Utah Down Syndrome Found., Inc. v. Utah Down Syndrome Ass'n

Decision Date07 December 2012
Docket NumberNo. 20110205.,20110205.
Citation293 P.3d 241,723 Utah Adv. Rep. 82
PartiesUTAH DOWN SYNDROME FOUNDATION, INC., Plaintiff and Appellee, v. UTAH DOWN SYNDROME ASSOCIATION, et al., Defendants and Appellants. The Members of the Uptown Downs and Up with Down, Intervenor. Donald D. Gilbert, Jr., Judgment Debtor and Appellant.
CourtUtah Supreme Court

OPINION TEXT STARTS HERE

E. Barney Gesas, Lynn O. Poulson, Salt Lake City, for appellant.

Russell A. Cline, Salt Lake City, for appellee.

Justice PARRISH, opinion of the Court:

INTRODUCTION

¶ 1 Attorney Donald D. Gilbert, Jr. appeals the denial of his motion to vacate the district court's Disgorgement Order, which ordered him to return $30,000 that he received as payment for legal services he had provided to the Utah Down Syndrome Association and its founders. We dismiss Mr. Gilbert's appeal for lack of appellate jurisdiction because, as a nonparty to this lawsuit, he is not entitled to an appeal as of right. Because we lack appellate jurisdiction, we are precluded from addressing this case on the merits and therefore express no opinion regarding Mr. Gilbert's personal jurisdiction claims.

BACKGROUND

¶ 2 This appeal arises from the district court's Disgorgement Order, which required Mr. Gilbert to disgorge $30,000 in legal fees that he received as payment for his representationof the Utah Down Syndrome Association and its founders. The Disgorgement Order stems from a dispute between the founders of the Utah Down Syndrome Association (Association) and the Utah Down Syndrome Foundation (Foundation). In two separate lawsuits, Mr. Gilbert represented several former officers 1 of the Foundation and current founders of the Association who, after becoming dissatisfied with the management of the Foundation, left to form a competing nonprofit, the Association. The Disgorgement Order, which was issued in the second lawsuit, required Mr. Gilbert to forfeit legal fees he had received for representing the Association and its founders in their lawsuits with the Foundation. This appeal arises from the second lawsuit.

¶ 3 In the first lawsuit, the details of which are not relevant to this appeal,2 the district court issued a Partial Summary Judgment Order forbidding Mr. Gilbert's clients from accessing the Foundation's funds located in certain bank accounts (Disputed Accounts). Later, as payment for his legal services, Mr. Gilbert received four checks, totaling $30,000, which were drawn from the Disputed Accounts. After the Partial Summary Judgment Order was issued in the first lawsuit, the Foundation filed a complaint initiating the second lawsuit.3

¶ 4 In the second lawsuit, the Foundation sued the Association and its founders, requesting an accounting and recovery of all funds taken from the Foundation's Disputed Accounts. After discovering that some of the funds were used to pay Mr. Gilbert for his legal representation of the Association and its founders, the Foundation filed two successive motions for disgorgement. 4 The motions requested that the court order Mr. Gilbert to disgorge $30,000 in legal fees he had received from the Disputed Accounts, as well as an additional $2,453 for the Foundation's attorney fees. This appeal stems from the Disgorgement Order, which was issued in the second lawsuit.

¶ 5 Mr. Gilbert was never named as a party and he was never served with process. And Mr. Gilbert did not file a motion to intervene as an interested party. However, Mr. Gilbert did receive a copy of the motions for disgorgement and the Disgorgement Order in his capacity as an attorney for his clients. He filed a brief in opposition to the motion on behalf of his clients, and he orally opposed the first Motion for Disgorgement before the district court, again in his representative capacity on behalf of his clients. The district court ultimately granted the Foundation's final Motion for Disgorgement and issued an Order and Judgment against Mr. Gilbert two months after he had withdrawn as the Association's attorney of record. The district court's Order and Judgment against Mr. Gilbert ordered him to pay $32,453 to the Foundation. To date, Mr. Gilbert has not disgorged his fees.5

¶ 6 Two years after the issuance of the Disgorgement Order in the second lawsuit, and while the second lawsuit was still being litigated, Mr. Gilbert filed a Motion to Vacate the Disgorgement Order (Motion to Vacate) under rule 60(b)(4) of the Utah Rules of Civil Procedure. He argued that the Disgorgement Order was void for lack of personal jurisdiction because he was never a named party or personally served with the motions or the order. He also argued that, because the district court lacked personal jurisdiction over him, the Disgorgement Order violated his due process rights. The Foundation opposed Mr. Gilbert's Motion to Vacate, arguing that the court had jurisdiction based on its inherent authority over Mr. Gilbert as an attorney and officer of the court. Additionally, the Foundation argued that Mr. Gilbert had a special duty to inquire as to the source of his fees and that he violated that duty when he accepted funds that he knew were subject to the Partial Summary Judgment Order from the first lawsuit. The district court denied Mr. Gilbert's motion on the merits, reasoning that it had jurisdiction over Mr. Gilbert as an officer of the court and that he had violated a court order by accepting funds that he knew were subject to the Partial Summary Judgment Order. Mr. Gilbert now appeals the district court's dismissal of his motion to vacate the Disgorgement Order.

