Snow, Christensen & Martineau v. Lindberg , 730 Utah Adv. Rep. 68 ( 2013 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2013 UT 15IN THE
SUPREME COURT OF THE STATE OF UTAH
SNOW, CHRISTENSEN & MARTINEAU, RAYMOND SCOTT BERRY,
WILLIE JESSOP, DAN JOHNSON, and MERLIN JESSOP,
Petitioners,
v.
HONORABLE DENISE P. LINDBERG,
District Court Judge,
Respondent.
No. 20091006
Filed March 12, 2013
Third District, Salt Lake
The Honorable Denise P. Lindberg
No. 053900848
Attorneys:
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
JUSTICE PARRISH authored the opinion of the Court,
in which JUSTICE DURHAM and JUDGE THORNE joined.
CHIEF JUSTICE DURRANT filed a concurring in part and dissenting
in part opinion, in which ASSOCIATE CHIEF JUSTICE NEHRING
joined.
Due to his retirement, JUSTICE WILKINS did not participate herein;
Court of Appeals JUDGE WILLIAM A. THORNE sat.
JUSTICE THOMAS R. LEE became a member of the Court on July 19,
2010, after oral argument in this matter, and accordingly did not
participate.
JUSTICE PARRISH, opinion of the Court:
INTRODUCTION
¶1 This case requires us to determine whether an attorney-client
relationship that existed between the United Effort Plan Trust (UEP
Trust or Trust) and its attorneys at the law firm Snow, Christensen
SNOW et al v. HONORABLE LINDBERG
Opinion of the Court
& Martineau (SCM) continued after the Trust was reformed cy pres.1
Specifically, we must determine whether the district court’s
reformation of the UEP Trust altered the Trust to such an extent that
it can no longer be considered the same client for purposes of the
attorney-client privilege and rule 1.9 of the Utah Rules of Profes-
sional Conduct. The district court determined that reformation of
the UEP Trust did not sever the attorney-client relationship and it
therefore ordered SCM to disgorge privileged attorney-client
information 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 in
which the Movants’ interests were materially adverse to the
Reformed Trust.
¶2 We hold that the UEP and the Reformed Trust were not the
same client. Therefore, there was no attorney-client relationship
between SCM and the Reformed Trust. As a result, the district court
erred when it disqualified SCM from representing Movants and
ordered SCM to disgorge privileged attorney-client information to
the Special Fiduciary of the Reformed Trust.
BACKGROUND
¶3 The UEP Trust was created in 1942 by the predecessors of
a religious group known as the Fundamentalist Church of Jesus
Christ of Latter-Day Saints (FLDS Church). The UEP Trust’s stated
purpose was primarily “charitable and philanthropic.” Membership
1
On June 13, 2011, we stayed the present case pending disposi-
tion of the appeal in a related case, Fundamentalist Church of Jesus
Christ of Latter-Day Saints v. Wisan,698 F.3d 1295 (10th Cir. 2012)
(FLDS v. Wisan). Wisan was an appeal from the federal district
court’s decision granting the Fundamentalist Church of Jesus Christ
of Latter-Day Saints (FLDS Association) a preliminary injunction
barring the probate court’s further administration of the Trust.
Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Wisan, 773
F. Supp. 2d 1217, 1236, 1244–45 (D. Utah 2011). On November 5,
2012, the Court of Appeals for the Tenth Circuit vacated the federal
district court’s order granting a preliminary injunction and re-
manded with directions to dismiss the claims filed by the FLDS
Association. Fundamentalist Church of Jesus Christ of Latter-Day Saints
v. Horne, 698 F.3d 1295, 1299 (10th Cir. 2012). We thereafter lifted
our stay on December 12, 2012.
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in the UEP Trust was established by “consecrating” property to the
Trust “in such amounts as shall be deemed sufficient by the Board
of Trustees.”
¶4 In 1987, the Trustees of the UEP Trust were sued by Trust
land residents. The suit alleged several causes of action, including
a claim for breach of fiduciary duty. The district court dismissed
these claims because it found that the UEP Trust was charitable and
the plaintiffs therefore lacked standing. But in Jeffs v. Stubbs, we
reversed the district court’s decision and held that the UEP Trust
was not charitable because it benefitted specific individuals. 970
P.2d 1234, 1252–53 (Utah 1998). In response to our decision, the sole
surviving beneficiary of the UEP Trust, Rulon Jeffs, acting for
himself and as the president of the Corporation of the FLDS Church,
and other trustees amended and reinstated the UEP Trust. It is
undisputed that the amended UEP Trust is a charitable trust. Unlike
the original trust documents, which essentially limited the class of
beneficiaries to the UEP Trust founders, the 1998 restatement
substantially broadened the class of beneficiaries to include FLDS
Church members who “consecrate their lives, times, talents, and
resources to the building and establishment of the Kingdom of God
on Earth under the direction of the President of the [FLDS] Church.”
¶5 The primary purpose of the UEP Trust was religious. The
1998 UEP Trust’s declaration expressly states that it “is a religious
and charitable trust,” and “a spiritual . . . step toward[s] living the
Holy United Order.” The Trust further provides that the Holy
United Order is a “central principle of the Church” that “requires the
gathering together of faithful Church members on consecrated and
sacred lands to establish as one pure people the Kingdom of God on
Earth under the guidance of Priesthood leadership.”
¶6 “[C]onsistent with its religious purpose,” the UEP Trust
states that it is to be administered “to provide for Church members
according to their wants and their needs, insofar as their wants are
just (Doctrine and Covenants, Section 82:17–21).” The UEP Trust
makes clear that participation in the Trust is conditioned on living
in accordance with the principles of the United Effort Plan and the
FLDS Church as determined by spiritual leaders. It provides that
[p]articipants who, in the opinion of the Presidency of
the Church, do not honor their commitments to live
their lives according to the principles of the United
Effort Plan and the Church shall remove themselves
from the Trust property and, if they do not, the Board
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Opinion of the Court
of Trustees may . . . cause their removal.
The UEP Trust was “intended to be . . . of perpetual duration;
however in the event of [its] termination, . . . the assets of the Trust
Estate at the time [were to] become the property of the Corporation
of the President of the [FLDS] Church, corporation sole.”
¶7 In 2004, the UEP Trust and then FLDS president, Warren
Jeffs, were sued in two separate tort actions. Rodney Parker, an
attorney from the law firm of SCM entered an appearance as counsel
for the UEP Trust and the FLDS Church in both of these actions but
later withdrew when he was discharged by his clients. Because the
controlling trustee, Warren Jeffs, did not appoint substitute counsel
in either action, the UEP Trust was vulnerable to having default
judgments entered against it. The Utah Attorney General (AG)
responded by petitioning the district court for: (1) removal of the
trustees for breach of fiduciary duty; (2) an order that the trustees
provide an inventory, final report, and accounting of Trust assets;
and (3) an appointment of a Special Fiduciary to administer the
Trust until a new trustee was appointed.
¶8 In June 2005, the district court entered an order for a
preliminary injunction suspending the trustees of the UEP Trust and
appointing Bruce Wisan as special fiduciary “on a limited basis” to
manage the affairs of the Trust. Additionally, the court asked the
Special Fiduciary to identify any issues that the court needed to
address before it appointed new trustees. In response to the court’s
request, the Special Fiduciary indicated that the Trust would need
to be reformed before new trustees could be appointed.
¶9 On December 13, 2005, the district court issued an order
that the UEP Trust be reformed. Using the doctrine of cy pres, the
district court found that the UEP Trust had two primary purposes.
It concluded that its first purpose was to advance the religious
doctrines and goals of the FLDS Church and that its second purpose
was to provide for the “just wants and needs” of FLDS Church
members. The district court held that although the trust could not
be reformed to advance its religious purposes, it could be reformed
to advance its charitable purpose to provide for UEP Trust beneficia-
ries’ “just wants and needs.”2
2
The district court determined that it could not reform the UEP
Trust to advance its religious purposes for primarily two reasons.
First, it determined that it could not advance the religious purposes
(continued...)
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¶10 Using secular principles, the district court reformed the
UEP Trust. The purpose and provisions of the Reformed Trust are
vastly different from those of the UEP Trust. The UEP Trust existed
solely for the purpose of “preserv[ing] and advanc[ing] the religious
doctrines and goals of the [FLDS Church].” In contrast, the
Reformed Trust is “separate and distinct from . . . the FLDS Church,
as well as other religious efforts, objectives, doctrines or
organizations.” Additionally, the Reformed Trust was to be
administered “based on neutral principles of law,” independent of
Priesthood input. But Priesthood input was critical to the
administration of the UEP Trust. Indeed “[t]he doctrine and laws of
the Priesthood . . . [were] the guiding tenants by which the Trustees
of the [UEP] Trust” were to act. The beneficiaries of the Reformed
Trust were also different from those of the UEP Trust. While
participation in the UEP Trust was limited to FLDS Church
members, beneficiaries of the Reformed Trust included nonmembers
“who [could] demonstrate that they had previously made
contributions to either the [UEP] Trust or the FLDS Church.”
