6 “[C]onsistent with its religious purpose,” the UEP Trust states that it is to be administered “to provide for Church members according to their wants and their needs, insofar as their wants are just (Doctrine and Covenants, Section 82:17–21).” The UEP Trust makes clear that participation in the Trust is conditioned on living in accordance with the principles of the United Effort Plan and the FLDS Church as determined by spiritual leaders. It provides that

[p]articipants who, in the opinion of the Presidency of the Church, do not honor their commitments to live their lives according to the principles of the United Effort Plan and the Church shall remove themselves from the Trust property and, if they do not, the Board of Trustees may ... cause their removal.

The UEP Trust was “intended to be ... of perpetual duration; however in the event of [its] termination, ... the assets of the Trust Estate at the time [were to] become the property of the Corporation of the President of the [FLDS] Church, corporation sole.”

¶ 7 In 2004, the UEP Trust and then FLDS president, Warren Jeffs, were sued in two separate tort actions. Rodney Parker, an attorney from the law firm of SCM entered an appearance as counsel for the UEP Trust and the FLDS Church in both of these actions but later withdrew when he was discharged by his clients. Because the controlling trustee, Warren Jeffs, did not appoint substitute counsel in either action, the UEP Trust was vulnerable to having default judgments entered against it. The Utah Attorney General (AG) responded by petitioning the district court for: (1) removal of the trustees for breach of fiduciary duty; (2) an order that the trustees provide an inventory, final report, and accounting of Trust assets; and (3) an appointment of a Special Fiduciary to administer the Trust until a new trustee was appointed.

¶ 8 In June 2005, the district court entered an order for a preliminary injunction suspending the trustees of the UEP Trust and appointing Bruce Wisan as special fiduciary “on a limited basis” to manage the affairs of the Trust. Additionally, the court asked the Special Fiduciary to identify any issues that the court needed to address before it appointed new trustees. In response to the court's request, the Special Fiduciary indicated that the Trust would need to be reformed before new trustees could be appointed.

¶ 9 On December 13, 2005, the district court issued an order that the UEP Trust be reformed. Using the doctrine of cy pres, the district court found that the UEP Trust had two primary purposes. It concluded that its first purpose was to advance the religious doctrines and goals of the FLDS Church and that its second purpose was to provide for the “just wants and needs” of FLDS Church members. The district court held that although the trust could not be reformed to advance its religious purposes, it could be reformed to advance its charitable purpose to provide for UEP Trust beneficiaries' “just wants and needs.” ²

¶ 10 Using secular principles, the district court reformed the UEP Trust. The purpose and provisions of the Reformed Trust are vastly different from those of the UEP Trust. The UEP Trust existed solely for the purpose of “preserv[ing] and advanc[ing] the religious doctrines and goals of the [FLDS Church].” In contrast, the Reformed Trust is “separate and distinct from ... the FLDS Church, as well as other religious efforts, objectives, doctrines or organizations.” Additionally, the Reformed Trust was to be administered “based on neutral principles of law,” independent of Priesthood input. But Priesthood input was critical to the administration of the UEP Trust. Indeed “[t]he doctrine and laws of the Priesthood ... [were] the guiding tenants by which the Trustees of the [UEP] Trust” were to act. The beneficiaries of the Reformed Trust were also different from those of the UEP Trust. While participation in the UEP Trust was limited to FLDS Church members, beneficiaries of the Reformed Trust included nonmembers “who [could] demonstrate that they had previously made contributions to either the [UEP] Trust or the FLDS Church.”

¶ 11 Petitioners argue that the administration of the Reformed Trust differs vastly from that of the UEP Trust. Unlike the UEP Trust, which was administered in a manner that advanced the FLDS Church and its members, petitioners contend that the Reformed Trust is administered in a manner that is hostile towards the FLDS Church and its members. To support their argument, they point to the Special Fiduciary's attorney's characterization of the administration of the trust as “sociological and psychological war with the beneficiaries.” They also point to the Special Fiduciary's court filings, which refer to church members and the former Trustees of the UEP Trust, including the president of the FLDS Church, as “saboteurs” and “conspirators.” Petitioners also note that the Special Fiduciary has admitted that a factor in determining whether Trust property will be conveyed to beneficiaries outright or subject to a spendthrift trust is whether the transferee is likely to participate in the United Holy Order. Petitioners claim that this practice discriminates against beneficiaries who practice the doctrines of the FLDS Church.

¶ 12 Petitioners are particularly critical of the Special Fiduciary's attempt to sell the Harker Dairy Operation (Berry Knoll Farm). Petitioners take offense to the sale because they view the Berry Knoll Farm as having historic and religious value. They claim that the Berry Knoll Farm is sacred because it was revealed to FLDS Church leadership by divine inspiration that the property was to be the site for an FLDS temple. Despite these protests, the Special Fiduciary claims that he must sell Berry Knoll Farm to meet the Reformed Trust's cash flow problems.

¶ 13 In response to...