Gilbert v. Third Dist Ct JJs

This opinion is subject to revision before final
publication in the Pacific Reporter
2016 UT 31IN THE
SUPREME COURT OF THE STATE OF UTAH
DONALD D. GILBERT, JR.,
Petitioner,
v.
Third District Court Judges
PAUL G. MAUGHAN and ROBERT P. FAUST,
Respondents.
No. 20150664
Filed July 20, 2016
On Petition for Extraordinary Relief
Third District, Salt Lake
The Honorable Paul G. Maughan
The Honorable Robert P. Faust
No. 070902087
Attorneys:
Lynn O. Poulson, Lehi, for petitioner
Nancy J. Sylvester, Salt Lake City, for respondents
JUSTICE PEARCE authored the opinion of the Court in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE DURHAM, and JUSTICE HIMONAS joined.
JUSTICE PEARCE, opinion of the Court:
¶1 This matter arises out of a dispute between the Utah Down
Syndrome Foundation, Inc. (the Foundation) and a splinter group,
the Utah Down Syndrome Association (the Association). Donald D.
Gilbert, Jr., an attorney, represented the Association and a number of
its founders—who were formerly officers and directors of the
Foundation—in litigation between the two entities. In 2015, Gilbert
filed this petition for extraordinary relief, challenging a 2008 district
court judgment that ordered him to disgorge $30,000 taken from
Foundation bank accounts to pay his attorney fees. Gilbert’s petition
GILBERT v. THIRD DISTRICT COURT JUDGES
Opinion of the Court
also challenges the district court’s 2007 injunction that originally
barred Gilbert’s clients from paying him with Foundation funds, its
order denying his 2010 motion to vacate the 2008 judgment, and its
order denying his 2014 motion for relief from the 2008 judgment. We
decline to grant extraordinary relief, and we deny Gilbert’s petition.
BACKGROUND
¶2 The Foundation is a nonprofit organization dedicated to
improving the lives of individuals affected by Down syndrome. A
dispute arose between the Foundation and some of its members (the
Individual Defendants) over the Foundation’s management. The
Individual Defendants, who were officers and directors of the
Foundation’s Salt Lake and Utah County chapters, created the
Association as a purportedly separate Down syndrome support
organization. However, the Individual Defendants, acting as the
Association, allegedly retained Foundation funds and property and
continued to use the Foundation’s trade names, 501(c)(3) tax-exempt
status, and bank accounts.
¶3 In February 2007, the Foundation sued the Association and
the Individual Defendants, alleging conversion, misappropriation,
and breach of fiduciary duty. 1 The Foundation sought an accounting
and an injunction requiring, among other things, the return of “all
funds from the Utah County and Salt Lake County chapters of the
Foundation.” The Foundation moved for partial summary judgment,
asking the district court to rule that the Association and the
Individual Defendants could not act in the Foundation’s name. The
Foundation also asked the district court to enter an order restraining
the Individual Defendants from accessing funds in the disputed
bank accounts.
¶4 Neither the Association nor the Individual Defendants filed
an opposition to the motion for partial summary judgment. On May
3, 2007, Judge Maughan entered an order granting the Foundation’s
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1 In a previous action, Gilbert represented two of the Individual
Defendants in an attempt to bring a derivative action against the
Foundation’s president. In that case, the district court ruled on
summary judgment that the Individual Defendants lacked the
authority to sue on behalf of the Foundation. See Utah Down
Syndrome Found., Inc. v. Utah Down Syndrome Ass’n, 2012 UT 86, ¶ 3
& n.2, 293 P.3d 241. That decision is not before us.
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Cite as: 2016 UT 31Opinion of the Court
request for injunctive relief (the Injunction). The Injunction
concluded that the Individual Defendants “do not have the
authority” to act in the Foundation’s name in any respect. The
Injunction also required the Individual Defendants to return all
Foundation funds and stated they were “restrained from accessing
[the Foundation’s bank accounts] or any [Foundation] funds.” The
Individual Defendants did not attempt to appeal the Injunction. On
June 14, their counsel entered a notice of withdrawal.
¶5 On July 13, 2007, Gilbert filed a motion to intervene on
behalf of the members of the Foundation’s Utah and Salt Lake
County chapters (the Intervenors), 2 which the district court granted.
On September 21, the Foundation filed a motion for entry of
judgment that asked, in part, for an order to show cause against
Gilbert for failing to hand over some $11,000 in Foundation funds
that Gilbert was allegedly holding in his trust account. 3 On
September 26, Gilbert entered an appearance as counsel for the
Individual Defendants and filed, on their behalf and on behalf of the
Association, a motion to set aside the Injunction. On October 4,
Gilbert filed a memorandum opposing the Foundation’s motion for
entry of judgment and order to show cause.