¶11 Petitioners argue that the administration of the Reformed
Trust differs vastly from that of the UEP Trust. Unlike the UEP
Trust, which was administered in a manner that advanced the FLDS
Church and its members, petitioners contend that the Reformed
Trust is administered in a manner that is hostile towards the FLDS
Church and its members. To support their argument, they point to
the Special Fiduciary’s attorney’s characterization of the administra-
tion of the trust as “sociological and psychological war with the
beneficiaries.” They also point to the Special Fiduciary’s court
filings, which refer to church members and the former Trustees of
the UEP Trust, including the president of the FLDS Church, as
“saboteurs” and “conspirators.” Petitioners also note that the
Special Fiduciary has admitted that a factor in determining whether
Trust property will be conveyed to beneficiaries outright or subject
to a spendthrift trust is whether the transferee is likely to participate
2
(...continued)
of the UEP Trust insofar as those purposes were illegal. Specifically,
the district court noted that it could not advance the FLDS doctrines
of polygamy, bigamy, or sexual activity between adults and minors.
Second, the district court determined that it could not advance the
religious purposes of the Trust because it was prohibited by the First
Amendment to the United States Constitution from resolving
property disputes on the basis of religious doctrines.
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Opinion of the Court
in the United Holy Order. Petitioners claim that this practice
discriminates against beneficiaries who practice the doctrines of the
FLDS Church.
¶12 Petitioners are particularly critical of the Special
Fiduciary’s attempt to sell the Harker Dairy Operation (Berry Knoll
Farm). Petitioners take offense to the sale because they view the
Berry Knoll Farm as having historic and religious value. They claim
that the Berry Knoll Farm is sacred because it was revealed to FLDS
Church leadership by divine inspiration that the property was to be
the site for an FLDS temple. Despite these protests, the Special
Fiduciary claims that he must sell Berry Knoll Farm to meet the
Reformed Trust’s cash flow problems.
¶13 In response to concerns over administration of the Trust,
an association of members of the FLDS Church (Association) filed a
petition for an extraordinary writ, which challenged the validity of
the Reformed Trust on several grounds. In Fundamentalist Church of
Jesus Christ of Latter-Day Saints v. Lindberg, we concluded that
because the Association’s petition was filed three years after the
district court’s reformation of the UEP Trust, all but one of the
Association’s clams were barred by the doctrine of laches. 2010 UT
51, ¶ 1, 238 P.3d 1054. We further concluded that the remaining
claim that was not barred by laches was not ripe for adjudication. Id.We therefore held that the district court’s reformation of the UEP
Trust was final and could not be challenged. Id. ¶ 35.
¶14 On May 19, 2008, the Special Fiduciary served subpoenas
on SCM seeking documents related to SCM’s former representation
of the UEP Trust. SCM objected, claiming that the requested
documents contained privileged attorney-client information. SCM
argued that the Special Fiduciary was not entitled to these docu-
ments because the Reformed Trust was not the same entity as the
UEP Trust and because the Special Fiduciary and the Reformed
Trust were, in fact, adversaries of the former UEP Trustees and the
settlor of the UEP Trust. On June 26, 2008, the Special Fiduciary filed
a motion to compel compliance with the subpoenas, and the district
court granted the Special Fiduciary’s motion.
¶15 On August 14, 2008, Movants learned of the Special
Fiduciary’s intent to sell the Berry Knoll Farm and hired SCM to
represent them in their efforts to prevent the sale. On August 25,
2008, the Special Fiduciary moved to disqualify SCM under rule 1.9
of the Utah Rules of Professional Conduct. The Special Fiduciary
argued that because SCM had formerly represented the UEP Trust
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and because the Reformed Trust and the UEP Trust were the same
entity, SCM was prohibited from representing Movants in any
matter in which they were materially adverse to the Reformed Trust.
SCM opposed the Special Fiduciary’s motion. First, it argued that
trusts are not capable of forming attorney-client relationships and
therefore it never established a relationship with the Reformed
Trust. Second, it argued that, even if it were possible to form an
attorney-client relationship with a trust, the Reformed Trust is not
the same entity as the UEP Trust. It therefore argued that it neither
represented the Reformed Trust nor established an attorney-client
relationship with that entity.
¶16 The district court rejected SCM’s arguments and disquali-
fied SCM from representing Movants. Because SCM and Movants
were not parties to the proceedings, they had no right to appeal.
They therefore petitioned this court for a writ of extraordinary relief
under rule 65B of the Utah Rules of Civil Procedure. We have
jurisdiction pursuant to Utah Code section 78A-3-102(2).
STANDARD OF REVIEW
¶17 Rule 65B of the Utah Rules of Civil Procedure governs
petitions for extraordinary relief. It provides that “[w]here no other
plain, speedy and adequate remedy is available . . . relief may be
granted . . . where an inferior court . . . has exceeded its jurisdiction
or abused its discretion.” UTAH R. CIV. P. 65B(a), (d)(2). A district
court’s mistake of law “may constitute an abuse of [its] discretion.
State v. Barrett, 2005 UT 88, ¶ 26, 127 P.3d 682; see also State v.
Henriod, 2006 UT 11, ¶ 19, 131 P.3d 232.
¶18 Petitioners argue that the district court abused its discre-
tion when it ordered SCM to disclose privileged attorney-client
information to the Reformed Trust and when it disqualified SCM
from representing the Movants. The existence of a privilege is a
question of law that we review for correctness. Burns v. Boyden, 2006
UT 14, ¶ 6, 133 P.3d 370. “[T]he proper standard of review for
decisions relating to disqualification is abuse of discretion.” Cheves
v. Williams, 1999 UT 86, ¶ 57, 993 P.2d 191 (internal quotation marks
omitted). “However, to the extent this [c]ourt has a special interest
in administering the law governing attorney ethical rules, a trial
court’s discretion is limited.” Id. (internal quotation marks omitted).
ANALYSIS
¶19 This case raises three issues: (1) whether a petition for
extraordinary relief is an appropriate mechanism for challenging the
district court’s order disqualifying SCM and compelling it to disclose
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Opinion of the Court
privileged attorney-client information to the Special Fiduciary of the
Reformed Trust, (2) whether SCM is required to disclose attorney-
client information to the Special Fiduciary, and (3) whether SCM can
represent clients whose interests are materially adverse to the
interests of the Reformed Trust. We address each of these issues in
turn.
I. THE PETITION FOR EXTRAORDINARY RELIEF
IS AN APPROPRIATE PROCEDURE TO
CHALLENGE THE DISTRICT COURT’S ORDER
¶20 Judge Lindberg argues that a writ for extraordinary relief
is not the appropriate procedural mechanism for challenging the
district court’s ruling. Specifically, she argues that this case does not
involve extraordinary circumstances. We disagree.
¶21 Rule 65B of the Utah Rules of Civil Procedure provides that
“[w]here no other plain, speedy and adequate remedy is available,
a person may petition the court for extraordinary relief on . . .
grounds . . . involving the wrongful use of judicial authority.” UTAH
R. CIV. PROC. 65B(a). A court wrongfully uses its judicial authority
when it abuses its discretion. UTAH R. CIV. PROC. 65B(d)(2)(A). “[I]f
a petitioner is able to establish that a lower court abused its discre-
tion, that petitioner becomes eligible for, but not entitled to,
extraordinary relief.” State v. Barrett, 2005 UT 88, ¶ 24, 127 P.3d 682.
¶22 The question of whether to grant a petition for extraordi-
nary relief lies within the sound discretion of this court. Id. When
considering whether to grant a petition, we may consider a variety
of factors such as “the egregiousness of the alleged error, the signifi-
cance of the legal issue presented by the petition, the severity of the
consequences occasioned by the alleged error, and additional
factors.” Id. ¶ 24. But these factors are neither controlling nor do
they wholly measure the extent of our discretion. Id.
¶23 We conclude that SCM and Movants appropriately utilized
a petition for extraordinary writ in challenging the district court’s
order. As nonparties to the district court proceeding, SCM and
Movants had “no other plain, speedy and adequate remedy . . .
available” to challenge the district court’s order. Moreover, the
consequences of the district court’s error—disgorgement of docu-
ments allegedly protected by attorney-client privilege and disqualifi-
cation of counsel—are of sufficient severity to justify the writ.
¶24 Because SCM and Movants were not parties to the
proceeding below, they cannot appeal the district court’s order.
