Rawlings v. Rawlings ( 2015 )

This opinion is subject to revision before
publication in the Pacific Reporter
2015 UT 85
IN THE
SUPREME COURT OF THE STATE OF UTAH
DONALD RAWLINGS and JEANETTE RAWLINGS,
Appellants,
v.
ARNOLD DWAYNE RAWLINGS and PAULETTE RAWLINGS,
Appellees.
ARNOLD DWAYNE RAWLINGS and PAULETTE RAWLINGS,
as Trustees of the Arnold Dwayne Rawlings Family Trust,
THERON LARELL RAWLINGS, BRYCE C. RAWLINGS
and CAROL LYNN R. MASTERSON,
Third-Party Appellees.
No. 20130744
Filed September 22, 2015
Fourth District, Provo Dep’t
The Honorable Fred D. Howard
No. 970400260
Attorneys:
M. David Eckersley, Salt Lake City, for appellants
Thomas W. Seiler, Jamis M. Gardner, Lacee M. Whimpey,
Provo, for appellees
M. Dayle Jeffs, Randall L. Jeffs, Provo,
for third-party appellees
JUSTICE HIMONAS authored the opinion of the Court, in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
and JUSTICE DURHAM joined.
JUSTICE PARRISH sat for oral argument. Due to her resignation from
this court, however, she did not participate herein.
JUSTICE HIMONAS, opinion of the Court:
RAWLINGS v. RAWLINGS
Opinion of the Court
INTRODUCTION
¶ 1 “In the beginning God created the heaven and the
earth,” Genesis 1:1, and families have been fighting over them ever
since. Today we address a conflict between five siblings over land.
The eldest, Donald Rawlings, claims full ownership of farmland
deeded him by his father, while his three brothers and his sister
(the siblings) argue their father never intended to vest sole
ownership in Donald and to their permanent exclusion. The
siblings seek to maintain a constructive trust over the property
and its equal division among the children.
¶ 2 We first addressed this dispute in Rawlings v. Rawlings,
2010 UT 52, 240 P.3d 754 (Rawlings I). There, we reversed the court
of appeals and upheld a district court order imposing a
constructive trust over the farm property in favor of the siblings
based on a theory of unjust enrichment. Id. ¶ 25. On remand, the
district court permitted discovery to resolve the question of the
exact contents of the constructive trust. Because Donald’s
responses to the siblings’ discovery requests were inadequate, the
district court entered an order to compel. When Donald failed to
comply with that order, the district court struck Donald’s
pleadings and defenses and entered default judgment against
him. We hold that the entry of default judgment was not an abuse
of discretion, and we affirm the form and content of the
constructive trust imposed by the district court.
BACKGROUND
¶ 3 Our decision in Rawlings I, 2010 UT 52, ¶¶ 3–19, 240 P.3d
754, details the events leading up to this action, and thus we
provide only a brief summary of them here. This case, now in its
third decade, involves a family dispute over land in Utah and
Washington counties. The dispute is between children whose
father, Arnold Rawlings, owned approximately twenty-two acres
of land near Orem, Utah.1 Id. ¶ 4. In 1957, Arnold transferred
1 Apart from Donald, the children are Arnold Dwayne
Rawlings (Dwayne), Theron LaRell Rawlings, Bryce Rawlings,
and Carol Lynn Masterson. Donald’s wife, Jeanette Rawlings, and
Dwayne’s wife, Paulette Rawlings, are also embroiled in this
matter, both as parties and as co-owners of some of the referenced
properties. However, because their presence in this action “does
(cont.)
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Opinion of the Court
twelve acres of the land to a third party. Id. Over the course of the
next decade, he also conveyed some small portions to Donald and
to Dwayne. Id.
¶ 4 In 1966, Arnold was diagnosed with cancer and began
undergoing treatment. Id. ¶ 5. Approximately six months after his
diagnosis, on March 24, 1967, Arnold transferred a “small parcel”
of the land, “approximately half an acre” in size, to Dwayne. Id.
¶ 4. Arnold conveyed title to the remainder of the farm to Donald.
