Siebach v. Brigham Young University

2015 UT App 253, 361 P.3d 130, 797 Utah Adv. Rep. 11, 2015 Utah App. LEXIS 267, 2015 WL 5894810
CourtCourt of Appeals of Utah
DecidedOctober 8, 2015
Docket20140317-CA
StatusPublished
Cited by6 cases

This text of 2015 UT App 253 (Siebach v. Brigham Young University) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Siebach v. Brigham Young University, 2015 UT App 253, 361 P.3d 130, 797 Utah Adv. Rep. 11, 2015 Utah App. LEXIS 267, 2015 WL 5894810 (Utah Ct. App. 2015).

Opinion

Opinion

PEARCE, Judge:

T1 Ralph and Muriel Siebach (the Sie-bachs) sued Brigham Young University (BYU), seeking, among other forms of relief, the return of charitable donations they had given to BYU. The district court determined that the Siebachs lacked standing to pursue their claims and dismissed their Amended Complaint with prejudice. We affirm in . part, reverse in part, and remand for further proceedings.

BACKGROUND 1

1 2 The Siebachs have donated hundreds of thousands of dollars to BYU over the past several decades. The Siebachs' son, Dr. James L. Siebach (Son), was employed as a philosophy professor at BYU. In 1990, Son asked BYU to establish a research account that would be known as the Rhetorical Studies Account (the RSA). The RSA was to be used exclusively to fund academic research in philosophy at BYU.

T3 BYU created the RSA and designated it as a restricted account for "Research; Hiring; [and] promotion of any & all aspects of philosophical studies." The RSA was to be funded primarily by private donations. Son was the only person authorized to spend the RSA funds. In the following years, the Sic- *133 bachs and other donors-three corporations and at least four individuals-contributed approximately $425,000 to the RSA with the understanding that the money would be used to fund Son's research.

T4 In April 2009, BYU began an audit of the RSA. BYU did not inform the Siebachs or the other donors of the audit. In July 2009, BYU froze the RSA and issued an interim report concluding that the Siebachs' contributions to the account had violated federal tax laws. The interim report also stated that BYU's audit indicated "a significant level of purchases made from the RSA without adequate control or supervision." The interim report concluded that the RSA had been utilized in a manner that "failed to comply with university policies and procedures," and directed that all future expenditures from the RSA conform to "approved research areas." BYU did not provide the interim report, or communicate its results, to the Siebachs or any other donor.

T5 On September 9, 2009, BYU accepted an additional $50,000 contribution from the Siebachs. Upon receipt of the donation, BYU unfroze the RSA, deposited the Sie-bachs' contribution, and then refroze the RSA. On or about September 17, 2009, BYU removed Son as the person authorized to access the RSA. BYU did not inform the Siebachs that it had frozen the RSA or removed Son's authorization to access the RSA.

T6 BYU issued its final audit report in December 2011. The report concluded that the Siebachs had "a personal interest in making donations to benefit [Son] financially, which conflicts with their avowed charitable interest in supporting the exempt educational purpose of [BYU]." The report also opined that the Siebachs' "intention was to make a gift for a private use rather than for a public benefit," that BYU "was being used merely as a 'conduit' to funnel funds to [Son] from his parents and avoid tax liabilities," and that if the Siebachs donated the funds with the restriction that they only be used by Son, "it would have been seen as an effort to use [BYU] as a conduit for a personal gift in violation of the Internal Revenue Code and [BYU's] policy and established practice." 2 The final report acknowledged BYU's own negligence in failing to enforce university policies regarding the RSA. The report also documented various inappropriate uses of the RSA funds, including personal travel, the purchase of approximately $81,000 in personal items, and other expenditures that "were of doubtful value or no value" to BYU.

T7 The Sicbachs eventually became aware of the audit and apparently made their disagreement and displeasure with the audit's conclusions known to BYU. BYU offered to return any unspent funds in the RSA that could be attributed to the Siebachs. However, the Siebachs and BYU could not agree on the precise amount to be refunded. Eventually, BYU offered to return approximately $114,000 to the Sicbachs. The Siebachs directed BYU to return that amount but announced that the $114,000 was "less than should be transferred and that they were not waiving any and all claims to the remaining balance BYU promised and is obligated to transfer. 3 The Siebachs also demanded that BYU return, with interest, the entire $50,000 donation they had made in 2009. BYU responded by conditioning the return of money on the agreement of all donors to the RSA and a waiver of further claims by all donors, including the The Siebachs were unwilling or unable to satisfy BYU's conditions, and BYU did not refund any portion of the unspent funds to the Siebachs.

T8 In 2013, the Siebachs filed suit against BYU, seeking an accounting of their donations to the RSA, a declaratory judgment that BYU should be required to use the RSA funds in accordance with the Siebachs' dona-tive intent, and the return of funds. The Siebachs' complaint included claims of breach of fiduciary duty, declaratory relief, accounting, breach of contract, constructive trust, unjust enrichment, revocation of gift, fraud in the inducement, negligent misrepresentation, and negligent management of the donated funds.

*134 19 The district court dismissed the Sie-bachs' Amended Complaint with prejudice, concluding that they lacked standing to assert their claims. The district court reasoned that, under the general common-law rule, a donor who has made a completed gift to a charitable institution lacks standing to bring an action to enforce the terms of the gift and that, in most cireumstances, it is only a state's attorney general who has standing to bring such an action. The district court concluded that the Utah Legislature "implicitly adopted the common law rule" when it enacted the Uniform Prudent Management of Institutional Funds Act. The district court further concluded that all of the Siebachs' claims amounted to attempts to enforce their donative intent, observing that it "(could not] comprehénd a scenario where the conditions identified by the Siebachs may not be considered terms of a charitable gift, or where the alleged bad acts may not be viewed as failures in complying with the terms of a gift." Accordingly, the district court dismissed the Amended Complaint for lack of standing.

110 Before the district court entered a final written dismissal order, the Siebachs filed a motion to reconsider, which BYU opposed. The district court issued its final written order without ruling on the motion to reconsider. The Siebachs filed a notice of appeal. Thereafter, the district court granted the Siebachs' motion to reconsider in part and reinstated their breach of contract claim relating to BYU's offer to return the unspent portion of their RSA donations. BYU objected that the district court lacked jurisdiction to reconsider its final order in light of the Siebachs' appeal. The district court agreed and voided its order reconsidering and reinstating the Siebhachs' breach of contract claim. The Siebachs filed another notice of appeal.

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Cite This Page — Counsel Stack

Bluebook (online)
2015 UT App 253, 361 P.3d 130, 797 Utah Adv. Rep. 11, 2015 Utah App. LEXIS 267, 2015 WL 5894810, Counsel Stack Legal Research, https://law.counselstack.com/opinion/siebach-v-brigham-young-university-utahctapp-2015.