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Thus, outside of the extraordinary writ process, they have no “plain,
speedy, and adequate remedy” to challenge it. As we have previ-
ously indicated, when an individual who is not a party to a district
court proceeding is adversely affected by an order or judgment, the
procedural mechanism for challenging the district court’s action is
through a petition for extraordinary writ. See Soc’y of Prof’l Journal-
ists v. Bullock, 743 P.2d 1166, 1168, 1171 (Utah 1987).3
¶25 Second, an extraordinary writ is appropriate in this case
because compelling SCM to turn over what is alleged to constitute
privileged information has the potential to result in irreparable
injury. “[A]ppellate courts cannot always unring the bell once the
information has been released.” United States v. Sciarra, 851 F.2d 621,
636 (3d Cir. 1988) (internal quotation marks omitted); see also In re
Perrigo Co., 128 F.3d 430, 437 (6th Cir. 1997) (“[F]orced disclosure of
privileged material may bring about irreparable harm.”).
¶26 Finally, the order disqualifying SCM will result in irrepara-
ble injury to the Movants because it will separate them “from the
counsel of [their] choice with immediate and measurable effect.”
Zurich Ins. Co. v. Knotts, 52 S.W.3d 555, 560 (Ky. 2001); see, e.g.,
AlliedSignal Recovery Trust v. AlliedSignal, Inc., 934 So.2d 675, 681
(Fla. Dist. Ct. App. 2006). And in this case, SCM is not only the
Movants’ counsel of choice, but is uniquely situated to represent the
Movants because it has knowledge of the circumstances surrounding
the creation of the UEP Trust, the trust documents, and the trust
reformation. Because SCM and the Movants cannot appeal the
district court’s order and because any error could result in irrepara-
3
Judge Lindberg also argues that a petition for extraordinary writ
is not an appropriate procedure to challenge the validity of the
Reformed Trust because such a challenge implicates the rights of the
Reformed Trust’s beneficiaries. We disagree that our decision here
will implicate the validity of the Reformed Trust. Indeed, we
explicitly decided in Fundamentalist Church of Jesus Christ of Latter-
Day Saints v. Lindberg that, because no one had challenged the
district court’s reformation of the UEP Trust for three years, the
validity of the Reformed Trust could no longer be challenged. 2010
UT 51, ¶ 35, 238 P.3d 1054. Although our decision in this case
addresses the reformation of the Trust, it does so for the limited
purpose of determining whether SCM should be required to turn
over the subpoenaed information and whether SCM should be
disqualified from representing the Movants.
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Opinion of the Court
ble harm to petitioners, we conclude that a petition for extraordinary
relief was the correct procedure for challenging the district court’s
order. We now turn to the question of whether SCM and Movants
are entitled to the relief they seek.
II. THE DISTRICT COURT ABUSED ITS DISCRETION
WHEN IT DETERMINED THAT SCM HAD AN
ATTORNEY-CLIENT RELATIONSHIP WITH
THE REFORMED TRUST
¶27 We next address whether the district court abused its
discretion when it ordered SCM to disgorge privileged attorney-
client information to the Special Fiduciary. SCM argues that the
district court abused its discretion because “charitable trusts are not
entities capable of entering into an attorney-client relationship or
holding a privilege.” It therefore reasons that the only attorney-
client relationship created by SCM’s prior representation of the UEP
Trust was between SCM and the former trustees and not between
SCM and the UEP Trust itself. Alternatively, SCM argues that even
if an attorney-client relationship existed between SCM and the UEP
Trust, the Reformed Trust is not the same client as the UEP Trust.
Therefore, SCM cannot be disqualified from representing the
Movants based on its former relationship with the UEP Trust.
¶28 We hold that the UEP Trust was an entity that was capable
of forming an attorney-client relationship. Nevertheless, we hold
that the Reformed Trust and the UEP Trust are not the same entity
for purposes of analyzing the attorney-client relationship. We
therefore conclude that the district court abused its discretion when
it ordered SCM to disgorge privileged information to the Special
Fiduciary and when it disqualified SCM from representing Movants.
A. The UEP Trust Was an Entity Capable of Entering
Into an Attorney-Client Relationship
¶29 We first consider whether the UEP Trust was a client of
SCM. SCM argues that the UEP Trust was never its client because
a charitable trust is merely a fiduciary relationship and is not an
entity capable of being a “client” for purposes of asserting an
attorney-client privilege. SCM argues that it established an attorney-
client relationship with the trustees of the UEP Trust and not the
UEP Trust itself. It therefore reasons that when the district court
reformed the UEP Trust and removed its trustees, SCM was entitled
to continue its attorney-client relationship with the former trustees.
We disagree.
¶30 The attorney-client privilege is defined by rule 504 of the
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Utah Rules of Evidence. “When interpreting [our rules of evidence],
we use general rules of statutory construction.” Clark v. Archer, 2010
UT 57, ¶ 9, 242 P.3d 758. “[W]e consider the literal meaning of each
term and avoid interpretations that will render portions of a [rule]
superfluous or inoperative.” Hoyer v. State, 2009 UT 38, ¶ 22, 212
P.3d 547. “If a rule’s language is clear and unambiguous, analysis
of the rule’s meaning ends.” Clark, 2010 UT 57, ¶ 9. We therefore
begin with the plain language of rule 504.
¶31 Rule 504 provides that an attorney’s “client has a privilege
to refuse to disclose and to prevent any other person from disclos-
ing, confidential communications . . . made for the purpose of
facilitating the rendition of professional legal services.”
UTAH R. EVID. 504(b)(1). The rule defines client as “a person[,] . . .
corporation, association, or other organization or entity . . . who is
rendered professional legal services by a lawyer.” Id. 504(a)(1). The
rule further provides that “[t]he [attorney-client] privilege may be
claimed by . . . the successor, trustee, or similar representative of a
client that was a corporation, association, or other organization,
whether or not in existence.” Id. 504(c)(4).
¶32 For purposes of rule 504, a trust is an entity not unlike a
corporation. Under the plain language of the rule, a trustee can
claim the privilege on behalf of the entity that it represents just as a
representative of a corporation can assert the privilege on behalf of
the corporation. Interpreting rule 504 as stating that a trust could
not hold the privilege is simply inconsistent with the language of
provision (c), which specifies who can claim the privilege on behalf
of an entity or organization. Under the plain language of rule 504,
it is the trust that holds the actual privilege and the trustee who
claims the privilege on behalf of the trust.
¶33 Having determined that the UEP Trust is capable of
forming an attorney-client relationship and thereby holding the
attorney-client privilege, we next address whether the privilege
continued from the original UEP Trust to the Reformed Trust. We
conclude that the district court’s reformation of the UEP Trust so
significantly altered it that the UEP Trust was transformed into an
entirely different entity. In other words, we conclude that the UEP
Trust and the Reformed Trust are not the same client.
B. The UEP Trust and the Reformed
Trust Are not the Same Entity
¶34 To determine whether the UEP Trust and the Reformed
Trust are the same client for purposes of the attorney-client privi-
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Opinion of the Court
lege, we begin by examining the Trust’s reformation. The district
court reformed the trust using the doctrine of cy pres. When the
purposes of a charitable trust “become[] unlawful, impracticable,
impossible to achieve, or wasteful,” a “court may apply cy pres to
[either] modify or terminate the trust by directing that the trust
property be applied . . . in a manner consistent with the settlor’s
charitable purposes.” UTAH CODE § 75-7-413(1).
Cy pres is a doctrine that is sometimes invoked when
there has been a gift or bequest for a charitable pur-
pose, which for some reason cannot be literally carried
out, and something closely analogous is done which
comports with and fulfills what appears to be the
donor’s intention and purpose.
In re Gerber, 652 P.2d 937, 940 (Utah 1982) (emphasis omitted)
(internal quotation marks omitted).
¶35 When employing the doctrine of cy pres, the donor’s
intention “should be the aim of the court.” Id. (internal quotation
marks omitted). The idea underlying the doctrine is that the donor
may have a general charitable intent, and that the particular
charitable institution is only an agent for effectuating that intent.
Therefore, if it becomes impossible or illegal to effectuate the gift in
the precise manner specified by the donor, the court may look for
another agent that is of the same character as the one specified and that
will effectuate the settlor’s general charitable intent. Id. at 937–40.
Essential to the application of cy pres is the requirement that the
court determine what “the settlor would have wanted to happen if
he were aware of the contingency which has made the exact
effectuation of his expressed intent impossible.” Howard Sav. Inst. of
Newark, N.J. v. Peep, 170 A.2d 39, 43 (N.J. 1961). Thus, application of
the cy pres doctrine requires a court to determine whether the settlor
would have chosen the district court’s modifications over a simple
termination of the trust.
