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High court hears more arguments involving complicated FLDS trust

SHARE High court hears more arguments involving complicated FLDS trust

SALT LAKE CITY — The number of times the Utah Supreme Court has heard cases connected to a Utah-based polygamist sect's trust reached into the double digits Wednesday.

This time, the state's five justices heard arguments about how they should respond to a question from the 10th Circuit Court of Appeals — which also has a case involving the trust in front of it — and who should pay the bills of those hired by the state to manage the trust.

The United Effort Plan was created by the Fundamentalist LDS Church in 1942 on the concept of a "united order," allowing followers to share in its assets. Utah's state courts seized control of the FLDS trust in 2005, amid allegations of mismanagement by church leaders.

Members consider sharing its assets a religious principle and see state intervention in the trust as a violation of their religious rights. They have long been challenging the state takeover of the trust in both state and federal courts.

Valued at more than $110 million, the trust holds most of the property and homes in the twin border towns of Hildale, Utah, and Colorado City, Ariz. The church also holds property in Bountiful, British Columbia, and Eldorado, Texas.

In 2009, 3rd District Judge Denise Lindberg, who presides over legal issues involving the trust, ruled that a liquidity crisis of the UEP trust made selling trust property necessary. The trust has around $3 million in debt and no steady source of revenue. The FLDS Church appealed the ruling to the Utah Supreme Court.

In August 2010, the state's high court found that the pending state lawsuit, which was filed in 2008 and challenged the administration of the trust, came too late.

Meanwhile, in a separate federal court action, U.S. District Judge Dee Benson ruled that state action to oversee the United Effort Plan Trust was an unconstitutional "virtual takeover." Benson issued an injunction ordering that the church's assets be returned to FLDS leaders and prohibiting any further action by the state-appointed special fiduciary when it came to management of the trust.

The issue was appealed to the 10th Circuit Court of Appeals. That court asked the Utah Supreme Court to clarify whether its ruling that the UEP lawsuit was too late barred any subsequent lawsuits stemming from the same argument in any court.

Utah Solicitor General Bridget Romano argued that high court's prior decisions followed a "well worn path" and had already considered the substantive issues in the case.

Rod Parker, attorney for the FLDS Church, said that the high court never really considered the facts of the underlying case.

But Justice Christine Durham implied that the court would have had to consider the facts and evidence in the case to have made a decision.

"You sought to have us invalidate reformation of the trust," Durham said. "Weren't you contemplating (that) we would make a (decision) on the facts?"

The court took the matter under advisement before immediately hearing arguments on a second, related issue. That issue was whether the state of Utah — through the Utah Attorney General's Office — should have to pay the bills of those who have been managing and defending the trust.

Lindberg ruled that the attorney general should pay more than $5.5 million owed to those appointed by the state to manage the communal land trust. Salt Lake accountant Bruce Wisan, attorneys representing Wisan and other firms were hired to assist in management of the trust have gone largely unpaid since 2008.

Romano was adamant that the payment issues are not the fault of the state, but are the result of a series of lawsuits. If a 10th Circuit injunction freezing the assets were lifted, property could be sold and the money used to pay those administering the trust.

"The financial crisis is not a liquidity crisis as much as a litigation crisis," Romano said, alluding to the original plan that the trust itself would pay the managers. "The trust is rich in property and poor in liquid funds."

Wisan's attorney, Jeffrey Shields, said it was the state that started the process of seizing the trust and recruited Wisan to work as fiduciary.

"Who should pay this, should pay us?" Shields asked. "We're doing state work. … The court can, should and did order that these fees be paid."

He said it is hard to get people to work for the trust and those who do, do so out of a commitment to seeing the task to completion. Ultimately, the trust will pay for itself, but that will be a process, Shields said. The professionals hired to handle the trust shouldn't bear the costs in the interim.

The justices asked Romano what her concerns were about Lindberg's plan that involved the attorney general's office paying the fees now, but being later repaid with trust properties that would be held for that purpose.

"The fact that the state is ordering the state to make a loan in the first place … What is the basis for that?" Romano said, stating that she thinks Wisan, Utah, Arizona and the FLDS Church should pay the $5.5 million bill.

But if ordered to pay, she said her office will have to turn to the Legislature for funds.

The Utah Supreme Court also took the funding matter under advisement.

E-mail: emorgan@desnews.com

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