¶6 On December 21, 2007, the Foundation filed a motion for
disgorgement. The Foundation alleged that the Individual
Defendants, or those working in concert with them, had taken funds
to pay Gilbert’s attorney fees from the Foundation bank accounts
that were subject to the Injunction. The motion argued that Gilbert
had accepted these funds in violation of the Injunction and asked
that Gilbert be ordered to return the funds to the Foundation. Gilbert
opposed the disgorgement motion on behalf of the Intervenors.
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2 We see no relevant distinction between the Intervenors and the
Individual Defendants for purposes of this opinion, and the
intervention motion itself appears to have been a tactical effort to
disassociate the county chapters from the Foundation and associate
those chapters with the Association and the Individual Defendants.
Nevertheless, we identify the Intervenors separately to match the
pleadings filed below.
3 These funds were apparently not fees paid to Gilbert for
attorney services but were donations that he was holding while the
parties litigated the question of who was entitled to them.
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GILBERT v. THIRD DISTRICT COURT JUDGES
Opinion of the Court
¶7 On February 21, 2008, Judge Faust determined that Gilbert’s
motion to set aside the Injunction was “not well-taken.” On March
10, Gilbert appeared at a hearing on the disgorgement motion and
argued against that motion on behalf of his clients. On March 11,
Judge Faust entered a minute entry granting the Foundation’s
motion for entry of judgment and stating, “Any remaining issues
reserved regarding the disgorgement of funds [are] also . . . granted
in [the Foundation’s] favor.” On April 14, Gilbert filed a notice of
withdrawal as counsel for the Individual Defendants and the
Intervenors.
¶8 On May 16, 2008, the Foundation filed a second motion for
disgorgement of funds, alleging that the Foundation had discovered
another check that had been used to pay Gilbert with funds taken
from the Foundation bank accounts. The second disgorgement
motion asked for an order requiring Gilbert to return a total of
$30,000, with pre and post judgment interest, and to pay attorney
fees the Foundation had incurred in seeking disgorgement. On June
13, Judge Faust entered an “Order and Judgment” (Disgorgement
Order) granting the Foundation’s second disgorgement motion,
granting judgment against Gilbert for $30,000, and awarding the
Foundation attorney fees and interest. To date, Gilbert has not paid
the Foundation as ordered.
¶9 Sometime prior to November 2010, Gilbert became aware
that the Utah State Bar had received a complaint from a Foundation
officer about Gilbert’s failure to comply with the Disgorgement
Order. In response, Gilbert filed a motion in the district court seeking
to vacate the Disgorgement Order (the Motion to Vacate). The
motion sought relief on Gilbert’s behalf as a nonparty to the
litigation between the Association and the Foundation. The motion
argued that the district court had lacked personal jurisdiction to
enter the Disgorgement Order against Gilbert because he was not a
party to that action and had never been served with a summons and
complaint. Gilbert argued that this rendered the Disgorgement
Order void and freed him of any obligation to comply.
¶10 Judge Maughan denied the motion, ruling that the district
court had possessed jurisdiction to enter the Disgorgement Order.
Specifically, Judge Maughan ruled,
The fact that [Gilbert] was not a party to this action is
irrelevant. He is an attorney representing parties in this
action and was clearly aware of the [Injunction] which
was in place when he commenced representation.
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While the funds at issue were not formally frozen, they
were clearly identified and earmarked for return to the
[Foundation]. [Gilbert] had a clear duty to ensure that
the funds he was receiving for attorney’s fees did not
come from [this] pool of funds, a duty which he
violated. Indeed, it appears that [Gilbert] was fully
aware of the source for his payments, but nevertheless
accepted these funds.
Judge Maughan concluded that “[u]nder such circumstances, both
[Gilbert] and the funds he received fell under [the district court’s]
continuing jurisdiction.”
¶11 Gilbert attempted to appeal the district court’s denial of
the Motion to Vacate to this court. We held that, as a nonparty to the
underlying litigation, Gilbert could not directly appeal the court’s
decision. Utah Down Syndrome Found., Inc. v. Utah Down Syndrome
Ass’n, 2012 UT 86, ¶ 1, 293 P.3d 241. We explained that our rules
“require nonparties, whose interests are purportedly affected by a
court order, to file a motion to intervene as a party in the district
court or to file a petition for extraordinary writ with the appellate
court.” 4 Id. ¶ 15. We held that “[b]ecause [Gilbert] failed to seek
intervention, his remaining option was to petition this court for
extraordinary relief.” Id. We also stated, “In cases where there is time
to seek intervention, the claim for party status can be submitted to
the district court in the first instance, rather than to the appellate
court.” Id. ¶ 22. Despite that instruction, Gilbert did not petition for
extraordinary relief at that time, nor did he seek to intervene in the
underlying litigation.