¶36 Although we previously upheld the reformation of the
Trust in Fundamentalist Church of Jesus Christ of Latter-Day Saints v.
Lindberg, we did so exclusively on the basis of laches. 2010 UT 51,
¶ 35, 238 P.3d 1054. We did not evaluate whether the reformation
was consistent with the principle or requirements of cy pres in that
the Reformed Trust was of the same character as the UEP Trust or
that the Reformed Trust was consistent with the settlor’s intent.
¶37 In determining the settlor’s intent, a court considering
reformation under the doctrine of cy pres looks first to the plain
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language of the trust. Makoff v. Makoff, 528 P.2d 797, 798 (Utah 1974).
If the settlor’s intent is clear from the language of the trust, parol
evidence is inadmissible to vary the terms of the instrument. Id.“However, in ascertaining the intention of the settlor[, the court]
may consider the entire instrument aided by the surrounding
circumstances existing at the time of creation of the trust.” Id.¶38 In this case, the plain language of the Trust makes clear
that advancement of the FLDS religion was an essential purpose of
the Trust. This religious purpose permeates all aspects of the Trust,
starting with the manner in which Trust assets were acquired. Trust
assets were acquired through the “consecration” of property by
FLDS members. The Trust described “consecration” as “an uncondi-
tional dedication to a sacred purpose.” The Trust’s religious
purpose also was reflected in the manner in which trustees were
appointed. Trustees were appointed by the President of the FLDS
Church and the President of the Church was to serve as “a trustee
and President of the Board of Trustees.”
¶39 In addition, Trust distributions were judged by religious
standards. Whether beneficiaries were entitled to benefit from Trust
property was evaluated based on their righteousness. Specifically,
[t]hose who [sought] the privilege to . . . live upon the
lands and in the buildings of the . . . Trust . . .
commit[ed] themselves and their families to live their
lives according to the principles of the United Effort
Plan and the Church, and they and their families
consent[ed] to be governed by the Priesthood leader-
ship.
Additionally, the beneficiaries of the Trust were required to
“consecrate their lives, times, talents and resources to the building
and establishment of the Kingdom of God on Earth.” And those
beneficiaries “who[,] in the opinion of the Presidency of the Church,
[did] not honor their commitments to live their lives according to the
principles of the United Effort Plan and the Church [were to] remove
themselves from the trust property and, if they do not, the Board of
Trustees may in its discretion cause their removal.”
¶40 Finally, the Trust’s provisions regarding termination were
meant to ensure that Trust property remained under the control of
the FLDS Church. In the event of the Trust’s termination, “the assets
of the Trust Estate at that time [were to] become the property of the
Corporation of the President of the Fundamentalist Church of Jesus
Christ of Latter-Day Saints, corporation sole.”
13
SNOW et al v. HONORABLE LINDBERG
Opinion of the Court
¶41 In reforming the UEP Trust, the district court stripped the
Trust of its essential religious purpose and required that the Trust be
administered according to secular principles. In place of these
essential religious principles, it seized upon a provision of the Trust
requiring that the Trust be administered to “members according to
their wants and their needs, insofar as their wants are just.” Al-
though the district court relied on this provision to suggest that the
Trust had a secular purpose of providing for the needs of its
members, the language of the Trust makes clear that “just wants and
needs” is a religious determination. And the Trust specifically states
that the “Board of Trustees, in its sole discretion, shall administer the
Trust consistent with its religious purpose to provide for Church
members according to their wants and their needs, insofar as their
wants are just.” (Emphasis added.)
¶42 The religious purpose of the Trust is also evidenced by the
fact that the “just wants” provision was intended to promote the
FLDS doctrine of communal property ownership:
The United Effort Plan is the effort and striving on the
part of Church members toward the Holy United
Order. This central principle of the Church requires the
gathering together of faithful Church members on conse-
crated and sacred lands to establish as one pure people
the Kingdom of God on Earth under the guidance of
Priesthood leadership. . . . [C]onsistent with its reli-
gious purpose [the Trust is to be administered to]
Church members according to their wants and their
needs, insofar as their wants are just.
(Emphasis added.) Indeed, the “just wants” provision cites to FLDS
scripture.
¶43 In short, the district court seized upon an isolated trust
provision to find a secular component to the Trust where none
existed. Because the settlor intended that the advancement of the
FLDS religion was the essential purpose of the Trust, the district
court’s reformation of the trust by stripping it of its religious
purpose so changed its purpose and identity that it is a different
entity.
C. SCM Had no Attorney-Client Relationship
with the Entity Known as the Reformed Trust
¶44 We now address whether an attorney-client relationship
existed between SCM and the Reformed Trust. The Special
Fiduciary argues that because SCM previously represented the UEP
14
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Trust, the Reformed Trust is therefore the holder of any privileged
information. We disagree.
¶45 Rule 504 of the Utah Rules of Evidence recognizes
attorney-client communications as privileged. UTAH R. EVID. 504.
It provides that “[a] client has a privilege to refuse to disclose, and
to prevent any other person from disclosing, confidential communi-
cations . . . made for the purpose of facilitating the rendition of
professional legal services to the client.” Id. 504(b). “The attorney-
client privilege is intended to encourage candor between attorney
and client and promote the best possible representation of the
client.” Doe v. Maret, 1999 UT 74, ¶ 7, 984 P.2d 980 (internal
quotation marks omitted), (overruled on other grounds by Munson
v. Chamberlain, 2007 UT 91, ¶ 10, 173 P.3d 848). Rule 504(c) states
that “the successor, trustee, or similar representative of a corpora-
tion, association, or other organization, whether or not in existence”
may claim the privilege. The advisory committee’s notes provide
that “[w]here there is a dispute as to which of several persons has
claims to the rights of a previously existing entity, the court will be
required to determine from the facts which entity’s claim is most
consistent with the purposes of this rule.” UTAH R. EVID. 504
advisory committee’s note.
¶46 In this case, we conclude that allowing the Special
Fiduciary to claim the privilege for communications between SCM
and the UEP Trust would be inconsistent with the purpose of rule
504 because the Reformed Trust and the UEP Trust are so different
that they cannot be considered the same entity. Indeed, the pur-
poses of these two trusts are inconsistent. The UEP Trust existed
solely for the purpose of “preserv[ing] and advanc[ing] the religious
doctrines and goals of the [FLDS Church].” In contrast, the purpose
of the Reformed Trust is secular. It is “separate and distinct from . . .
the FLDS Church, as well as other religious efforts, objectives,
doctrines or organizations.” Additionally, the Reformed Trust is
administered “based on neutral principles of law,” independent of
priesthood input. This is in stark contrast to the administration of
the UEP Trust in which priesthood input was critical. In addition,
the beneficiaries of the trusts are different. While participation in the
UEP Trust was limited to faithful FLDS members, the Reformed
Trust beneficiaries include individuals “who can demonstrate that
they had previously made Contributions to either the Trust or the
FLDS Church.” Therefore, the beneficiaries of the Reformed Trust
can include individuals who have left the FLDS Church, joined a
rival sect, and/or have been critical of the FLDS Church.
15
SNOW et al v. HONORABLE LINDBERG
Opinion of the Court
¶47 Our conclusion that the Reformed Trust cannot be
considered the successor of the UEP Trust is also supported by the
differences in trust administration. The administration of the UEP
Trust has been characterized as “sociological and psychological war”
with FLDS Church members. And the Special Fiduciary has
admitted that a determination of whether property should be
conveyed outright or subject to a spendthrift trust depends in part
on whether the transferee is likely to continue to advance the FLDS
Church’s United Holy Order. In other words, a determination of
whether a beneficiary will be given ownership of trust property
outright or merely use of that property can depend on whether that
beneficiary will promise not to advance a specific FLDS doctrine. It
is clear that the settlor did not intend that the Trust that it created to
advance the FLDS religion be reformed and administered in a
manner that is hostile to that same religion.
¶48 The Special Fiduciary correctly notes that the Reformed
Trust and the UEP Trust are holding primarily the same property.
However, we do not find this fact determinative. Generally, when
a court reforms a trust cy pres, the reformation is considered a
modification of the trust. See UTAH CODE § 75-7-413 (1)(c)
(Supp. 2010). But in this case where the Reformed Trust is so
different from the original Trust that it cannot be deemed a continua-
tion for purposes of the attorney-client privilege, the assets of the
original Trust are deemed to have been purchased by the Reformed
Trust.
¶49 The Special Fiduciary also argues that if an attorney-client
relationship does not exist between the Reformed Trust and SCM,
any time an entity undergoes a “change of corporate management
or control,” or amends its bylaws or corporate mission, it will risk
severing the attorney-client relationships that have been formed.