Id. Donald argued that the farm transfer was to compensate him
for debts he paid on Arnold’s behalf. Id. At that time, the siblings
also signed quitclaim deeds assigning their interests in the farm to
Donald. Id. ¶ 7. The siblings maintained that Arnold transferred
the farm to Donald because Arnold could not qualify for welfare
assistance to help pay for his cancer treatment if the farm was in
his name. Id. ¶ 6. Thus, they argued that Donald held the land as a
trustee for the family. Id. ¶ 4. Indeed, the district court found that
Arnold did not believe that his conveyance of the farm to Donald
to be an alienation of his ownership rights. Id. ¶ 6.
¶ 5 In line with Arnold’s and the siblings’ views, Arnold, his
wife (Cleo Rawlings), Donald, and the siblings all remained
involved in the farm from around the time of the 1967 land
transfers and for years following. Id. ¶¶ 7–10. At Donald’s behest,
Dwayne provided $1,000 for the farm’s taxes. Id. ¶ 7. Arnold
managed the property and harvested crops. Id. ¶ 8. Bryce lived on
the farm. Id. ¶ 9. And because Donald represented “that income
from the farm property was being used to support their mother[,]
. . . all of the siblings, except Donald, . . . helped to maintain the
farm property.” Id. ¶ 10.
¶ 6 The farm was the subject of a boundary lawsuit in 1974,
which arose over whether neighboring fences encroached upon
the southern boundary of the farm. Id. ¶ 11. During the boundary
dispute, Donald convinced the siblings to again transfer their
interests in the farm to him via a quitclaim deed. In the process, he
told them that the legal description on the “deed encompassed
only the land being disputed.” Id. However, the deed “actually
described the entire farm property.” Id. The boundary lawsuit
not alter our analysis,” we refer only to the siblings. Rawlings I,
2010 UT 52, ¶ 4 n.3, 240 P.3d 754.
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settled, and Donald received approximately $52,000. Id. Donald
distributed approximately $6,600 of the settlement money to the
siblings and to Cleo for her expenses. Id. The district court stated
that Donald thereby, at least tacitly, “acknowledg[ed] that the
farm was in fact a family farm in which the parties each had a
right.”
¶ 7 The siblings were not aware that Donald considered the
farm to be solely his until 1993, when Donald conveyed a portion
of the farm to a third party. When Dwayne became aware of the
conveyance, Donald informed him that he, Donald, owned the
farm and could use the property in any way he chose.
¶ 8 Donald brought suit in 1997 to quiet title and establish
himself as rightful owner of the farm. Id. ¶ 12. The siblings
counterclaimed and requested that the district court declare them
equal beneficiaries of a trust Arnold intended. Id. The siblings also
filed several lis pendens on the farm property and additional
property they asserted was acquired with trust proceeds. The
district court found that it was “undisputed that Donald co-
mingled the funds from the trust property with his other funds
and is unable to distinguish any funds” that he spent from the
time Arnold deeded him the property in 1967 to the date of trial.
¶ 9 The district court bifurcated the action and found in
favor of the siblings on the preliminary issue of whether to
impose a constructive trust. Id. ¶ 15. The court credited the
testimony of the siblings and concluded that Arnold’s 1967
conveyance to Donald “was to accommodate Arnold’s attempts at
becoming eligible for welfare, not in exchange for payment of
Arnold’s debt and not to transfer ownership.” Id. The court
therefore determined that there was an “equitable need to impose
a constructive trust on the property” conveyed by Arnold. Id.
(internal quotation marks omitted). In Rawlings I, we upheld the
district court’s order imposing a constructive trust under a theory
of unjust enrichment, and we remanded for further proceedings.
Id. ¶ 25.