STANDARD OF REVIEW

¶ 7 “Whether this court has jurisdiction over an appeal is a question of law that can be raised for the first time on appeal.” Navajo Nation v. State (In re Adoption of A.B.), 2010 UT 55, ¶ 21, 245 P.3d 711. And “a lack of jurisdiction can be raised at any time by either party or by the court.” Kennecott Corp. v. Utah State Tax Comm'n, 814 P.2d 1099, 1100 (Utah 1991) (internal quotation marks omitted). “When this court lacks jurisdiction over an appeal, it retains only the authority to dismiss the appeal.” In re A.B., 2010 UT 55, ¶ 21, 245 P.3d 711.

ANALYSIS
I. WE DISMISS THIS APPEAL FOR LACK OF APPELLATE JURISDICTION BECAUSE, AS A NONPARTY, MR. GILBERT IS NOT ENTITLED TO AN APPEAL AS OF RIGHT

¶ 8 Mr. Gilbert and the Foundation present this case as an appeal taken as of right under section 78A–3–102(3)(j) of the Utah Code, and both parties focus their arguments on the merits of the district court's denial of Mr. Gilbert's Motion to Vacate. Mr. Gilbert argues that the district court erred in denying his Motion to Vacate because he was never personally served with the motions for disgorgement and therefore, the lower court lacked personal jurisdiction over him and its order violated his due process rights. The Foundation contends that, because Mr. Gilbert received and opposed the motion on behalf of his clients, he had actual knowledge of the motion and waived his right to challenge the court's personal jurisdiction over him.

¶ 9 While both Mr. Gilbert and the Foundation focus on the merits of the district court's denial of the Motion to Vacate, we see a more fundamental jurisdictional problem with this appeal.6 Namely, Mr. Gilbert, as a nonparty, is not entitled to appeal the district court's denial of his Motion to Vacate. We have previously held that persons or entities that are not parties to a proceeding are not entitled to an appeal as of right. See, e.g., Brigham Young Univ. v. Tremco Consultants, Inc., 2005 UT 19, ¶ 46, 110 P.3d 678 (noting that “nonparties ... cannot appeal the [court] order”); State v. Sun Sur. Ins. Co., 2004 UT 74, ¶ 9, 99 P.3d 818 (noting that [a] surety cannot bring a direct appeal in a criminal case because it is not a party to the criminal case”). Instead, “an extraordinary writ is the vehicle pursuant to which [nonparties can] properly ... challenge[ ] [a court] order.” Tremco, 2005 UT 19, ¶ 46 n. 7, 110 P.3d 678.

¶ 10 The Utah Rules of Appellate and Civil Procedure support this conclusion. While the appellate rules do not explicitly state who may file an appeal as of right, contextually, they speak exclusively in terms of parties who may take an appeal. SeeUtah R.App. P. 3, 4. Specifically, rule 3(d), which governs appeals as of right, requires that [t]he notice of appeal ... specify the party or parties taking the appeal.” (Emphasis added.) 7 In contrast, rule 65B(a) of the Utah Rules of Civil Procedure, which governs extraordinary writs, states that [w]here no other plain, speedy and adequate remedy is available, a person may petition the court for extraordinary relief.” (Emphasis added.) And “where an inferior court ... has exceeded its jurisdiction,” a person aggrieved or whose interests are threatened ... may petition the court for relief.” Id. 65B(d)(1)-(2) (emphasis added).8 Thus, our procedural rules confirm that nonparties are not entitled to an appeal as of right. Instead, a nonparty who seeks relief from a lower court's order that purports to affect the nonparty's interests must proceed by way of an extraordinary writ.

¶ 11 The issues presented here are similar to those presented in Tremco. In Tremco, we dismissed an appeal for lack of jurisdiction because a nonparty had improperly attempted to take an appeal as of right. 2005 UT 19, ¶ 46, 110 P.3d 678. The district court had issued an order that held several nonparties liable for a judgment even though they “were neither served with process nor made parties to the case.” Id. ¶ 43. After the order was issued, the nonparties moved to vacate the order, arguing that the court lacked personal jurisdiction over them because they were never served with the summons and complaint. Id. ¶ 44. They also argued that, because they were not personally served, the court's order violated their due process rights. Id. The district court denied the motion. Id. ¶ 45.

¶ 12 The nonparties appealed the denial of the motion to vacate and, on appeal, we determined that there...

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