The Special Fiduciary’s argument is misplaced because this case
does not involve a mere change in the management of the UEP
Trust. Rather, this case involves the district court’s reformation of
a charitable trust that, absent the defense of laches, would have been
set aside because the Reformed Trust does not effectuate the settlor’s
intent. Unlike a corporation or similar entity, a charitable trust’s
very existence is tied to the settlor’s intent. See Utah Code Ann. § 75-
7-413 (noting that a “court may apply cy pres to modify or terminate
the trust . . . in a manner consistent with the settlor’s charitable
purposes”); cf. id. § 75-7-410(1) (“A trust terminates to the extent
the . . . purposes of the trust have become unlawful, contrary to
public policy, or impossible to achieve.”). If a charitable trust cannot
16
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be reformed in a manner that is consistent with the settlor’s intent,
it should be terminated. In this case, the district court reformed the
trust rather than terminating it. Because the district courts reforma-
tion of the UEP Trust drastically altered the purpose and identity of
the Trust, we hold that the district court’s modifications transformed
it into an entirely different entity.
III. SCM IS NOT REQUIRED TO DISGORGE
PRIVILEGED ATTORNEY-CLIENT INFORMATION
TO THE REFORMED TRUST
¶50 We next consider whether SCM is required to disgorge
privileged attorney-client communications to the Reformed Trust.
Rule 1.9 of the Utah Rules of Professional Conduct describes the
duties lawyers owe to former clients. Specifically, “[a] lawyer who
has formerly represented a client in a matter shall not thereafter . . .
reveal information relating to the representation except as these
Rules would permit or require with respect to a client.” UTAH R. OF
PROF’L CONDUCT 1.9(c). An attorney’s duty of confidentiality is the
“hallmark of the client-lawyer relationship.” By safeguarding
attorney-client communications, a client is “encouraged to seek legal
assistance and to communicate fully and frankly with the lawyer
even as to embarrassing or legally damaging subject matters.” Id. 1.6,
cmt. 2 advisory committee’s notes. In turn, the client’s frankness
facilitates the effectiveness of a lawyer in representing the client.
¶51 In this case, not only is SCM not required to disgorge
privileged attorney-client information related to its representation
of the UEP Trust, it is prohibited by rule 1.9(c) from so doing. The
Reformed Trust is not the same entity as the UEP Trust and therefore
it is not entitled to the UEP Trust’s privileged attorney-client
information. Requiring the UEP Trust to disgorge privileged
information to the Reformed Trust would be contrary to the
underlying purpose of the attorney-client privilege in encouraging
candor between lawyer and client. It would require the UEP trust
to turn over possibly embarrassing or legally damaging material to
an entity that it perceives as hostile to the FLDS Church and thus
hostile to the very purpose of the UEP Trust.
¶52 The Special Fiduciary argues that disgorgement is
necessary because without the records relating to the underlying
management and property of the UEP trust, he cannot effectively
manage the Reformed Trust. But we disagree. The attorney-client
privilege protects communications, not facts. Munson v. Chamberlain,
2007 UT 91, ¶ 15, 173 P.3d 848. The property records that the special
17
SNOW et al v. HONORABLE LINDBERG
Opinion of the Court
fiduciary requests are therefore not privileged and are available
through discovery. The special fiduciary has not pointed us to any
privileged communications that are required for the administration
of the Reformed Trust. And while we can imagine some circum-
stances where privileged attorney-client communication may
facilitate the administration of the Reformed Trust, we believe the
importance of safeguarding the confidentiality of attorney-client
communications justifies any minor inconvenience that will result.
Because requiring SCM to disgorge privileged attorney-client
communication is inconsistent with rule 1.9 of the Utah Rules of
Professional Conduct, we hold that the district court erred when it
ordered SMC to disgorge privileged communications related to its
representation of the UEP Trust.
IV. SCM IS NOT DISQUALIFIED FROM REPRESENTING
PARTIES ADVERSE TO THE REFORMED TRUST
¶53 We finally address whether SCM is disqualified from
representing Movants under rule 1.9 of the Utah Rules of Profes-
sional Conduct. The Special Fiduciary argues that SCM cannot
represent the Movants because their interests are materially adverse
to those of the Reformed Trust. We disagree.
¶54 Rule 1.9 of the Utah Rules of Professional Conduct
provides that “[a] lawyer who has formerly represented a client in
a matter shall not thereafter represent another person in the same or
a substantially related matter in which that person’s interests are
materially adverse to the interests of the former client.”
UTAH R. PROF’L CONDUCT 1.9(a).
¶55 In this case, SCM is not disqualified from representing the
movants in matters that are materially adverse to the Reformed
Trust because SCM has never represented the Reformed Trust. As
previously discussed, SCM represented the UEP Trust. When the
district court reformed the UEP Trust in a manner that was inconsis-
tent with the settlor’s intent, the Trust was transformed into an
entirely new entity for purposes of the attorney-client relationship.
The Reformed Trust is therefore not the same client as the UEP
Trust.4
4
SCM and Movants also argue that the Special Fiduciary waived
its right to bring a motion to disqualify SCM. Because we resolve the
disqualification issue on the grounds that the Reformed Trust and
the UEP Trust are not the same client, we need not and do not
(continued...)
18
Cite as: 2013 UT 15CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
CONCLUSION
¶56 Because the district court’s reformation of the UEP Trust
was contrary to the settlor’s intent, the Reformed Trust cannot be
considered the same client as the UEP Trust. The district court
therefore erred when it ordered SCM to disgorge to the Special
Fiduciary of the Reformed Trust privileged communications
between SCM and the UEP Trust. It further erred when it disquali-
fied SCM from representing the Movants in matters that are
materially adverse to the Reformed Trust.
CHIEF JUSTICE DURRANT, concurring in part, dissenting in part:
¶57 I concur in the majority’s holding that a trust may be an
attorney’s client and that a trustee is entitled to assert privilege on
behalf of the trust-client, but I respectfully dissent as to the rest of
the opinion. I believe the majority has not properly framed the issue
before it, which has led to confusing results. Properly framed, the
issue before the court in this petition for extraordinary writ is
whether the district court abused its discretion when it ordered that
(1) SCM hand over confidential information protected by attorney-
client privilege to the special fiduciary and that (2) SCM stop
representing clients in litigation against the reformed trust. The
majority instead focuses on a different action taken by the district
court years earlier—its modification of the trust. The majority’s
argument that the district court transformed the UEP Trust into an
entirely different entity really amounts, in substance, to an argument
that the court should have terminated the trust rather than modify
it and that, as a result, the court abused its discretion years later
when it entered the orders at issue here. The majority reaches this
conclusion despite the fact that the trust’s modification was not
appealed and despite the fact that we declined to reach whether the
modification was appropriate in Fundamentalist Church of Jesus Christ
of Latter-day Saints v. Lindberg.1 In that case, we declined to address
the propriety of the trust’s modification because the claims were
brought too late and after too many parties had relied to their
4
(...continued)
address the waiver issue.
1
2010 UT 51, 238 P.3d 1054.
19
SNOW et al v. HONORABLE LINDBERG
CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
detriment on the modification.2 Because the modification stands, I
would hold that the district court did not abuse its discretion when
it assumed that its unchallenged modification of the trust was valid,
disqualified SCM accordingly, and ordered SCM to provide
privileged information to the trust.
STANDARD OF REVIEW
¶58 SCM has filed a petition for extraordinary writ under rule
65B(d) of the Utah Rules of Civil Procedure, alleging that the district
court either abused its discretion or exceeded its jurisdiction when
it disqualified SCM as attorneys in matters adverse to the trust and
compelled SCM to disclose to the trust attorney-client communica-
tions between SCM and the suspended trustees regarding trust
administration. Petitioners may seek relief under rule 65B “[w]here
no other plain, speedy and adequate remedy is available.”3 Impor-
tantly, rule 65B provides that “relief may be granted . . . where an
inferior court . . . abused its discretion.”4 This means that even if we
find that the district court abused its discretion, we may opt not to
grant relief.5 And especially in matters of disqualification, we grant
the district court “considerable latitude” because “the likelihood and
dimensions of nascent conflicts of interest are notoriously hard to
predict.”6 When deciding to grant relief after an abuse of discretion
has been found, we “will consider multiple factors, including the
egregiousness of the alleged error, the significance of the legal issue
presented by the petition, the severity of the consequences occa-
sioned by the alleged error, and any additional factors that may be
regarded as important to the case’s outcome.”7
ANALYSIS
¶59 I would hold that the district court did not abuse its
discretion when it (I) ordered SCM to disclose to the special
fiduciary communications protected by the attorney-client privilege
2
Id. ¶ 35.
3
UTAH R. CIV. P. 65B(a).
4
Id. 65B(d)(2) (emphasis added).