¶ 10 On remand, Donald contended that the constructive
trust should take the form of an equitable lien and not a
possessory interest in the farm or any other property. The district
court disagreed and imposed a constructive trust proportionately
dividing the subject property among the five children. The court
also found that Donald was a “conscious wrongdoer” under Parks
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v. Zions First National Bank, 673 P.2d 590, 602–03 (Utah 1983). It
therefore ordered that any profits or benefits derived from trust
property be included in the trust res. The court also denied
Donald’s motion for release of the lis pendens on land known as
the “13.5 Acre Property,” concluding that the siblings had
established a probable validity of success on their claim to that
parcel. Thereafter, the district court permitted additional
discovery on the issue of what properties should be included
within the trust. When Donald failed to respond, the siblings
moved to compel. The district court found that Donald’s
responses to the siblings’ discovery requests were “inadequate
and nonresponsive.” The court ordered Donald “to respond
anew” to the siblings’ request for documents and awarded the
siblings $7,924 in costs and fees.
¶ 11 Dissatisfied with Donald’s response to the order, the
siblings brought a motion for an order to show cause as to why
Donald had not complied. The siblings asked that Donald be held
in contempt and that his pleadings be stricken and that default
judgment be entered against him. After a hearing, the district
court ruled that Donald’s “persistent dilatory tactics” in refusing
to produce documents in accordance with the court’s express
order “inappropriately delayed th[e] case’s progress” and
“frustrated the judicial process.” Additionally, the court was
“convinced that [Donald] will only continue to ignore the [c]ourt’s
orders in the future.” On that basis, the court granted the siblings’
request to strike Donald’s pleadings and defenses and entered
default judgment against him. The court then determined that the
trust included property described as the “Farm Property,” the
“Industrial Property,” the “6 Acres Property,” and the “13.5 Acres
Property,” and it ordered their sale.
¶ 12 Donald now challenges the default judgment, arguing
that it was improper for the district court to allow the additional
discovery and, through the constructive trust, to award the
siblings a possessory interest in the farm and additional
properties he purchased. We have jurisdiction under Utah Code
section 78A-3-102(3)(j).
STANDARD OF REVIEW
¶ 13 “The choice of an appropriate discovery sanction is
primarily the responsibility of the trial judge and will not be
reversed absent an abuse of discretion.” First Fed. Sav. & Loan
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Ass’n v. Schamanek, 684 P.2d 1257, 1266 (Utah 1984). “With regard
to the imposition of a constructive trust, the availability of such a
remedy is . . . a question of law reviewed for correctness.”
Rawlings I, 2010 UT 52, ¶ 21, 240 P.3d 754. But where “such a
remedy is available, the trial court is accorded considerable
latitude and discretion in applying and formulating an equitable
remedy, and [it] will not be overturned unless it [has] abused its
discretion.” Id. (alterations in original) (internal quotation marks
omitted).
ANALYSIS
¶ 14 Donald argues that the district court erred in entering
default judgment against him. Given Donald’s actions during
discovery, we disagree and affirm the district court’s order of
default. Donald also contends that it was error to grant the
siblings equitable title to the property, arguing that the only
available remedy was an equitable lien, as a form of constructive
trust. But having already determined in Rawlings I that the
siblings were legally entitled to a constructive trust, we hold that
the mandate rule bars Donald from arguing to the contrary, which
is effectively what he is trying to do.2 We therefore affirm the
district court’s constructive trust remedy. We also conclude that
the district court properly included additional properties acquired
with proceeds from conveyances of the constructive trust res, and
we affirm the equal division of the trust assets among the
children.3
2 In Rawlings I, this court affirmed the district court’s
imposition of a constructive trust based on a finding of unjust
enrichment. 2010 UT 52, ¶ 51. Because Donald never raised the
issue of an equitable lien in his briefs before either the court of
appeals or this court during the Rawlings I proceedings, we were
not given an appropriate opportunity to explain that constructive
trusts and equitable liens are separate remedies; one is not a
subset of the other. Though it is clear that Rawlings I imposed a
constructive trust—not an equitable lien—we take the
opportunity here to discuss the distinction between the two
remedies. See infra ¶¶ 27–29.
3 Donald also attempts to relitigate his statute of limitations
defense, arguing that the claim “has never been adequately
addressed on appeal.” This contention is in error. In Rawlings I,
(cont.)
