TED STEWART, District Judge.
This matter is before the Court on Defendants Snow Christensen & Martineau, P.C. ("SC&M") and Rodney R. Parker's (collectively, "Defendants") Motion to Dismiss. For the reasons set forth below, the Court will dismiss Plaintiffs' legal malpractice, breach of fiduciary duty, fraud, negligent misrepresentation, civil conspiracy, and civil RICO claims as barred by the relevant statutes of limitation, with the exception of the claims brought by Plaintiff May Musser, for whom the limitations period was tolled. The Court will dismiss Plaintiff May Musser's claims as inadequately pleaded. The Court will also dismiss Plaintiffs' claim under the Trafficking Victims Protections Reauthorization Act ("TVPRA") as inadequately pleaded, and will dismiss Plaintiffs' aiding and abetting claim as stipulated by Plaintiffs.
Plaintiffs are all former members of the Fundamentalist Church of Jesus Christ of Latter-Day Saints ("FLDS Church"), and have brought the following claims against Warren Steed Jeffs, Rodney R. Parker, and SC&M: (1) legal malpractice, (2) breach of fiduciary duty, (3) fraud, (4) negligent misrepresentation, (5) civil conspiracy, (6) violation of the TVPRA, (7) aiding and abetting commission of felonies, and (8) civil RICO. Defendant Jeffs has failed to respond and a Default Certificate has been entered against him.
Plaintiffs allege that when Defendant Jeffs began to assume the responsibilities of President of the FLDS Church, he retained SC&M to develop an "overarching scheme and plan . . . to develop the legal framework within which Jeffs and his favored cohorts would possess means to enforce their lewd, sadistic, tortious and criminal wishes upon the FLDS people."
The amended and reinstated Trust provides that "[t]he doctrines and laws of the Priesthood and the Church are found in . . . revelations received through the [Prophet] and are the guiding tenets by which the trustees of the United Effort Plan Trust shall act."
Plaintiffs' 120-page Complaint details the purported losses of each Plaintiff. Many Plaintiffs recount harrowing experiences and claim long-lasting emotional or physical harms resulting from an alleged lack of education, malnutrition, non-consensual sexual encounters, or periods of exile from family members. Many of Plaintiffs' allegations are directed at Defendant Jeffs. While sympathetic to Plaintiffs' claims, the allegations against Defendant Jeffs are not at issue on this Motion, and the Court may only consider the allegations against Defendants Parker and SC&M.
In considering a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), all well-pleaded factual allegations, as distinguished from conclusory allegations, are accepted as true and viewed in the light most favorable to Plaintiffs as the nonmoving party.
"The court's function on a Rule 12(b)(6) motion is not to weigh potential evidence that the parties might present at trial, but to assess whether the plaintiff's complaint alone is legally sufficient to state a claim for which relief may be granted."
Plaintiffs' claims center on Defendants' role in the amendment and reinstatement of the Trust in 1998. Defendants' involvement with the Trust ended in 2005, when a Utah court reformed the Trust and appointed a fiduciary. However, Plaintiffs allege that Defendants continued to enable Jeffs' unlawful behaviors by advising Jeffs and by representing FLDS members in custody disputes and criminal matters. Defendants argue that Plaintiffs' claims are time-barred with the exception of Plaintiffs' cause of action under the TVPRA.
Plaintiffs' claims of legal malpractice and breach of fiduciary duty are subject to a four-year statute of limitations.
The Court finds that Plaintiffs' breach of fiduciary duty and malpractice claims are timebarred. As a general rule, "a statute of limitations begins to run upon the happening of the last event necessary to complete the cause of action."
A three-year statute of limitations applies to Plaintiffs' fraud and negligent misrepresentation claims.
Plaintiffs' claims of civil conspiracy and civil RICO are subject to four-year statutes of limitation.
These claims are untimely because the underlying events occurred well before July, 2012. Plaintiffs allege that the Trust was the primary means by which Defendants' gave Jeffs power to commit crimes and extract legal fees from Plaintiffs; however, Defendants' assistance with the Trust ended in 2005. Similarly, Defendants' representation of FLDS members in connection with the YFZ raid occurred in 2008. Therefore, these claims are untimely.
A claim under the TVPRA must be brought within either 10 years after the cause of action arose or 10 years after the victim reaches 18 years of age, if the victim was a minor at the time of the alleged offense.
Although "a statute of limitations begins to run upon the happening of the last event necessary to complete the cause of action,"
Plaintiffs argue that the statute of limitations should be tolled for all Plaintiffs because they did not discover or were prevented from discovering facts supporting their claims. Under the discovery rule, a limitations period may be tolled "until the discovery of facts forming the basis for the cause of action."