5
State v. Laycock, 2009 UT 53, ¶ 8, 214 P.3d 104.
6
State v. Maughan, 2008 UT 27, ¶ 20, 182 P.3d 903 (internal
quotation marks omitted).
7
Laycock, 2009 UT 53, ¶ 9 (internal quotation marks omitted).
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Cite as: 2013 UT 15CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
and (II) disqualified SCM from representing clients with interests
adverse to the modified trust. I reach these conclusions largely
because the district court’s order modifying the trust was never
appealed and was not reversed, even after we were asked to do so
in a petition for extraordinary writ. I address each of the orders
below.
I. THE DISTRICT COURT DID NOT ABUSE ITS
DISCRETION WHEN IT ORDERED SCM TO
DISCLOSE PRIVILEGED COMMUNICATIONS
¶60 To determine whether the district court abused its
discretion in ordering SCM to disclose confidential attorney-client
communications to the special fiduciary, we must decide whether
the special fiduciary is entitled to claim the attorney-client privilege
on behalf of the trust, and whether the special fiduciary is still
entitled to claim the privilege after the district court modified the
trust using the cy pres doctrine. Because the majority correctly
concludes that the trust was the client, I would hold that the special
fiduciary was entitled to claim the privilege on behalf of the trust
before the trust was modified, and that the special fiduciary is still
entitled to assert that privilege even though the trust has been
modified.
A. Before the Trust Was Modified, the Special Fiduciary
Was Entitled to Claim the Attorney-Client Privilege
on Behalf of the Trust
¶61 Upon appointment by the district court, the special
fiduciary had the power to claim attorney-client privilege on the
trust’s behalf. Rule 504 allows persons other than trustees to assert
privileges on behalf of a trust-client: “The privilege may be claimed
by . . . (1) the client; (2) the client’s guardian or conservator; (3) the
personal representative of a client who is deceased; (4) the successor,
trustee, or similar representative of a client that was a corporation,
association, or other organization, whether or not in existence; and (5)
the lawyer on behalf of the client.”8 The question then is whether for
the purposes of rule 504, the special fiduciary is a “successor” or
“similar representative” so that he may claim privilege on the trust’s
behalf. I would hold that he is.
¶62 When the district court suspended the acting trustees, a
8
UTAH R. EVID. 504(c) (emphasis added).
21
SNOW et al v. HONORABLE LINDBERG
CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
vacancy in trusteeship occurred. Pursuant to its authority under
section 75-7-704, the district court then appointed a special fiduciary
“for the administration of the trust.”9 Importantly, these acts took
place before the trust’s modification. Mr. Parker (of SCM) had just
been fired by the trustees, who had decided not to defend the trust
in lawsuits. This decision left the trust vulnerable to default
judgments. Mr. Parker petitioned the district court to notify the Utah
Attorney General before a default judgment was entered so that the
Attorney General might intervene on behalf of the trust’s charitable
beneficiaries. The Utah Attorney General did intervene, and after the
trustees failed to respond, the district court suspended them and
appointed the special fiduciary. While the majority takes issue with
the district court’s modification of the trust, it is undisputed that
suspending nonresponsive trustees charged with breaching their
fiduciary duties and appointing an interim special fiduciary to
manage trust affairs until new trustees could be appointed was
within the district court’s power and was not an abuse of its
discretion. Thus, even under the majority’s reasoning, the special
fiduciary was properly charged with managing the trust before its
modification and therefore took the place of or succeeded the
properly suspended trustees.
¶63 And the special fiduciary was a “successor” or a “similar
representative” to a trustee in every way relevant to the purposes of
the attorney-client privilege where the trust is the client. For
example, before modification, the special fiduciary was charged with
administering the trust. This charge included protecting trust assets
by defending the trust against the pending lawsuits. In addition, the
charge included conducting trust business such as fulfilling any
contracts entered into by the former trustees. As the California
Supreme Court stated in Moeller v. Superior Court, “[t]o allow for
effective continuous administration of a trust, the right of access to
[attorney-client] communications and the privilege to prevent their
disclosure must belong to the person presently acting as trustee,
because that person has the duty to conduct all pending trust business.”10
Before modification, the special fiduciary, like the trustee in Moeller,
was the person who had “the duty to conduct all pending trust
business.” Because access to attorney-client communications and the
privilege to prevent their disclosure are vital to conducting trust
9
UTAH CODE § 75-7-704(5).
10
947 P.2d 279, 284 (Cal. 1997) (emphasis added).
22
Cite as: 2013 UT 15CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
business and managing the trust’s legal affairs, the special fiduciary,
being a “similar representative” and “successor” to the previous
trustees is entitled to claim the attorney-client privilege on behalf of
the trust under rule 504(c).
B. The Special Fiduciary is Entitled to Claim the
Attorney-Client Privilege on Behalf of the Trust
Even Though the Court Modified the Trust
¶64 I would hold that the special fiduciary is entitled to claim
the attorney-client privilege on behalf of the trust even though the
trust has been modified. Thus, I conclude that the majority errs in
three important ways. First, instead of accepting that the trust’s
purpose was modified—erroneously or not—in an attempt to
effectuate the settlor’s legitimate and legal charitable purposes, the
majority, without foundation in fact, asserts that a terminated trust’s
assets were purchased by a reformed trust. But this asset-purchase
metaphor does not account for the legal and practical ramifications
arising from the fact that, in reality, the trust was modified, not
terminated. Second, although the majority rejects the special
fiduciary’s assertion of the attorney-client privilege, the majority
fails to explain who holds the privilege on behalf of the old trust.
Third, even assuming the majority’s legal fiction that, for purposes
of the attorney-client privilege, the trust, in effect, terminated and a
new trust bought its assets, the special fiduciary, under rule 504, was
still the last to manage the old trust and has the best claim to assert
the privilege on behalf of the hypothetically nonexistent trust.
¶65 To begin, I believe the majority errs by creating an inapt
legal fiction when it holds that “for purposes of the attorney-client
privilege, the assets of the original Trust are deemed to have been
purchased by the Reformed Trust.”11 This holding has no basis in
Utah law and does not describe what happened here. As the district
court stated in its order, the plain language of Utah Code section 75-
7-413 authorizes a court, under certain conditions, to “apply cy pres
to modify or terminate [a] trust.”12 Here, the district court elected to
modify (and not terminate) the trust in an effort to effectuate the
settlor’s original and legitimate charitable purposes. Thus, even after
modification, the reformed trust remains an instrument to “provide
for [FLDS] Church members according to their [just] wants and their
11
Supra ¶ 48.
12
UTAH CODE § 75-7-413(1)(C) (emphasis added).
23
SNOW et al v. HONORABLE LINDBERG
CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
needs.” The district court modified the trust in October 2006. Its
decision was not appealed. Further, when the modification was
eventually challenged years later in a petition for extraordinary writ,
we held that the challenge was barred by laches.13 Thus, the district
court’s order modifying the trust stands and the present legal reality
is that there now exists a single trust whose purpose has been
modified, not two separate trusts, one of which purchased the assets
of the other.
¶66 Because the trust was modified and not terminated, it
continues to function in ways relevant to the attorney-client
privilege. For example, the modified trust has the same liabilities, the
same fiduciary obligations to beneficiaries, the same contractual
obligations and rights, and the same assets as the old trust. In
addition, the beneficiaries are largely the same, and the special
fiduciary owes these charitable beneficiaries fiduciary obligations
much as the now-suspended trustees did. In fact, the special
fiduciary has the responsibility of defending the trust against any
claims that the previous trustees breached their fiduciary duties.14
Before modification, the special fiduciary did exactly that.
¶67 The special fiduciary’s continuing duty to defend the trust
against litigation, makes the majority’s asset-purchase metaphor
particularly inapt. If an interested party sues the reformed trust for
actions that constitute a breach of fiduciary duty by the previous
trustees before modification, the special fiduciary is obligated to
defend against those claims to protect trust assets. And this is not
merely hypothetical—the previous trustees’ breaches of fiduciary
duty were the very reason for the special fiduciary’s appointment.
If the majority’s asset-purchase legal fiction were reality, there could
be no cause of action against the new trust for the previous trustees’
breaches of duty because the old trust would have terminated and
the new, unrelated trust would owe no duties to the old beneficia-
ries. But since the legal reality is that the trust was modified, and the
majority creates the asset-purchase metaphor only for the limited
13
Fundamentalist Church of Jesus Christ of Latter-day Saints v.
Lindberg, 2010 UT 51, ¶ 35, 238 P.3d 1054.
14
When trustees breach duties, a court may impose liens and
constructive trusts on trust property to remedy the breach. See UTAH
CODE § 75-7-1001(2)(i). The special fiduciary, much like a trustee, is
charged with protecting trust property. See id. § 75-7-807.