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I. THE ENTRY OF DEFAULT JUDGMENT
WAS PROPER
¶ 15 We grant district courts broad discretion in matters of
discovery because they “deal first hand with the parties and the
discovery process.” Utah Dep’t of Transp. v. Osguthorpe, 892 P.2d 4,
6 (Utah 1995) (internal quotation marks omitted). For that reason,
“we have long held,” and we expressly reaffirm today, “that we
will not interfere unless abuse of that discretion [is] clearly
shown.” Morton v. Cont’l Baking Co., 938 P.2d 271, 274 (Utah 1997)
(alteration in original) (internal quotation marks omitted).
Accordingly, “[w]e will find that a [district] court has abused its
discretion in choosing which sanction to impose only if there is
either an erroneous conclusion of law or . . . no evidentiary basis
for the [district] court’s ruling.” Id. (second alteration in original)
(internal quotation marks omitted).
¶ 16 A court “may impose appropriate sanctions for the
failure to follow its orders, including . . . dismiss[ing] all or part of
the action, strik[ing] all or part of the pleadings, or render[ing]
judgment by default on all or part of the action.” UTAH R. CIV. P.
37(e)(2)(D) (2011).4 Sanctions are appropriate when “(1) the
party’s behavior was willful; (2) the party has acted in bad faith;
(3) the court can attribute some fault to the party; or (4) the party
has engaged in persistent dilatory tactics tending to frustrate the
judicial process.” Kilpatrick v. Bullough Abatement, Inc., 2008 UT 82,
¶ 25, 199 P.3d 957 (internal quotation marks omitted).
¶ 17 In the present case, we first conclude that it was proper
for the district court to permit additional discovery on remand
following Rawlings I. Second, even though default judgment is
we explicitly stated that we “reviewed the arguments made by
both parties and the authorities cited in support of [the statute of
limitations] arguments,” and we found there was “no error in the
trial court’s resolution of this issue.” 2010 UT 52, ¶ 12 n.5. Thus,
even if this argument were not foreclosed by the default
judgment, it has already been decided and cannot be challenged
again here.
4 Rule 37 was amended after the district court’s default
judgment order was entered. We cite to the 2011 rule that was in
effect at the time of the order.
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“one of the most severe of the potential sanctions that can be
imposed,” Morton, 938 P.2d at 274 (internal quotation marks
omitted), there was an ample evidentiary basis for the district
court’s default order because Donald “engaged in persistent
dilatory tactics that have frustrated the judicial process” and his
actions were “intentional and willful.”
A. The District Court Properly Ordered Discovery
Regarding the Trust Contents
¶ 18 Donald’s challenge to the default judgment centers on
the argument that it was error for the district court to permit
discovery on remand following Rawlings I. He argues that once a
constructive trust was imposed, “there was no need for any
additional discovery” because “the parties have already had their
day in court on the merits.”
¶ 19 We determine that additional discovery was appropriate
and, indeed, necessary. The trial in this case was bifurcated, a fact
that Donald disregards: the district court chose to first address
whether it was proper to impose a constructive trust before
deciding the issue of what property such a trust would contain.
Therefore, after the district court imposed a constructive trust, the
issue of what would make up the corpus of the trust remained.
Discovery was thus necessary to allow the court to make a
determination on that issue. Furthermore, Donald stipulated to a
post—Rawlings I scheduling order that provided that “[d]iscovery
shall be allowed in this case on all remaining material issues in
this bifurcated action.”5 He cannot now claim that he should be
released from that agreement. Therefore, after this court upheld
the imposition of a constructive trust, it was proper for the district
court to permit further discovery to determine what properties the
trust comprised and to identify any benefits or profits derived
from Donald’s use or transfer of those properties.
B. Given Donald’s Conduct During Discovery, Entry of Default
Judgment Was Not an Abuse of Discretion
¶ 20 Donald also contends that it was an abuse of discretion
for the district court to enter default judgment against him. But
the district court made extensive findings that Donald was not
5 Though Donald’s counsel did not sign the order, he orally
agreed to it at a July 10, 2012 hearing.
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responsive to requests, ignored earlier discovery sanctions, and
disregarded an explicit court order. Given these facts, we hold
that it was not an abuse of discretion for the district court to strike
Donald’s pleadings and defenses and enter default judgment
against him.
