Shurtleff v. United Effort Plan Trust

2012 UT 47, 289 P.3d 408, 714 Utah Adv. Rep. 50, 2012 Utah LEXIS 109, 2012 WL 3176369
CourtUtah Supreme Court
DecidedAugust 3, 2012
DocketNo. 20120300
StatusPublished
Cited by11 cases

This text of 2012 UT 47 (Shurtleff v. United Effort Plan Trust) is published on Counsel Stack Legal Research, covering Utah Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shurtleff v. United Effort Plan Trust, 2012 UT 47, 289 P.3d 408, 714 Utah Adv. Rep. 50, 2012 Utah LEXIS 109, 2012 WL 3176369 (Utah 2012).

Opinion

Justice DURHAM,

opinion of the Court:

INTRODUCTION

T1 This is an appeal from the probate court's order requiring the State to make an interim payment of the Special Fiduciary's fees incurred in administering the United Effort Plan (UEP) Trust. The State argues that the probate court abused its discretion and acted contrary to Utah law. The State also challenges the probate court's denial of its motions for reconsideration, extension of time, and contribution. We conclude that the probate court did not abuse its discretion or act contrary to Utah law when it found that justice and equity required the State to make an interim payment to the Special Fiduciary, and we affirm the court's grant of the Special Fiduciary's motion for fees. We also affirm the court's denial of the State's other motions.

[411]*411BACKGROUND

12 In 1942, the spiritual leadership of the Fundamentalist Church of Jesus Christ of Latter-day Saints (FLDS Church) formed the UEP Trust, conditioning membership upon the total "consecration" of all potential beneficiaries' properties to the UEP Trust. See Fundamentalist Church of Jesus Christ of Latter-Day Saints v. Lindberg, 2010 UT 51, ¶ 2, 238 P.3d 1054. In 1998, this court held that the UEP Trust as originally formed was private, rather than charitable. Jeffs v. Stubbs, 970 P.2d 1234, 1252-58(Utah 1998). The FLDS Church subsequently modified the UEP Trust so as to qualify it as a charitable trust under Utah law, Lindberg, 2010 UT 51, ¶ 1, 238 P.3d 1054, although it remained a religious trust. In May 2005, the Utah Attorney General (AG) petitioned the probate court to protect the trust beneficiaries by appointing a Special Fiduciary to administer the UEP Trust. The Utah AG recommended Bruce Wisan to fill this position.1 Granting the Utah AG's request, the probate court appointed Mr. Wisan as the Special Fiduciary. Later that year, the probate court granted the Special Fiduciary's recommendation to reform the UEP Trust into a nonreligious charitable trust in order to administer to the needs of all beneficiaries equally, regardless of FLDS affiliation. For the first three years of his appointment, the Special Fiduciary paid the trust administration expenses through proceeds received from the liquidation of UEP Trust assets and through occupancy fees paid by the beneficiaries.

3 In July 2008, a subset of the beneficiaries (the FLDS Association), headed by their religious leader, Warren Jeffs, began for the first time to contest the 2005 reformation of the UEP Trust.2 This abrupt change tied up trust assets in litigation and stopped all occu-paney fee payments. - Consequently, the UEP Trust's need for legal representation escalated, and the Trust simultaneously lost its ability to pay for counsel. The Special Fiduciary continued to look to trust assets to meet the costs of trust administration and in September 2008 began efforts to sell Berry Knoll Farm, a valuable trust property. In response, the FLDS Association brought a federal lawsuit challenging the 2005 reformation of the UEP Trust. The federal district court issued a stay on the sale of Berry Knoll Farm. The probate court approved the Special Fiduciary's request to sell Berry Knoll Farm, but the court agreed to continue the stay on the sale provided that the parties continued to negotiate in good faith and that the FLDS beneficiaries paid their occupancy fees.

T4 Despite their assurances to the court, the FLDS Association made only partial oc-cupaney fee payments. Members of the FLDS Association claimed that they ultimately stopped making payments because the Utah AG told them that they were not required to do so. Because the FLDS Association asked the Utah AG to withhold its funds, even its partial fee payment given to the Utah AG was not paid to the Special Fiduciary until a court order mandated its transfer. The FLDS Association members have refused to make any further occupancy fee payments.

15 Meanwhile, the Utah AG crafted a settlement proposal that sought to resolve the ongoing disputes among all involved parties. The settlement proposal was opposed by the Special Fiduciary and rejected by the probate court because it unduly favored the FLDS Association at the Special Fiduciary's expense and favored FLDS trust beneficiaries over non-FLDS ones. The proposal would have granted complete control over nearly all trust property to the FLDS Church This wholesale transfer to the FLDS Church would not have been a neutral division among the potential beneficiaries.3 [412]*412Furthermore, the proposal included no method of payment for the Special Fiduciary.

16 In light of the lack of a successful settlement, the impediments to liquidation of trust assets, and the continuing financial eri-sis enveloping the UEP Trust, in early 2011 the Special Fiduciary sent a representative to meet with State officials regarding the financial situation.4 The Utah AG raised the possibility of the legislature making an interim payment. But about a month later, the Utah AG informed the Special Fiduciary's representative that the Utah AG no longer supported this idea, and suggested that the Special Fiduciary would be more likely to receive payment if he first obtained a court order.

T7 Following this advice, the Special Fidu-clary moved for a court order requiring the State to pay the Special Fiduciary's trust administration fees. The Utah AG opposed the motion, including a statement that "[to the extent the Fiduciary complains of additional expenses which he may incur if he elects to continue to administer the [UEP Trust], the Fiduciary is free to resign." In August 2011, the probate court granted the Special Fiduciary's motion after conducting a thorough weighing of the history of the administration of the UEP Trust, as discussed above. The probate court reasoned that, in weighing the equities, "the only reasonable alternative is to require the State to make whole those individuals and businesses that have in good faith rendered services to the Trust." And the court stressed that "the equities weigh substantially in favor of the State bearing these costs and fees in the interim." The probate court also "categorically rejected)" the idea that the Special Fiduciary could simply resign because "whether with this or another Special Fidu-clary, the costs of [trust] administration will remain until such time as a final resolution is reached in this case." The court did "not disagree, however, with the Utah AG's argument that the fees incurred in administering the Trust should ultimately be paid from Trust assets if at all possible." The court reassured the Utah AG that it would consider any objections regarding the Special Fidu-clary's fee requests before approving them. Finally, the court stated that once it ruled on the fee requests, "it will be the State's duty to pay the obligation timely. Specifically, it shall be the duty and obligation of the Utah AG, as the State's agent and representative, to take all necessary action to secure prompt payment of the amounts approved by the Court."

8 Following this ruling, the Special Fidu-clary requested the State's advice on how to conduct the fee review process. In October 2011, about a month before filing its fee approval motion, the Special Fiduciary submitted an outline of his plan for filing his accountings to the court and explicitly invited the State's input.

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Bluebook (online)
2012 UT 47, 289 P.3d 408, 714 Utah Adv. Rep. 50, 2012 Utah LEXIS 109, 2012 WL 3176369, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shurtleff-v-united-effort-plan-trust-utah-2012.