Summary
The Utah Supreme Court reviewed an interlocutory appeal from the denial of summary judgment in tort claims brought by M.J. against Bruce R. Wisan as Special Fiduciary of the United Effort Plan Trust. The court held that the Trust's reformation did not bar claims based on pre-reformation conduct and that M.J.'s release of claims against Allen Steed did not, on the record presented, eliminate all claims against the Trust. The court rejected reverse veil-piercing on the facts of the case and affirmed the district court in large part.
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Practice areas
Questions Presented
- Whether Snow, Christensen & Martineau v. Lindberg established that the reformed United Effort Plan Trust could not be liable for tortious conduct predating its reformation.
- Whether M.J.'s release of claims against Allen Steed released her claims against the Trust under Utah's Joint Obligations Act.
- Whether the Trust could be vicariously liable under Utah's Uniform Trust Code and the doctrine of respondeat superior for Warren Jeffs's alleged conduct.
- Whether Utah recognizes reverse veil-piercing against a trust and, if so, whether that remedy was available on the facts of this case.
Holdings
- Snow, Christensen & Martineau v. Lindberg is limited to its facts and does not eliminate the reformed Trust's potential liability for tortious conduct predating the reformation.
- The release of Steed does not automatically release M.J.'s claims against the Trust. The Utah Liability Reform Act applies to claims based on the Trust's or Jeffs's independent fault, while the Joint Obligations Act applies to pure vicarious or pass-along liability unless the claim against the vicariously liable party was expressly reserved.
- Under Utah Code section 75-7-1010, a trust may be liable for a trustee's tortious acts performed in the course of administering the trust, and the governing standard is the traditional scope-of-employment standard for respondeat superior.
- The Trust was not entitled to summary judgment on the ground that Jeffs's alleged direction of the marriage and related sexual conduct could not, as a matter of law, fall within the scope of his trustee responsibilities.
- Utah recognizes reverse veil-piercing as a possible remedy against a corporation or trust, but the remedy is unavailable here because M.J. had an adequate legal remedy through respondeat superior and reverse piercing could adversely affect innocent Trust beneficiaries.
Key quotations
“Instead we hold that the key question is whether Jeffs was acting "within the scope of employment when performing work assigned by the employer or engaging in a course of conduct subject to the employer's control."” (¶ 59)
“And we take this occasion to generally endorse this principle of liability.” (¶ 77)
“Thus, reverse piercing should be a tool of last resort; too-frequent imposition of such liability could "bypass[] normal judgment-collection procedures" in a manner prejudicing "non-culpable shareholders."” (¶ 79)
Factual background
M.J. alleged that, when she was fourteen, Warren Jeffs directed her marriage to Allen Steed and later refused her requests for a divorce or permission to live separately from him. Jeffs was acting as a leader of the FLDS Church and as a trustee or trustee-related fiduciary of the United Effort Plan Trust, which provided the property where M.J. and Steed resided. M.J. alleged that Steed repeatedly sexually assaulted and raped her and that Jeffs and other trustees failed to prevent or stop the conduct. The Trust had previously been reformed under cy pres and was being administered by a court-appointed special fiduciary.
Procedural history
M.J. sued Warren Jeffs and Bruce R. Wisan, in his capacity as special fiduciary of the United Effort Plan Trust, asserting tort claims and theories of direct and vicarious liability arising from an alleged underage marriage and related conduct. The district court denied the Trust's motions for summary judgment. The Utah Supreme Court granted interlocutory review and affirmed in large part, but held that the Trust was entitled to summary judgment on M.J.'s reverse veil-piercing theory.
Remand instructions
The district court must determine, on further motions or at trial, whether and to what extent M.J.'s claims run independently through Jeffs and are preserved under the Liability Reform Act or run vicariously through Steed and are subject to waiver under the Joint Obligations Act. The Trust's reverse veil-piercing theory is foreclosed.