¶ 21 During the post—Rawlings I discovery, Donald failed to
produce additional documents requested by the siblings, but
instead contended that he had previously supplied all requested
documentation. The siblings moved to compel, and the district
court found that, “in fact . . . such documents had not been
supplied” and that Donald’s responses to the document requests
“were inadequate and nonresponsive.” As a result, the court
ordered Donald “to respond anew” to the siblings’ request for
documents by either providing the requested documents or
personally certifying that after a diligent search no responsive
documents existed. The court also sanctioned Donald, awarding
the siblings their costs, expenses, and attorney fees associated
with the motion to compel.
¶ 22 Despite the district court’s clear directives and the
imposition of sanctions, Donald still did not comply with the
court’s order. The siblings brought a motion for an order to show
cause, arguing that Donald did not comply with court orders and
that the court should hold Donald in contempt, strike his
pleadings, and enter default judgment. In response, Donald
claimed that he had “now complied with all document requests.”
Ruling on the matter, the district court stated that Donald
“inappropriately delayed this case’s progress” and that “[m]ost
troubling is [his] refusal to act in accordance with the express and
stringent terms” of the court’s order. Moreover, the court
continued, “[i]n light of the fact that [Donald] previously [had]
been found in contempt, had attorney fees awarded against [him],
and now [has] ignored the new Order imposed against” him, the
court was “convinced that [he] will only continue to ignore the
Court’s orders in the future.” Under Utah Rule of Civil Procedure
37(e)(2)(D) (2011), the court found that Donald’s failure to comply
“was not substantially justified” and there was “no adequate
excuse or explanation.” As a result, the court granted the siblings’
request to strike Donald’s pleadings and defenses and entered
default judgment against him.
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¶ 23 Donald defends his actions by again arguing that he had
previously produced all requested documents. He contends that,
even though the district court ordered him to “respond anew,”
this court should consider the documents that he did produce. In
other words, Donald acknowledges that he did not comply with
the district court’s explicit order but nonetheless argues that
sanctions against him were an abuse of discretion.
¶ 24 The rules do not permit parties to comply with court
orders only when they see fit, and we will not countenance
Donald’s open disregard for the district court’s directives. Under
rule 37, if a party fails to comply with a court order, the court may
“dismiss all or part of the action, strike all or part of the pleadings,
or render judgment by default on all or part of the action.” UTAH
R. CIV. P. 37(e)(2)(D) (2011). The district court made extensive
findings that Donald did not comply with its orders, provided no
adequate justification or excuse, ignored previous sanctions, and
acted in a willful and intentional manner. These findings support
the district court’s decision to strike Donald’s pleadings and
defenses and enter default judgment in favor of the siblings. We
therefore find no abuse of discretion and affirm the district court’s
order of default judgment.
II. UNDER THE MANDATE RULE, DONALD
MAY NOT CHALLENGE THE IMPOSITION
OF THE CONSTRUCTIVE TRUST
¶ 25 Donald also challenges the default judgment by
attacking the form of the remedy. He contends that any unjust
enrichment he received was through the siblings’ improvements
to the land and not in acquisition of the land in the first place. He
argues that the siblings may therefore receive only an equitable
lien against the property in the amount of their improvements,
not a possessory interest in it. But the siblings counter that
because Rawlings I affirmed the district court’s imposition of the
constructive trust, Donald may not challenge that ruling now
because it is the law of the case. We agree and therefore decline to
address the merits of Donald’s argument.
¶ 26 Under our “law of the case doctrine, a decision made on
an issue during one stage of a case is binding in successive stages
of the same litigation.” IHC Health Servs., Inc. v. D & K Mgmt., Inc.,
2008 UT 73, ¶ 26, 196 P.3d 588 (internal quotation marks omitted).
The doctrine “further[s] the goals of judicial economy and finality
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. . . within a single case.” Id. A district court retains discretion to
revisit a decision—either sua sponte or by request of the parties—
provided that the case has not been appealed and remanded. Id.
¶ 27. However, the “mandate rule”—a branch of the law of the
case doctrine—“dictates that a prior decision of a district court
becomes mandatory after an appeal and remand[,]bind[ing] both
the district court and the parties to honor the mandate of the
appellate court.” Id. ¶ 28. Moreover, the mandate “is also binding
on the appellate court should the case return on appeal after
remand.”6 Id.
