Swallow v. Jessop (In re United Effort Plan Trust)

• Decision Date: 29 January 2013
• Docket Number: No. 20090691.,20090691.
• Citation: 296 P.3d 742,727 Utah Adv. Rep. 33
• Court: Utah Supreme Court
• Parties: In the Matter of the UNITED EFFORT PLAN TRUST. John E. Swallow, Petitioner and Appellee, Bruce Wisan; William Jessop; Richard Jessop Ream; Thomas Samuel Steed; Don Ronald Fischer; Dean Joseph Barlow; Walter Scott Fischer; Richard Gilbert; Brent Jeffs; Helaman Barlow; Hildale City; Colorado City; Twin Cities Water Authority; Dan Johnson; Merlin Jessop; Snow, Christensen & Martineau; and State of Arizona, Other Parties and Appellees, v. Willie Jessop; Dan Johnson; Merlin Jessop; Lyle Jeffs; and James Oler, Intervenors and Appellants.

296 P.3d 742

727 Utah Adv. Rep. 33

In the Matter of the UNITED EFFORT PLAN TRUST.

John E. Swallow, Petitioner and Appellee,

Bruce Wisan; William Jessop; Richard Jessop Ream; Thomas Samuel Steed; Don Ronald Fischer; Dean Joseph Barlow; Walter Scott Fischer; Richard Gilbert; Brent Jeffs; Helaman Barlow; Hildale City; Colorado City; Twin Cities Water Authority; Dan Johnson; Merlin Jessop; Snow, Christensen & Martineau; and State of Arizona, Other Parties and Appellees,

v.Willie Jessop; Dan Johnson; Merlin Jessop; Lyle Jeffs; and James Oler, Intervenors and Appellants.

No. 20090691.

Supreme Court of Utah.

Jan. 29, 2013.

Bridget K. Romano, Utah Solicitor Gen., Timothy A. Bodily, Asst. Att'y Gen., Jeffrey L. Shields, Zachary T. Shields, Mark L. Callister, Spencer E. Austin, Mark W. Dykes, Brandon J. Mark, Salt Lake City, David Weinzweig, Phoenix, AZ, for appellees.

James C. Bradshaw, Rodney R. Parker, Richard A. Van Wagoner, Frederick Mark Gedicks, Kenneth A. Okazaki, Stephen C. Clark, Salt Lake City, for appellants.

Justice LEE, opinion of the Court:

¶ 1 This case arises out of the district court's denial of several motions to intervene in the ongoing state administration of the United Effort Plan Trust. This charitable trust was originally established by members of what is now referred to as the Fundamentalist Church of Jesus Christ of Latter–Day Saints. In 2006, following allegations of trustee mismanagement, the district court removed these trustees, reformed the Trust according to secular principles, and appointed a special fiduciary to manage the Trust subject to the district court's ongoing supervisory jurisdiction.

¶ 2 When the special fiduciary sought court approval for the sale of Trust property with alleged religious significance, the appellants in this case—members and bishops of the FLDS church—asserted that their ecclesiastical interests in the Trust entitled them to intervene as of right under rule 24 of the Utah Rules of Civil Procedure in the ongoing administration proceedings. The district court denied intervention, concluding that appellants' asserted interests were inadequate. The potential intervenors appealed. We affirm. Under standards of review clarified below, we uphold the district court's determinations that appellants lacked a statutory right to intervene under rule 24(a)(1) and also lacked a sufficient interest in the subject matter of the litigation to intervene under rule 24(a)(2).

I

¶ 3 The United Effort Plan Trust was originally established in 1942 by members of a religious movement known as the Priesthood Work, a predecessor to the Fundamentalist Church of Jesus Christ of Latter–Day Saints. Adherents to the tenets of this movement purchased a number of properties and deeded them to the Trust. In 1998, following litigation with some disaffected Trust beneficiaries, the trustees amended the Trust, rendering it a charitable trust under Utah law.

¶ 4 In 2004, the Trust was named as defendant in several tort actions. The Trust faced a risk of defaulting in these suits because the then-trustees failed to defend them. Consequently, in May 2005 the Utah Attorney General's Office petitioned the district court to remove the trustees for breaching their fiduciary duties to the Trust. The court granted that request and appointed a special fiduciary to manage the Trust going forward. The court subsequently confirmed that the Trust was now a charitable trust and held that it needed to be reformed because several of its provisions were unworkable. The district court did so in an October 2006 court order, and nearly three years passed before any party sought to appeal or otherwise challenge it. When a challenge eventually reached this court, we held that it was barred by laches. See Fundamentalist Church of Jesus Christ of Latter–Day Saints v. Lindberg, 2010 UT 51, ¶ 1, 238 P.3d 1054.