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4 Much of our caselaw speaks in terms of “extraordinary writs”
rather than “extraordinary relief.” The Utah Rules of Civil Procedure
contemplate a party filing a petition for “extraordinary relief” rather
than an “extraordinary writ.” See UTAH R. CIV. P. 65B advisory
committee note (“This rule effectively eliminates the concept of the
‘writ’ from extraordinary relief procedure. . . . The concept has been
replaced with terms such as ‘hearing order’ and ‘relief’ that are more
descriptive of the procedural reality.”). In hopes of promoting
readability, we will not alter quotations with a forest of bracketed
phrases to purge the older terminology, but in so doing we do not
mean to suggest that the old nomenclature is coming back in vogue.
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GILBERT v. THIRD DISTRICT COURT JUDGES
Opinion of the Court
¶12 In August 2014, over eighteen months after this court
issued Utah Down Syndrome Foundation, Gilbert filed a motion in the
district court seeking relief from the Disgorgement Order (Motion
for Relief from Judgment). In addition to reasserting Gilbert’s
personal jurisdiction arguments, that motion relied upon a 2009
settlement agreement between the Foundation and the Individual
Defendants (Settlement Agreement), which Gilbert argued released
him from the Disgorgement Order as part of the parties’ agreement.
After a hearing, Judge Maughan denied the Motion for Relief from
Judgment.
¶13 Despite this court’s instruction in Utah Down Syndrome
Foundation, Gilbert never sought to intervene in the action to gain a
right of direct appeal. Instead, once the district court denied the
Motion for Relief From Judgment, he filed this petition for
extraordinary relief.5
ISSUES AND STANDARD OF REVIEW
¶14 Gilbert’s petition identifies five issues: (1) whether Judge
Maughan violated the Code of Judicial Conduct by showing open
bias and prejudice against Gilbert at the 2014 hearing on the Motion
for Relief from Judgment; (2) whether Judge Maughan erred in
denying the Motion for Relief from Judgment; (3) whether Judge
Maughan exceeded the district court’s jurisdiction and failed to
comply with the law regarding injunctions when he entered the
Injunction; (4) whether Judge Faust violated Gilbert’s due process
rights under the Utah and United States Constitutions when he
entered the Disgorgement Order against Gilbert, when Gilbert was
not a party to the action and was not named in the Injunction; and
(5) whether Judge Maughan violated Gilbert’s due process rights
under the Utah and United States Constitutions when he denied the
2010 Motion to Vacate. Gilbert’s arguments can be divided into two
groups: first, those attacking the 2007 Injunction, the 2008
Disgorgement Order, and the denial of his 2010 Motion to Vacate;
and second, those arising from the denial of his 2014 Motion for
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5 The Foundation received copies of the petition, response, and
reply as the real party in interest, but it has not sought to intervene
or otherwise respond. The Association and the Individual
Defendants have not been served with the petition and related
papers, and they have not sought to participate.
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Relief from Judgment. This court has broad discretion to grant or
deny extraordinary relief. State v. Henriod, 2006 UT 11, ¶ 20, 131 P.3d
232 (“[T]he decision to grant extraordinary relief lies within our
discretion.”).
ANALYSIS
¶15 Rule 65B of the Utah Rules of Civil Procedure allows a
petition for extraordinary relief “[w]here no other plain, speedy and
adequate remedy is available.” UTAH R. CIV. P. 65B(a). A petition for
extraordinary relief “is not a proceeding for general review, and
cannot be used as such.” Anderson v. Baker, 296 P.2d 283, 285 (Utah
1956). “Unlike a party filing a direct appeal, a petitioner seeking rule
65B(d) extraordinary relief has no right to receive a remedy that
corrects a lower court’s mishandling of a particular case.” State v.
Barrett, 2005 UT 88, ¶ 23, 127 P.3d 682.
¶16 In State v. Barrett, we outlined a number of nonexclusive
factors a court may consider in deciding whether to grant a petition
for extraordinary relief. Id. ¶ 24. These factors include “the
egregiousness of the alleged error, the significance of the legal issue
presented by the petition, the severity of the consequences
occasioned by the alleged error, and additional factors.” Id. However,
“these factors are neither controlling nor do they wholly measure the
extent of [a court’s] discretion.” Snow, Christensen & Martineau v.