¶ 27 In Rawlings I, we expressly “affirm[ed] the [district]
court’s finding of unjust enrichment and its imposition of a
constructive trust on that basis.” 2010 UT 52, ¶ 25, 240 P.3d 754.
Donald now argues that Rawlings I “was silent as to the form” of
the constructive trust and thus does not preclude a subsequent
determination that an equitable lien—not a possessory interest—
was the only remedy available in these circumstances. But, as we
explain below, Donald’s contention is in error. Constructive trusts
and equitable liens are distinct and separate remedies, and
Rawlings I did not leave open the possibility that we meant
“equitable lien” when we said “constructive trust.”
¶ 28 In Rawlings I, we adopted and employed the
understanding of constructive trusts from the Restatement (First)
of Restitution. 2010 UT 52, ¶ 29. The Restatement draws a
distinction between a “Constructive Trust,” addressed in section
160, and an “Equitable Lien,” addressed in section 161.
RESTATEMENT (FIRST) OF RESTITUTION §§ 160, 161 (AM. LAW INST.
1937). “[A constructive trust arises] . . . [w]here a person holding
title to property is subject to an equitable duty to convey it to
another on the ground that he would be unjustly enriched if he
were permitted to retain it.” Id. § 160. In contrast, an equitable lien
6 We have recognized three exceptions to the law of the case
doctrine, but Donald has not argued that any of these apply:
“(1) when there has been an intervening change of controlling
authority; (2) when new evidence has become available; or
(3) when the court is convinced that its prior decision was clearly
erroneous and would work a manifest injustice.” IHC Health
Servs., Inc. v. D & K Mgmt., Inc., 2008 UT 73, ¶ 34, 196 P.3d 588
(internal quotation marks omitted).
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exists as a “security for a claim” and typically arises when an
individual makes improvements on the land of another. 7 Id. § 161,
cmt. a. Thus, while both may serve to remedy unjust enrichment,
“[t]he difference is that restitution is measured differently”—
“[w]here the constructive trust gives a complete title to the
plaintiff, the equitable lien only gives him a security interest in the
property.” DAN B. DOBBS, LAW OF REMEDIES § 4.3(3) (2d ed. 1993).
¶ 29 In short, a constructive trust and an equitable lien are
separate equitable remedies, and in Rawlings I we expressly
imposed the former. 2010 UT 52, ¶ 25. We do recognize that these
two remedies may engender confusion because some courts and
commentators have used the terms inconsistently. See AMY
MORRIS HESS ET AL., THE LAW OF TRUSTS AND TRUSTEES § 32 (3d ed.
2007) (“[T]he term equitable lien is often erroneously used when
referring to express or constructive trusts.”). However, it is clear
from the analysis in Rawlings I that this court did not use the
terms interchangeably but rather understood a constructive trust
to mean a possessory interest in the property. In our analysis, we
adopted and relied on section 160 of the Restatement (First) of
Restitution. 2010 UT 52, ¶ 29 (recognizing we adopted section 160
in Parks v. Zions First National Bank, 673 P.2d 590, 599 (Utah 1983)).
As noted above, that section is entitled “Constructive Trust” and
addresses situations when an individual who has title to property
is subject to a “duty to convey it to another.” RESTATEMENT (FIRST)
7 Donald’s argument hinges on this point—he contends that
the siblings’ contributions to the farm were mere improvements
that warrant, at most, a security interest but not a possessory
interest in the land. We agree with the general proposition that an
equitable lien is typically, though not invariably, the appropriate
remedy for an improvement. See RESTATEMENT (FIRST) OF
RESTITUTION § 161 cmt. a (AM. LAW INST. 1937). But this issue, too,
has been decided. In Rawlings I, we laid out the three-part test for
unjust enrichment and determined that the trial court’s findings
supported imposition of a constructive trust to remedy Donald’s
unjust enrichment. 2010 UT 52, ¶¶ 41–50. Moreover, though the
parties did not address or brief the legal significance of the
quitclaim deeds Donald twice secured from his siblings, we think
the deeds contradict Donald’s claim that the siblings never
contributed to his acquisition of the property. See infra ¶ 34.