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Cite as: 2013 UT 15CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
purpose of defining privilege, the reformed trust is still legally
responsible for the actions of its predecessors and can have its assets
seized to remedy any fiduciary duties they breached.
¶68 In addition, since the beneficiaries of the modified trust are
largely the same—that is, FLDS Church members—legal actions
against the trust that deplete trust assets injure the same people
before and after modification. The mere fact that the class of
beneficiaries has been slightly expanded to include people who had
previously donated to the trust, regardless of their religious views,
does not change the fact that the vast majority of trust beneficiaries
are still faithful FLDS members. When the trust loses assets in legal
battles, these assets will no longer benefit the FLDS community. So
it is not as though some new, unrelated entity purchased the assets,
because fiduciary duties are still owed to the FLDS members.
¶69 Because successor trustees are responsible for their
predecessors’ actions and owe beneficiaries the same fiduciary
obligations, the California Supreme Court has held that the power
to assert attorney-client privilege should follow the office of trustee:
To allow for effective continuous administration of a
trust, the right of access to [privileged] communica-
tions and the privilege to prevent their disclosure must
belong to the person presently acting as trustee, because
that person has the duty to conduct all pending trust
business. Therefore, for a trust to continue to operate
smoothly when a change in trustee occurs, the power
to assert the attorney-client privilege must pass from
the predecessor trustee to the successor.15
Allowing the trust modification to stand, but handicapping the
special fiduciary in his efforts to defend the trust by denying him
access to privileged communications through an asset-purchase legal
fiction, is the worst of all possible worlds—one in which only the
beneficiaries lose.
¶70 Nonetheless, the majority uses the asset-purchase meta-
phor to find not only that SCM is not required to disgorge the
privileged communications, but that SCM is actually prohibited from
disclosing this information under rule 1.9 of the Utah Rules of
Professional Conduct. The majority takes this position even though
15
Moeller, 947 P.2d at 284.
25
SNOW et al v. HONORABLE LINDBERG
CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
it “can imagine some circumstances where privileged attorney-client
communication may facilitate the administration of the Reformed
Trust.”16 Because the modified trust is legally responsible for the
suspended trustees’ actions, however, it makes no sense to deny the
modified trust access to those trustees’ attorney-client communica-
tions on behalf of the trust. Thus, the majority’s asset purchase legal
fiction for attorney-client purposes is unworkable because it fails to
appreciate the modified trust’s responsibilities and liabilities.
¶71 The majority’s asset-purchase metaphor is also unworkable
because it spawns confusion about who represents the old trust’s
interests. For example, in concluding that the old trust cannot
disgorge privileged information, the majority reasons that to hold
otherwise “would require the [old trust] to turn over possibly
embarrassing or legally damaging material to [the new trust,] an
entity it perceives as hostile to the FLDS Church and thus hostile to
the very purpose of the [old trust].”17 But because the majority
contends that the old trust, in effect, terminated, it is unclear how
this hypothetically nonexistent trust perceives the so-called new
trust as “hostile.” It is also unclear whose statements the majority
relies upon to come to this conclusion and whether those individuals
are qualified to represent the old trust’s interests. In reaching its
decision, is the majority relying upon statements by the FLDS
Church, beneficiaries of the old trust, the now-suspended trustees,
beneficiaries of the new trust, the petitioners in this action, or SCM
itself? Also, are any of those entities qualified to represent the old
trust’s interests? Without these answers, the majority’s legal fiction
is ultimately unworkable and confusing.
¶72 Instead of creating a legal fiction to deal with a trust
modification the majority feels was incorrect, but which we have
allowed to stand, I would hold that the propriety of modification is
not before us and focus on the presently existing legal reality: the
trust was modified. Because the trust was modified, and not
terminated, it continues to function in ways relevant to the attorney-
client privilege.
¶73 Further, even accepting the majority’s fictional construct
that the trust, in effect, terminated for purposes of the attorney-client
privilege, the majority does not identify who holds the privilege now
16
Supra ¶ 52.
17
Supra ¶ 51.
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dissenting in part
and who is in the best position to assert the privilege on the trust’s
behalf. Instead, the majority appears to conclude that it is SCM itself
who holds the privilege. But the attorney-client privilege belongs to
the client and cannot be held in a vacuum.18 Because the privilege
belongs to the client, the client must direct the attorney when to
assert or waive that privilege. Indeed, the attorney may only assert
the privilege “on behalf of the client.”19 Thus, for SCM to successfully
assert the privilege, it must be acting for an entity that has some
basis for claiming to hold the privilege on behalf of the old trust.
Here, SCM has failed to point to any client or entity that makes such
a claim. For example, SCM cannot purport to act on behalf of the
former trustees because the majority correctly recognizes that the
trust, and not the trustees, holds the privilege. In addition, the
privilege can hardly be said to have passed from the trust to the
former trustees because they were suspended before modification
for breaching their fiduciary obligations. Further, SCM has offered
no basis on which the court could conclude that SCM’s new clients,
the petitioners in this action, have any claim to hold the privilege on
behalf of the old trust. Because the privilege belongs to the client, the
majority must address who inherited the privilege upon the trust’s
modification or explain on whose behalf SCM asserts the privilege.
The majority has failed to do either.
¶74 I would therefore hold that the modification has not altered
who holds the attorney-client privilege: it is the trust, now as ever.
In addition, the person who is entitled to claim this privilege, under
rule 504, is the same person who was entitled to claim the privilege
on the trust’s behalf before modification: the special fiduciary.
¶75 Even accepting the legal fiction of the majority, where the
old trust, in effect, terminated and a new trust acquired its assets, the
special fiduciary remains the best person to claim the old trust’s
attorney-client privilege. Rule 504 specifically anticipates situations
where a client “corporation, association, or other organization” is no
18
See UTAH R. EVID. 504(b)(1) (“A client has a privilege to refuse to
disclose, and to prevent any other person from disclosing, confiden-
tial communications . . . made for the purposes of facilitating the
rendition of professional legal services . . . .” (emphasis added)).
19
Id. 504(c)(5) (emphasis added).
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SNOW et al v. HONORABLE LINDBERG
CHIEF JUSTICE DURRANT: concurring in part,
dissenting in part
longer “in existence.”20 Even then, a “successor, trustee, or similar
representative” can claim the privilege on behalf of the nonexistent
organization-client.21 The advisory committee’s note indicates that
“[w]here there is a dispute as to which of several persons has claims
to the rights of a previously existing entity, the court will be required
to determine from the facts which entity’s claim is most consistent
with the purposes of this rule.”22
¶76 When the special fiduciary took over after the district court
suspended the previous trustees for various breaches of duty, it took
over the same trust SCM had represented; the trust that had not yet
been modified. Therefore, at the very least, the special fiduciary
became a “successor . . . or similar representative of a[n] . . . organi-
zation . . . not in existence” and is entitled to assert privilege on
behalf of the hypothetically nonexistent trust.23 Because the special
fiduciary held the privilege before modification, it is troubling that
the majority does not explain who inherited that privilege after
modification. Even if SCM were correct in stating that the trust it
represented no longer exists, the last person responsible for the old
trust’s administration was the special fiduciary. He would have been
the last person who needed both the information contained in
attorney-client communications and the power to keep that informa-
tion privileged in order to protect the beneficiaries’ interests.
Therefore, the special fiduciary’s claim is better than anyone else’s
claim, including that of the suspended trustees or the petitioners.
¶77 Further, even as modified, the special fiduciary still
controls the trust’s property and still owes fiduciary obligations to
the original trust’s beneficiaries. Thus, even if the trust has been so
unrecognizably altered that it can no longer be considered the same
client SCM represented, the privilege is best claimed on the trust’s
behalf by the controller of whatever vestiges of the trust remain.
That is because this person is the only person with any remaining
20
Id. 504(a)(1), (c)(4).
21
Id. 504(c)(4).
22
Id. 504 advisory committee note (emphasis added). Here, it is
again worth noting that the special fiduciary is the only party
claiming the trust’s privilege. For instance, the suspended trustees
have not attempted to assert that they have the best claims or any
claims to the rights of the trust.
23
Id. 504(c)(4).
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duties to any beneficiaries, whom the trust, any lawyer representing
the trust, and any communications between trust and lawyer were
intended to benefit. Neither the suspended trustees nor the petition-
ers hold such duties. Thus, as between the suspended trustees, the
petitioners, and the later-appointed special fiduciary, the special
fiduciary’s claim to assert the attorney-client privilege would be
more consistent with rule 504.