Lindberg, 2013 UT 15, ¶ 22, 299 P.3d 1058.
¶17 Gilbert argues that the alleged errors were both egregious
and legally significant, and that the consequence—his ultimate
disbarment from the practice of law for failing to comply with the
Disgorgement Order—is severe. In opposition, Respondents argue
that the issues are not legally significant because none of them are
the subject of an ongoing debate in this court. See State v. Henriod,
2006 UT 11, ¶ 21, 131 P.3d 232 (“[T]he legal issue is significant, as
demonstrated by the ongoing debate in the Supreme Court.”).
Respondents also argue that extraordinary relief is unavailable to
Gilbert because he failed to pursue the remedy of seeking
intervention and direct appeal. 6
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6Respondents concede that the alleged errors could be deemed
egregious to the extent that Gilbert was denied due process, and they
also concede that the loss of one’s law license is a severe
consequence.
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GILBERT v. THIRD DISTRICT COURT JUDGES
Opinion of the Court
¶18 We need not reach the merits of the parties’ arguments,
however, because we may, as Barrett recognized, consider additional
factors that bear on the availability of extraordinary relief. 7 2005 UT
88, ¶¶ 24–26; see also, e.g., Cox v. Laycock, 2015 UT 20, ¶ 20, 345 P.3d
689 (considering “the necessity of prompt resolution [of a primary-
election question] in advance of the general election” in granting a
petition for extraordinary relief); Fundamentalist Church of Jesus Christ
of Latter-Day Saints v. Lindberg, 2010 UT 51, ¶ 24, 238 P.3d 1054(“[T]he equitable doctrine of laches is available to dismiss untimely
writs.” (citation omitted)). Here, Gilbert’s repeated and lengthy
delays in challenging the Injunction, the Disgorgement Order, and
the denial of his Motion to Vacate, without apparent justification or
excuse, weigh decisively against granting extraordinary relief.
Gilbert did not immediately seek to appeal the 2008 Disgorgement
Order. Rather, he waited over two years before attacking that order
by filing his Motion to Vacate. It was only upon the denial of the
Motion to Vacate that Gilbert attempted to appeal, resulting in our
2012 decision in Utah Down Syndrome Foundation, Inc. v. Utah Down
Syndrome Ass’n, 2012 UT 86, 293 P.3d 241.
¶19 In Utah Down Syndrome Foundation, we suggested that
Gilbert could still challenge the Disgorgement Order and denial of
his Motion to Vacate through a petition for extraordinary relief,
notwithstanding his prior failure to seek intervention and direct
appeal. See id. ¶ 15 (“Because [Gilbert] failed to seek intervention, his
remaining option was to petition this court for extraordinary relief.”).
But rather than promptly seeking extraordinary relief, Gilbert waited
until August 2015 to file this petition, allowing more than two-and-a-
half years to elapse between our opinion and his renewed efforts to
obtain relief.
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7 State v. Barrett contemplates a two-step analysis. See 2005 UT 88,
¶ 24, 127 P.3d 682. First, a petitioner must demonstrate that the
district court abused its discretion. Id. Once the petitioner makes that
showing, the “petitioner becomes eligible for, but not entitled to,
extraordinary relief.” Id. Second, the petitioner must demonstrate
that the court should exercise its discretion to grant relief. See id. For
the purposes of this opinion, we assume, without deciding, that
Gilbert could clear the first hurdle and demonstrate that the district
court abused its discretion in one or more of the rulings he
challenges.
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¶20 These repeated delays—and particularly the second one,
after we instructed Gilbert how to proceed—weigh heavily against
the grant of extraordinary relief. Cf. Renn v. Utah State Bd. of Pardons,
904 P.2d 677, 684 (Utah 1995) (“[P]etitions under [rule] 65B(e) for a
writ of certiorari or mandamus should be filed within a reasonable
time after the act complained of has been done or refused . . . .”).
Indeed, the magnitude of the delay, coupled with the lack of
apparent justification for that delay, overwhelms any of the Barrett
factors that might otherwise have weighed in favor of granting
Gilbert’s petition.8 Gilbert has twice allowed two years or more to
elapse without attempting to bring the alleged errors before this
court, by petition for extraordinary relief or otherwise. Further, there
is no apparent justification or excuse for these delays. Under these
circumstances, we deny the extraordinary relief that Gilbert seeks
with respect to the 2007 Injunction, the 2008 Disgorgement Order,
and the 2010 Motion to Vacate. See Barrett, 2005 UT 88, ¶ 24.
