Salt Lake City Laumalie Ma'oni'oni Free Wesleyan Church of Tonga v. Dep't of Commerce
| Decision Date | 18 August 2022 |
| Docket Number | 20200778-CA |
| Citation | 2022 UT App 102 |
| Parties | Salt Lake City Laumalie Ma'oni'oni Free Wesleyan Church of Tonga and Viliami Hosea,Appellants, v. Department of Commerce, Division of Corporations,Appellee. |
| Court | Utah Court of Appeals |
Third District Court, Salt Lake Department The Honorable Patrick Corum No. 180907281
Robert C. Avery, Nathan E. Burdsal, and Hutch U. Fale, Attorneys for Appellants
Sean D. Reyes, Sarah E. Goldberg, and Erin T. Middleton, Attorneys for Appellee
OPINION
¶1 From "the metaphysical principle that nothing can confer what it does not possess," it follows that an administrative agency cannot confer validity on a document if it lacks the power to do so. See City of Chicago v Morales, 527 U.S. 41, 91 n.9 (1999) (Scalia, J dissenting).[1] ¶2 Salt Lake City Laumalie Ma'oni'oni Free Wesleyan Church of Tonga and Viliami Hosea (collectively, FWC) argue that the Division of Corporations (the Division) is endowed with the authority to determine the validity of corporate filings. From this position, FWC asserts that the district court erred in dismissing a petition that asked for a determination that the Division lacked the authority to revoke and rescind amended articles of incorporation (the Amended Articles) that FWC had previously filed with the Division. Seeing no error in the district court's decision, we affirm.
¶3 In 1978, the Rocky Mountain Conference (RMC) of the United Methodist Church chartered a congregation, the Tongan United Methodist Church (TUMC), in Utah. TUMC was incorporated as a Utah nonprofit corporation. In 2012, several members of TUMC sought to disaffiliate with TUMC and sever ties with the United Methodist Church. Five of the nine trustees for TUMC called for a mail-in vote seeking to amend its articles of incorporation. After the mail-in vote approved the Amended Articles, the members who had initiated the vote submitted a series of registration changes to the Division, including changing the name of TUMC to the Salt Lake City Laumalie Ma'oni'oni Free Wesleyan Church of Tonga and changing the principals (including the registered agent). Thereafter, FWC submitted the Amended Articles to the Division.
¶4 The same day FWC submitted the Amended Articles, it filed a lawsuit seeking (1) an injunction to prevent a former director and principal of TUMC from controlling or accessing any of the entity's property and (2) declaratory relief that Hosea was the only individual authorized to represent the entity or control its property. TUMC's board of trustees and the RMC, in turn, filed a lawsuit against FWC and the members of FWC's board of directors (the Private Litigation) seeking, among other things, a declaration that the mail-in vote was improper and that any corporate actions FWC attempted to take were null and void.
¶5 After being notified of the Private Litigation, the Division informed the parties that it would place the Amended Articles on administrative hold until the dispute was settled through agreement or by the court. FWC then informed the Division that it intended to challenge the decision to place the changes on hold, and the Division subsequently removed the hold and accepted the Amended Articles. See Laumalie Ma'oni'oni Free Wesleyan Church of Tonga v. Ma'afu, 2019 UT App 41, ¶¶ 22-23, 440 P.3d 804. Nevertheless, the Division's record noted a dispute pending among the principals. Id. ¶ 23.
¶6 In the Private Litigation, the district court eventually entered an order determining that the mail-in vote was improper because the vote did not comply with TUMC's original articles of incorporation, and therefore none of FWC's subsequent corporate actions were authoritatively taken or valid. Id. ¶¶ 30-31. The court further determined that TUMC and the RMC were not required to exhaust administrative remedies because "the Division made no determination regarding the parties' rights, the validity of the vote by mail, or the Amended Articles." Id. ¶ 28 (cleaned up). The RMC notified the Division of the court's decision, and the Division rescinded the Amended Articles and reinstated TUMC's original articles of incorporation. Id. ¶ 32.
