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Utah Supreme Court Opinion on FLDS Trust

Utah Supreme Court Opinion on FLDS Trust

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Published by Ben Winslow
An opinion (and dissenting opinion) by the Utah Supreme Court regarding the Fundamentalist LDS Church's United Effort Plan Trust and the law firm that represented it.
An opinion (and dissenting opinion) by the Utah Supreme Court regarding the Fundamentalist LDS Church's United Effort Plan Trust and the law firm that represented it.

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Published by: Ben Winslow on Mar 13, 2013
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03/13/2013

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This opinion is subject to revision before final publication in the Pacific Reporter 
2013 UT 15
IN THE
S
UPREME
C
OURT OF THE
S
TATE OF
U
TAH
S
NOW
,
 
C
HRISTENSEN
&
 
M
ARTINEAU
,
 
R
AYMOND
S
COTT
B
ERRY
,W
ILLIE
 J
ESSOP
,
 
D
AN
 J
OHNSON
, and M
ERLIN
 J
ESSOP
,
Petitioners,v.
H
ONORABLE
D
ENISE
P.
 
L
INDBERG
,District Court Judge,
Respondent.
No. 20091006Filed March 12, 2013Third District, Salt LakeThe Honorable Denise P. LindbergNo. 053900848Attorneys: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 J
USTICE
P
ARRISH
authored the opinion of the Court,in which J
USTICE
D
URHAM
and J
UDGE
T
HORNE
joined.C
HIEF
 J
USTICE
D
URRANT
filed a concurring in part and dissentingin part opinion, in which A
SSOCIATE
C
HIEF
 J
USTICE
N
EHRING
 joined.Due to his retirement, J
USTICE
W
ILKINS
did not participate herein;Court of Appeals J
UDGE
W
ILLIAM
A.
 
T
HORNE
sat. J
USTICE
T
HOMAS
R.
 
L
EE
became a member of the Court on July 19,2010, after oral argument in this matter, and accordingly did notparticipate. J
USTICE
P
ARRISH
, opinion of the Court:
INTRODUCTION
¶1This case requires us to determine whether an attorney-clientrelationship that existed between the United Effort Plan Trust (UEPTrust or Trust) and its attorneys at the law firm Snow, Christensen
 
S
NOW
et al
v.
H
ONORABLE
L
INDBERG
Opinion of the Court
1
On June 13, 2011, we stayed the present case pending disposi-tion of the appeal in a related case,
Fundamentalist Church of JesusChrist of Latter-Day Saints v. Wisan
,698 F.3d 1295 (10
th
Cir. 2012)(
FLDS v. Wisan
).
Wisan
was an appeal from the federal districtcourt’s decision granting the Fundamentalist Church of Jesus Christof Latter-Day Saints (FLDS Association) a preliminary injunctionbarring the probate court’s further administration of the Trust.
Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Wisan
, 773F. Supp. 2d 1217, 1236, 1244–45 (D. Utah 2011). On November 5,2012, the Court of Appeals for the Tenth Circuit vacated the federaldistrict court’s order granting a preliminary injunction and re-manded with directions to dismiss the claims filed by the FLDSAssociation.
Fundamentalist Church of Jesus Christ of Latter-Day Saintsv. Horne
, 698 F.3d 1295, 1299 (10th Cir. 2012). We thereafter liftedour stay on December 12, 2012.2& Martineau (SCM) continued after the Trust was reformed cy pres.
1
Specifically, we must determine whether the district court’sreformation of the UEP Trust altered the Trust to such an extent thatit can no longer be considered the same client for purposes of theattorney-client privilege and rule 1.9 of the Utah Rules of Profes-sional Conduct. The district court determined that reformation ofthe UEP Trust did not sever the attorney-client relationship and ittherefore ordered SCM to disgorge privileged attorney-clientinformation to the reformed UEP Trust (Reformed Trust). Addition-ally, it disqualified SCM under rule 1.9 of the Utah Rules of Profes-sional Conduct from representing clients Willie Jessop, Dan Johnson,and Merlin Jessop (Movants) in substantially related matters inwhich the Movants’ interests were materially adverse to theReformed Trust.¶2We hold that the UEP and the Reformed Trust were not thesame client. Therefore, there was no attorney-client relationshipbetween SCM and the Reformed Trust. As a result, the district courterred when it disqualified SCM from representing Movants andordered SCM to disgorge privileged attorney-client information tothe Special Fiduciary of the Reformed Trust.
BACKGROUND
¶3The UEP Trust was created in 1942 by the predecessors ofa religious group known as the Fundamentalist Church of JesusChrist of Latter-Day Saints (FLDS Church). The UEP Trust’s statedpurpose was primarily “charitable and philanthropic.” Membership
 
Cite as: 2013 UT 15Opinion of the Court3in the UEP Trust was established by “consecrating” property to theTrust “in such amounts as shall be deemed sufficient by the Boardof Trustees.”¶4In 1987, the Trustees of the UEP Trust were sued by Trustland residents. The suit alleged several causes of action, includinga claim for breach of fiduciary duty. The district court dismissedthese claims because it found that the UEP Trust was charitable andthe plaintiffs therefore lacked standing. But in
 Jeffs v. Stubbs
, wereversed the district court’s decision and held that the UEP Trustwas not charitable because it benefitted specific individuals. 970P.2d 1234, 1252–53 (Utah 1998). In response to our decision, the solesurviving beneficiary of the UEP Trust, Rulon Jeffs, acting forhimself and as the president of the Corporation of the FLDS Church,and other trustees amended and reinstated the UEP Trust. It isundisputed that the amended UEP Trust is a charitable trust. Unlikethe original trust documents, which essentially limited the class ofbeneficiaries to the UEP Trust founders, the 1998 restatementsubstantially broadened the class of beneficiaries to include FLDSChurch members who “consecrate their lives, times, talents, andresources to the building and establishment of the Kingdom of Godon Earth under the direction of the President of the [FLDS] Church.”¶5The primary purpose of the UEP Trust was religious. The1998 UEP Trust’s declaration expressly states that it “is a religiousand charitable trust,” and “a spiritual . . . step toward[s] living theHoly United Order.” The Trust further provides that the HolyUnited Order is a “central principle of the Church” that “requires thegathering together of faithful Church members on consecrated andsacred lands to establish as one pure people the Kingdom of God onEarth under the guidance of Priesthood leadership.”¶6“[C]onsistent with its religious purpose,” the UEP Truststates that it is to be administered “to provide for Church membersaccording to their wants and their needs, insofar as their wants are just (Doctrine and Covenants, Section 82:17–21).” The UEP Trustmakes clear that participation in the Trust is conditioned on livingin accordance with the principles of the United Effort Plan and theFLDS Church as determined by spiritual leaders. It provides that[p]articipants who, in the opinion of the Presidency ofthe Church, do not honor their commitments to livetheir lives according to the principles of the UnitedEffort Plan and the Church shall remove themselvesfrom the Trust property and, if they do not, the Board

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