¶ 5 As reformed by the 2006 court order, the Trust provides that the “Trust Property shall be held, used and distributed to provide for [beneficiaries], ... according to their wants and their needs insofar as their wants are just.” “[J]ust wants and needs concern primarily housing” and “secondarily ... education, ... occupational training[,] and economic development,” although they “may also include food, clothing, [and] medical needs” and even “community development, including, but not limited to, community buildings and places, schools, parks and cemeteries, etc.”

¶ 6 Potential beneficiaries are defined as those “(1) who can demonstrate that they have previously made Contributions to either the Trust or the FLDS Church; or (2) who subsequent to the date of this Agreement make documented Contributions to the Trust which Contributions are approved by the Board.” Thus, “the beneficiaries of the Trust are large in number” and although they “constitute a definite class,” “the beneficiaries within the class are indefinite.”

¶ 7 Most significantly for purposes of this appeal, the reformed Trust is decidedly secular. The reformed Trust declaration states that the “administration of the Trust shall be based on neutral principles of law,” and “shall not be based on religious doctrine or practices.” It expressly prohibits “attempt[ing] to resolve underlying controversies over religious doctrine,” although it does note that “[t]he reformation shall allow for ecclesiastical input of a non-binding nature.” This input may include “recommendations received from an authorized representative of the FLDS Church concerning” whether “a particular Trust Participant's” “wants and needs” are “just ... in light of the religious principles of the FLDS Church,” although such recommendations are “non-binding and shall be only one criterion to be considered and shall not be the controlling criterion.”

¶ 8 After the Trust was reformed, the district court retained supervisory jurisdiction over its administration. In May 2009, the special fiduciary sought court approval for the sale of certain property in order to meet the Trust's ongoing financial obligations. In particular, the fiduciary sought to sell the Berry Knoll Farm. Within the weeks immediately following the fiduciary's application to sell Berry Knoll, two motions to intervene were filed based on rule 24(a) of the Utah Rules of Civil Procedure. This rule provides:

Upon timely application anyone shall be permitted to intervene in an action:

(1) [W]hen a statute confers an unconditional right to intervene; or

(2) [W]hen the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by existing parties.

Utah R. Civ. P. 24(a).

¶ 9 The first of the two rule 24(a) motions was filed by appellants Willie Jessop, Dan Johnson, and Merlin Jessop (the “Appellant Church Members”). They filed this motion in their capacity as FLDS Church members, claiming that they had “been granted a stewardship over the specific Trust property that is the subject” of the proposed sale and that the property was essential to the “discharge [of] their sacred priesthood stewardships.”

¶ 10 The second rule 24(a) motion was filed by appellants Lyle Jeffs and James Oler (the “Appellant Bishops”). The Appellant Bishops claimed that their priesthood “responsibilities extend to ascertaining and meeting the just wants and needs of Trust beneficiaries.” They noted that their ecclesiastical position as bishops gave them a “unique interest in Berry Knoll,” because as “Bishops, they ha[d] the sacred priesthood charge, pursuant to scripture and belief, to ensure that the just wants and needs of their respective congregations are met,” and further asserted that their “eternal salvation [was] intimately connected with how well they discharge[d] this duty.”

¶ 11 Following oral argument, the district court denied both motions to intervene. The court's ruling stated:

Categorical assertions of interest with respect to Trust property are insufficient to establish a right to intervene under Rule 24(a). What proposed Intervenors must show—which they have not—is that they have a legally cognizable interest in any Trust property. Any “claim of interest” under Rule 24 must have a legal basis; without it, no claimant has a right to a remedy and, therefore, no right to participate in the case as a party.... It is black letter law that potential beneficiaries of charitable trusts have no right to make claims upon such trusts. Because the UEP Trust is a charitable trust, the only individuals with legally cognizable interests are the Utah and Arizona Attorneys General ... as representatives of the community, and the Court-designated Special Fiduciary.

¶ 12 Although the court denied the intervention motions, this ruling did not prevent the potential intervenors from participating in the dialogue relating to the proposed sale of Berry Knoll. In fact, the same order that denied the intervention motions scheduled a public hearing on the proposed sale. At this hearing, both current and former members of the FLDS Church were allowed to give their input. Following the hearing, the district court issued a written order allowing the sale of the Berry Knoll Farm.

¶ 13 Despite the participation they were afforded at the public hearing, both groups of potential intervenors appealed the denial of their motions to intervene. We held oral argument in late 2010, but subsequently stayed further proceedings pending the resolution of parallel proceedings in federal court. These parallel proceedings were resolved in a November 5, 2012 opinion by the Tenth Circuit, Fundamentalist Church of Jesus Christ of Latter–Day Saints v. Horne, 698 F.3d 1295, 1299, 1302 (10th Cir.2012), clearing the way for our resolution of the potential intervenors' appeal.

II

¶ 14 Appellants challenge the denial of their motion to intervene ...