¶7 Shortly thereafter, in the wake of the court ruling, FWC sought agency review of the Division's decision to rescind the Amended Articles. The Department of Commerce affirmed the Division's decision. FWC then filed the petition that initiated the present case, seeking judicial review in the district court of the Department of Commerce's order affirming the Division's decision. In the petition, FWC asserted that it was "entitled" to a court order providing that the "Amended Articles must be accepted and approved by the Division, and that the Division lacked the authority to revoke and erred in revoking such Amended Articles."
¶8 After filing the petition for the present case, FWC appealed the decision rendered in the Private Litigation, and this court affirmed. Id. ¶ 90. While that appeal was pending, the district court granted a stay in the present case. After this court issued its opinion affirming the district court in the Private Litigation, the district court granted the Division's motion to dismiss FWC's petition in this case because (1) issue preclusion prevented relitigation of FWC's claims, (2) FWC failed to state a claim on which relief could be granted because the Amended Articles had been determined to be invalid in the Private Litigation, and (3) the case was moot. FWC now appeals the district court's dismissal of its petition.
¶9 The issue on appeal is whether the district court properly dismissed FWC's petition when the court determined that the results of the Private Litigation foreclosed the relief FWC sought. "A ruling on a motion to dismiss presents a legal question that we review for correctness, affording no deference to the district court's decision." AL-IN Partners, LLC v. LifeVantage Corp., 2021 UT 42, ¶ 17, 496 P.3d 76 (cleaned up).[2]
¶10 FWC argues that our legislature "has explicitly delegated the ability to make a conclusive determination regarding the validity of amended articles of incorporation for a nonprofit corporation in Utah to the Division." FWC's position appears to be primarily based on its assertion that nothing in the Utah Revised Nonprofit Corporations Act (the Act), see generally Utah Code Ann. §§ 16-6a-101 to -1705 (LexisNexis 2013 & Supp. 2021), "allows the Division to defer to any other entity, even a district court," to determine the validity of corporate filings. In essence, FWC's entire case rests on the assertion that the Division's eventual acceptance of the Amended Articles endowed that document with permanent validity.
¶11 But FWC's premise about the extent of the Division's authority to determine the validity of filings is simply wrong. As was resolved in the Private Litigation, and as we further explain below, the Division does not have the authority to determine the validity of corporate filings. Because of this, the Division's act of accepting the Amended Articles had no impact on their validity, and the relief FWC now seeks is unavailable.
¶12 Far from "explicitly" granting the Division "the ability to make a conclusive determination" about the validity of corporate filings, the plain language of the Act and our case law-as we will explain-say just the opposite is true. Moreover, nothing in the Act prohibits the Division from recognizing the legal force of the orders of a court of competent jurisdiction regarding the validity of corporate filings. Because the Division never had the authority to make a determination about the validity of documents filed with it, it was not improper for the Division to defer to the authority of the district court's determination that the Amended Articles were invalid. In other words, the Division's deferral to the district court's determination was not improper because the Division had no choice but to give effect to the court's decision.
¶13 The Act itself explicitly states that the Division's acceptance of a document is purely ministerial and does not touch on the underlying validity or invalidity of the document: "The division's duty to file a document under this section is ministerial." Id. § 16-6a-110(4)(a) (LexisNexis 2013). And unless otherwise noted in the Act, the Division's Id. § 16-6a-110(4)(b). Thus, it is clear from the Act itself that, apart from a statutory provision to the contrary, the Division's acceptance of the articles of incorporation is a ministerial act that does not vouchsafe their underlying validity.
¶14 Moreover, in the appeal of the Private Litigation, this court explained that the Division's duty is ministerial meaning that it is a duty that "requires neither the exercise of official discretion nor judgment." Laumalie Ma'oni'oni Free Wesleyan Church of Tonga v. Ma'afu, 2019 UT App 41, ¶ 41, 440 P.3d 804 (cleaned up); see also Ministerial, Black's Law Dictionary (11th ed. 2019) (defining "ministerial" as "relating to . . . an act that involves obedience to instructions or laws instead of discretion, judgment, or skill"). On this basis, this court concluded that "a determination regarding the validity of the mail-in vote, the Amended Articles, or any of the resulting...
To continue reading
Request your trial