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OF RESTITUTION § 160 (AM. LAW INST. 1937). This “duty to convey”
unambiguously speaks to the possessory nature of the
constructive trust rather than a mere security interest. Moreover,
the Restatement does squarely address security interests in the
form of equitable liens, but it does so in a separate section. Id. §
161. Absent from our decision in Rawlings I is any mention of
equitable liens or of section 161 of the Restatement. Indeed, it
appears that none of the parties and neither the trial court, the
court of appeals, nor this court ever discussed the issue of an
equitable lien during the Rawlings I proceedings. But that failing
lies squarely with Donald, for he did not raise the issue until
remand following Rawlings I. In sum, in Rawlings I we determined
that Donald would be unjustly enriched were he to retain the
farm, and so we imposed a constructive trust over the property,
recognizing that the siblings had an equitable interest in it. 2010
UT 52, ¶ 50. This ruling became the law of the case, and any
attempt by Donald to sidestep that ruling must fail.
¶ 30 Donald also contends that the district court erred in
determining that he was a “conscious wrongdoer” and thus
ordering that any profits or benefits derived from trust property
be included in the trust res. But Donald employs the same
equitable lien argument that we deem foreclosed under the
mandate rule, and, as we explain below, his challenge therefore
fails. Put differently, Donald ignores that the court in Rawlings I
already concluded that the siblings possessed an equitable interest
in the property giving rise to a constructive trust.
¶ 31 Following Rawlings I, the district court ordered that the
constructive trust should include “a disgorgement of any profits
or benefits derived” from the trust property because it found
Donald to be a “conscious wrongdoer” under Parks, 673 P.2d at
602–03. In Parks, we explained that “[a] ‘conscious wrongdoer’ is
one who ‘wrongfully disposes of property of another knowing
that the disposition is wrongful and acquires in exchange other
property.’” Id. at 603 (quoting RESTATEMENT (FIRST) OF
RESTITUTION § 202 (AM. LAW INST. 1937)). And because of a
wrongful disposition, a claimant may obtain an interest in both
the newly acquired property and any profits that may arise from
its use or appreciation. Id. at 602–03; see also RESTATEMENT (FIRST)
OF RESTITUTION §§ 160 cmt. h, 202 cmt. c (AM. LAW INST. 1937). In
Parks, a husband and wife acquired various properties during
their marriage, purchased primarily with income generated by
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Mr. Parks. 673 P.2d at 592. At the time of Mrs. Parks’s death, title
to the properties was in her name alone, and her will provided
that nearly all the properties should be sold, leaving Mr. Parks
only a meager sum. Id. at 592–94. Mr. Parks challenged the will,
and we determined that he held an “equitable interest” in the
properties and that Mrs. Parks’s estate would be unjustly enriched
if it were allowed to retain sole ownership of property acquired
primarily through her husband’s earnings. Id. at 600. Moreover,
we concluded that the estate acted as a “conscious wrongdoer”
when it disposed of portions of the trust property because it knew
that Mr. Parks had an equitable claim over them. Id. at 602–03. We
therefore held that Mr. Parks was entitled to a share of any
property acquired with the trust proceeds as well as any related
profits or appreciation. Id. at 603.
¶ 32 Donald contends that the conscious-wrongdoer doctrine
of Parks is not applicable here because the siblings’ contributions
did not relate to the acquisition of the farm property and therefore
they were entitled to only an equitable lien, not an ownership
interest. But the equitable lien argument is the same issue that we
decided in Rawlings I and that is now foreclosed under the
mandate rule.