¶78 In sum, I would hold that, whether the trust was properly
modified or not, it was modified, and thus the majority’s asset-
purchase metaphor fails. First, the trust’s modification has practical
and legal ramifications for which the asset-purchase legal fiction
does not properly account. For example, the trust’s liabilities,
contractual rights and obligations, rights to property, and fiduciary
duties all continued through modification. Yet under the majority’s
reasoning, the privileges necessary to defend the trust and to assert
these rights terminated. This is a position I cannot support. I would
therefore hold that the reformed trust is the same trust as it was
before modification, and that the special fiduciary, charged with
administering the trust before and after modification, has the best
claim to assert privilege on the trust’s behalf. Second, in using the
asset-purchase legal fiction to reject the special fiduciary’s claim, the
majority fails to explain who now holds the privilege on behalf of the
old, hypothetically nonexistent trust. Thus, the majority fails to
address how SCM can even assert the privilege. Third, even
assuming the old trust terminated, as the last manager of the trust,
the special fiduciary would be the best party to assert attorney-client
privilege on the terminated trust’s behalf.
¶79 For these reasons, I believe that the majority errs when it
holds that the district court abused its discretion in ordering
disclosure of the privileged communications. To arrive at this
conclusion, the majority reasons that Judge Lindberg abused her
discretion in failing to conclude that her previous modification of the
trust, which was not appealed or reversed by our recent decision in
Lindberg, was incorrect. Then, the majority reasons that this earlier
incorrect modification could only be remedied by creating a legal
fiction, unprecedented in Utah law, that the modification was, in
effect, a termination insofar as the narrow issue of privilege was
concerned. The majority creates this legal fiction even though it
could harm trust beneficiaries and even though it does not account
for who is entitled to assert privilege on the terminated trust’s
behalf. This is too slender a reed upon which to rest a holding of
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dissenting in part
abuse of discretion. I would thus hold that the district court did not
abuse its discretion when it ordered disclosure of privileged
communications to the special fiduciary.
II. THE DISTRICT COURT DID NOT ABUSE
ITS DISCRETION IN DISQUALIFYING SCM
¶80 The majority holds that the district court abused its
discretion when it disqualified SCM from representation adverse to
the modified trust, reasoning that the modified trust was never
SCM’s client. I believe this is incorrect for the same reasons outlined
above. Rule 1.9 of the Utah Rules of Professional Conduct provides
that “[a] lawyer who has formerly represented a client in a matter
shall not thereafter represent another person in the same or a
substantially related matter in which that person’s interests are
materially adverse to the interests of the former client.”24 As
discussed in Part I, supra, I would hold that the reformed trust is the
same trust that SCM represented before the trust’s modification. I
would also hold that SCM is currently representing clients whose
interests are adverse to the trust in matters substantially related to
the matters in which SCM previously represented the trust.
¶81 The majority rests its holding that disqualification was
inappropriate on its legal fiction that, for the purpose of attorney-
client relationships, an incorrectly modified trust is no longer the
same trust that existed before modification. I have addressed why I
think this argument is incorrect in Part I, supra. But when the
attorney who represents a trust switches sides and represents clients
suing that trust in matters substantially related to his previous
representation, the majority’s legal fiction becomes even less
workable.
¶82 The overlap of SCM’s representation is extensive. But
perhaps the most troubling aspect of SCM’s previous representation
of the trust is that SCM helped to restate the trust in 1998 after we
held in Jeffs v. Stubbs that the 1942 version of the trust was not
charitable and that beneficiaries, therefore, had standing to sue.25 In
that case, the trial court held that the trust was charitable, which had
the effect of denying would-be beneficiaries standing to assert
24
UTAH R. PROF’L CONDUCT 1.9(a).
25
970 P.2d 1234, 1253 (Utah 1998).
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“breach of fiduciary duty, accounting, and distribution claims.”26 But
we reversed, holding that the trust’s settlors had structured the trust
so that it would benefit specific individuals, and that these individu-
als therefore had standing.27 Restating the trust so that it had no
specific beneficiaries, but was instead “‘devoted to the accomplish-
ment of purposes beneficial to the community,’” made the trust
charitable and was one way to deny standing to those who, now
incidentally rather than specifically, benefitted from the trust.28
Indeed, SCM has, in previous litigation, made this argument on
behalf of the trust. But now SCM represents beneficiaries suing the
trust—even though SCM, during its representation of the trust, tried
to immunize the trust against exactly these kinds of suits. When it
issued the presently disputed disqualification order, the district
court found that
it is abundantly clear that during the 17 years that
[SCM] (and, in particular, Mr. Parker) represented the
Trust, [SCM] advocated positions on matters “sub-
stantially factually related” to those presently at issue
before this Court. Furthermore, the positions previ-
ously advocated by [SCM] on behalf of the Trust are
directly contrary to their present arguments on behalf
of the Movants. For example, [SCM] does not dispute
that the 1998 Restatement drafted by Mr. Parker expressly
provided that any donations to the Trust would be made
“without any reservation or claim of right and/or owner-
ship,” and that “use of property owned by the [Trust]
is not and does not become a right or claim of anyone
who may benefit in any way from the Trust.” [SCM],
on behalf of the Trust, vigorously litigated this posi-
tion in several cases . . . . Now . . . [SCM] argues that the
Movants [have rights] to use Trust land, and that such
use invests them with “rights” to seek an injunction
against the Fiduciary in order to prevent the sale of
certain Trust land.
. . . [I]n light of the breadth of [SCM]’s prior represen-
26
Id. at 1251.
27
Id. at 1251–53.
28
See, e.g., id. at 1252 (quoting RESTATEMENT (SECOND) OF TRUSTS
§ 364 cmt. a (1959)).
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SNOW et al v. HONORABLE LINDBERG
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dissenting in part
tation of the Trust and the arguments it is now making
against the Trust, the Court is persuaded that the
substantiality requirement is satisfied in that there is “a
factual nexus between [SCM]’s prior and current represen-
tations.”
Since the legal reality of this case is that the trust has been modified,
disqualifying SCM from representing clients with interests adverse
to its former client in substantially related matters was not an abuse
of the district court’s discretion.
¶83 But even assuming, as the majority does, that the reformed
trust is not the same trust that SCM represented, who SCM has
represented is less than straightforward. Indeed, this case seems ripe
with potential nascent conflicts. SCM represented a religious trust
and helped restate it to avoid suits by beneficiaries; then, after being
fired by trustees who did not want to defend the trust against
lawsuits, petitioned the court to notify the Utah Attorney General so
that the Attorney General could intervene and defend the trust
anyway. After the Attorney General intervened and the court
suspended the trustees, appointed a special fiduciary, and modified
the trust, SCM has now returned to represent charitable beneficiaries
against the trust that SCM drafted in 1998 and that was modified as
a result of the petition SCM filed after being fired by the former
trustees. Even if the reformed trust is not the old trust, this pattern
of representation leaves questions about where SCM’s loyalty lies:
Is it with the old trust, the former trustees who fired SCM, charitable
beneficiaries of the old trust who they evidently tried to protect by
petitioning the court against the former trustees’ wishes after their
firing, or beneficiaries of the modified trust? Given these potential
nascent conflicts and the wide latitude we grant district courts when
deciding matters of disqualification,29 I would hold that, even
assuming the legal fiction that the modified trust is not the same
trust SCM represented, the district court did not abuse its discretion
in disqualifying SCM.
¶84 The sole argument SCM presents, apart from arguing that
the modified trust is not the same client SCM represented, is that the
special fiduciary waived any right to move for disqualification due
to its failure to object to SCM’s earlier representation of a party in a
matter adverse to the trust. Although SCM filed a memorandum in
29
State v. Maughan, 2008 UT 27, ¶ 20, 182 P.3d 903.
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opposition to the special fiduciary’s motion to disqualify below,
SCM never argued the waiver issue to the district court. It cannot be
argued that the district court abused its discretion in failing to
consider a waiver argument it never had an opportunity to consider.
¶85 In sum, I would hold that the district court did not abuse
its discretion when it disqualified SCM because SCM is representing
parties with interests adverse to its former client, the trust, in matters
substantially related to the matters in which SCM represented the
trust. But even if the modified trust is not the same trust SCM
represented, I believe the potential for nascent conflicts in this case
warrants granting the district court wide discretion, which it did not
abuse when it disqualified SCM.
CONCLUSION
¶86 The reformed trust is the same trust SCM previously
represented. As a result, the district court did not abuse its discretion
when it disqualified SCM and ordered disclosure of privileged
communications. But even under the court’s legal fiction that the
two trusts are distinct for the narrow purpose of deciding matters of
attorney-client relations, I believe that the special fiduciary remains
the best person to assert privileges on behalf of the hypothetically
nonexistent trust and that this case is too full of potential nascent
conflicts to hold that the district court’s order was an abuse of
discretion. I would therefore deny SCM’s petition for extraordinary
writ.
33