¶21 Gilbert’s petition does not suffer from the same chronic
delay with respect to the 2014 Motion for Relief from Judgment. We
nevertheless reject that portion of the petition because Gilbert has
not demonstrated that the ordinary judicial process did not provide
him with a plain, speedy, and adequate remedy to challenge the
order denying the Motion for Relief from Judgment. See UTAH R. CIV.
P. 65B(a). In Utah Down Syndrome Foundation, we explained the
procedure a nonparty should employ to challenge a court order:
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8 In Fundamentalist Church of Jesus Christ of Latter-Day Saints v.
Lindberg, we concluded that laches barred a petition for
extraordinary relief because the three-year delay in bringing the
petition, without justification or excuse, “operated to the detriment
of others.” 2010 UT 51, ¶ 35, 238 P.3d 1054. Laches requires not just a
lack of diligence but also “an injury resulting from that lack of
diligence.” Id. ¶ 27. Although it is possible to articulate the prejudice
Gilbert’s delay occasioned, we note the difference between a party
asserting that laches should prevent the grant of relief and this court
determining that undue delay weighs against the exercise of our
discretionary jurisdiction. No showing of prejudice is needed when
this court concludes that a party has unreasonably delayed a request
for extraordinary relief. Of course, prejudice resulting from a delay
may also weigh against the availability of extraordinary relief.
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GILBERT v. THIRD DISTRICT COURT JUDGES
Opinion of the Court
In cases where there is time to seek intervention, the
claim for party status can be submitted to the district
court in the first instance, rather than to the appellate
court. In those cases where such a motion cannot
provide timely relief, a petition for extraordinary writ
filed with the appellate court provides an adequate
remedy in light of the appellate court’s obligation to
give due regard to principles of due process.
2012 UT 86, ¶ 22 (footnote omitted). Thus, when Gilbert filed his
Motion for Relief from Judgment, he was on notice that he should
seek intervention and a direct appeal if time permitted. Nothing in
the record suggests that Gilbert lacked the time needed to
accompany his Motion for Relief from Judgment with a motion to
intervene. Had he done so, he would likely have attained formal
party status and a direct appeal of the court’s final order. But he
chose to ignore this court’s explicit instruction to seek intervention in
favor of seeking extraordinary relief.
¶22 Gilbert defends his tactical decision by arguing that he did
not want to intervene because doing so would have “defeated his
argument that the District Court lacked in personam jurisdiction over
him.” He relies on language from the concurring opinion in Utah
Down Syndrome Foundation stating that “[n]onparties claiming that
the court lacks jurisdiction over them cannot be expected to
voluntarily submit themselves to that jurisdiction—by moving to
intervene—thereby laying waste to the very claim of error they wish
to raise on appeal.” 2012 UT 86, ¶ 34 (Lee, J., concurring). For this
reason, Gilbert argues, treating his ability to intervene and pursue
direct appellate relief as a plain, speedy, and adequate remedy that
precludes extraordinary relief would “impose an unfair and
improper burden” on him and “should be rejected.”
¶23 We disagree with Gilbert for the same reason a majority of
this court disagreed with him the last time he advanced this
argument. In Utah Down Syndrome Foundation, we stated that a
nonparty seeking intervention “can still raise personal jurisdiction as
a defense, so long as he does it in his first pleading.” 2012 UT 86,
¶ 22 n.11. It is only when an intervenor fails to raise that defense in
an initial pleading that the defense is waived. Id.; see also UTAH R.
CIV. P. 12(h) (describing the waiver of defenses). Because Gilbert
could have preserved his personal jurisdiction defense by raising it
in his initial pleading, we do not view eschewing intervention to
preserve that argument as depriving him of a plain, speedy, and
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adequate alternative to extraordinary relief with respect to review of
the order denying the Motion for Relief from Judgment. With respect
to the 2014 order, Gilbert possessed a plain, speedy, and adequate
avenue to seek review of the district court’s actions, and we deny his
petition for extraordinary relief.
CONCLUSION
¶24 Gilbert unreasonably delayed seeking extraordinary relief
from the Injunction, the Disgorgement Order, and the denial of his
Motion to Vacate. He also failed to pursue the plain, speedy, and
adequate remedy of seeking intervention and direct appeal of the
denial of his Motion for Relief from Judgment. We therefore deny
Gilbert’s petition for extraordinary relief.
11