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: 517 P.3d 418
• 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

517 P.3d 418

SALT LAKE CITY LAUMALIE MA'ONI’ONI FREE WESLEYAN CHURCH OF TONGA and Viliami Hosea, Appellants,
v.
DEPARTMENT OF COMMERCE, DIVISION OF CORPORATIONS, Appellee.

No. 20200778-CA

Court of Appeals of Utah.

Filed August 18, 2022

Robert C. Avery, Nathan E. Burdsal, Orem, and Hutch U. Fale, Attorneys for Appellants

Sean D. Reyes, Salt Lake City, Sarah E. Goldberg, and Erin T. Middleton, Attorneys for Appellee

Judge David N. Mortensen authored this Opinion, in which Judges Ryan M. Harris and Ryan D. Tenney concurred.

Opinion

MORTENSEN, Judge:

¶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, 119 S.Ct. 1849, 144 L.Ed.2d 67 (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

517 P.3d 420

Division. Seeing no error in the district court's decision, we affirm.

BACKGROUND

¶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...