¶ 33 And in any event, Donald’s argument misapprehends
our decision in Parks. Donald reads Parks to allow for the
imposition of a constructive trust (and application of the
conscious-wrongdoer doctrine) only when the plaintiff
contributed to the acquisition of the property. But Parks was not
so circumscribed. Certainly, under the facts of that case,
Mrs. Parks’s acquisition of the properties through her husband’s
income was the act that gave rise to the constructive trust. Parks,
673 P.2d at 600. But we never suggested that contribution to
acquisition was the only means by which a plaintiff was entitled
to a constructive trust. Instead, we adopted section 160 of the
Restatement, which we recognized “presents the broadest
possible application of a constructive trust.” Id. at 599. It imposes
a “duty to convey” property if the individual “would be unjustly
enriched” were he to retain it. Id. (quoting RESTATEMENT (FIRST) OF
RESTITUTION § 160 (AM. LAW INST. 1937)). There are a myriad of
circumstances—of which acquisition is one—that could give rise
to this equitable duty to convey. See id. (“Constructive trusts
include all those instances in which a trust is raised by the
doctrines of equity for the purpose of working out justice in the
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Opinion of the Court
most efficient manner . . . .” (internal quotation marks omitted)
(quoting JOHN NORTON POMEROY, EQUITY JURISPRUDENCE § 1044
(5th ed. 1941))).
¶ 34 Moreover, Donald’s entire argument is grounded in his
contention that the siblings did not contribute to the acquisition of
the farm property. But the record belies this factual assertion. The
siblings twice ceded their legal interests in the farm to Donald,
presumably so he could act as trustee over the property. They did
so via quitclaim deeds—including a deed that Donald secured
through misrepresentation, claiming that it comprised only land
involved in a boundary dispute when it really included the entire
farm property. As Judge Cardozo explained, “[w]hen property
has been acquired in such circumstances that the holder of the
legal title may not in good conscience retain the beneficial
interest[,] equity converts him into a trustee.” Beatty v. Guggenheim
Expl. Co., 122 N.E. 378, 380 (N.Y. 191x9). And in Parks, we stated
that the role of constructive trustee requires that the trustee
“respect and account for the equitable interest” held by the
beneficiaries. 673 P.2d at 602. A “disposition of the trust property,
with knowledge of [a beneficiary’s] interest therein, constitute[s] a
breach of [the] responsibility” of a trustee, resulting in “the status
of a ‘conscious wrongdoer.’” Id. Here, Donald procured quitclaim
deeds from his siblings (some through deceptive tactics), disposed
of farm property,8 comingled funds such that they could not be
traced, and obtained the benefits of the family’s efforts by
misleading them into believing that he was managing the
8 Donald argues that he did not use trust property or income to
acquire additional property. But the district court, in denying
Donald’s request to release the lis pendens on a property in
Washington County, reiterated its previous determinations that
Donald had comingled funds and received benefits from the
siblings, necessitating the imposition of a constructive trust. The
court then stated that the discovery it had ordered was “to
determine the profits and/or benefits derived by [Donald’s]
possession, exploitation, use, and control of the constructive trust
properties.” But because of Donald’s contumacious behavior
during discovery, evidence of his conveyances and acquisitions
was not ascertainable. The court therefore properly ordered that
all property subject to lis pendens be included in the trust.
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Opinion of the Court
property for the family’s benefit. And all the while, Donald was
aware that the siblings understood the farm to be a family farm
and believed—which we affirm here—that they had an equitable
interest in it. And in the end, Donald defied court orders designed
to unravel the foregoing by refusing to participate in discovery.
¶ 35 “A constructive trust is the formula through which the
conscience of equity finds expression. . . .” Beatty, 122 N.E. at386.
Given the foregoing facts and in light of the court’s broad powers
to fashion an equitable remedy, we see no abuse of discretion on
the part of the district court in finding Donald a conscious
wrongdoer and imposing a constructive trust on the properties
subject to lis pendens. We therefore affirm the district court’s
ruling.
CONCLUSION
¶ 36 Based on Donald’s intentional refusal to provide
requested discovery or comply with an unequivocal court order,
the district court did not abuse its discretion in entering default
judgment against him. And in Rawlings I, we affirmed the
imposition of a constructive trust to remedy the finding of unjust
enrichment. That is the law of the case, and Donald may not now
attempt to transform the constructive trust into an equitable lien
and is likewise foreclosed from arguing that the conscious-
wrongdoer doctrine is inapplicable. We therefore affirm the
district court’s default judgment and order of sale.
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