Of the claims brought by Plaintiffs, only the statute applicable to the fraud claim contains a discovery provision. Utah Code Ann. § 78B-2-305(3) provides that "the cause of action does not accrue until the discovery by the aggrieved party of the facts constituting the fraud or mistake." Under this provision, a plaintiff is deemed to have "discovered his action when he has actual knowledge of the fraud `or by reasonable diligence and inquiry should know, the relevant facts of the fraud perpetrated against him.'"
Here, the key facts supporting the alleged fraud began in 1998. Plaintiffs knew of Jeffs' actions and also allege that they knew of the connections between Jeffs and Defendants. Defendants' representation of FLDS members and connection to the Trust was either known to Plaintiffs or was discoverable during the limitations period. Defendants' representation of FLDS members in connection with custody disputes following the 2008 raid was public knowledge. The facts known to Plaintiffs were enough to trigger a duty to inquire into potential claims against Defendants. Plaintiffs failed to do so, and "they cannot now allege that they lacked knowledge of their claims."
Equitable tolling may be appropriate "where the case presents exceptional circumstances and the application of the general rule would be irrational or unjust, regardless of any showing that the defendant . . . prevented the discovery of the cause of action."
Plaintiffs argue that they are "not legally sophisticated, and do not have the ability to divine the impact of unknown machinations on the part of a law firm as sophisticated as SC&M."
While ignorance of the fact of injury may postpone the statute of limitations, ignorance of legal rights will not.
Plaintiffs next argue that researching potential wrongs committed by Jeffs was forbidden and that seeking legal advice would have been in vain because Plaintiffs would have been directed by FLDS leadership to Defendants, who allegedly oversaw and controlled the legal representation of FLDS members.
The fraudulent concealment version of the discovery rule aims to strike a balance between the policy underlying all statutes of limitation, "namely, to promote justice by preventing surprises through the revival of claims that have been allowed to slumber until evidence has been lost, memories have faded, and witnesses have disappeared," and the policy against "allowing a defendant who has concealed his wrongdoing to profit from his concealment."
Plaintiffs do not qualify for this exception. First, Plaintiffs have not established that Defendants concealed any of the alleged wrongdoings. Defendants' assistance with the amended and reinstated Trust was no secret. It was known to at least some Plaintiffs and was discussed in a published decision by the Utah Supreme Court in 2005. Further, Defendants' representation of FLDS members was public knowledge, and Plaintiffs knew that Defendants assisted in the FLDS Church's legal matters. There is no indication that the provisions of the Trust were concealed. Further, there is no indication that Plaintiffs diligently investigated their claims. Plaintiffs claim that seeking legal advice would have been futile, but no Plaintiff ever attempted to do so.
The Court finds that Plaintiffs were on notice of Defendants' potential wrongdoing and that through the exercise of due diligence, a reasonable plaintiff would have discovered the facts forming the basis of these causes of actions within the limitations periods. Therefore, the limitations periods will not be tolled, and Plaintiffs' claims of legal malpractice, breach of fiduciary duty, fraud, negligent misrepresentation, civil conspiracy, and civil RICO are dismissed as untimely, except in the case of Plaintiff Ms. Musser.
To succeed on a claim of legal malpractice based on negligence, a plaintiff must prove: "(i) an attorney-client relationship; (ii) a duty of the attorney to the client arising from their relationship; (iii) a breach of that duty; (iv) a causal connection between the breach of duty and the resulting injury to the client; and (v) actual damages."
Defendants argue that Plaintiffs' Complaint fails to allege facts supporting the existence of a duty because no attorney-client relationship was formed between Defendants and the individual Plaintiffs. "The determination of whether a legal duty exists falls to the court."
Plaintiffs do not claim that an express attorney-client relationship between Ms. Musser and Defendants was ever formed. However, Plaintiffs argue that an implied attorney-client relationship is adequately pleaded in the Complaint. An implied attorney-client relationship "exists when a person reasonably believes that the attorney represents the person's legal interest."
Ms. Musser claims that the FLDS Church withheld her paychecks in part for attorneys fees, and that she sometimes saw wheelbarrows at the entrance of the FLDS meetinghouse to collect money for "the lawyers," which Ms. Musser allegedly understood to include Defendants. Plaintiffs also allege that Defendants asserted publicly that SC&M represented all residents of the YFZ Ranch in connection with civil claims arising from a Texas raid in 2008, and that SC&M represented the Trust until 2005.
These factual allegations are not legally sufficient to adequately plead an implied attorney-client relationship. Defendants' representation of the Trust ended in 2005 and Ms. Musser did not live on or claim any connection to the YFZ Ranch. In addition, it is not objectively reasonable to believe that simply donating funds to a church creates an implied attorney-client relationship with that church's retained attorneys.
Plaintiffs' cite Margulies v. Upchurch in support of their argument that an implied attorney-client relationship existed in this case.
Here, Plaintiffs do not specify any action taken by Defendants that would directly involve Ms. Musser's individual interests. Defendants' actions may have affected Ms. Musser in the same way they affected all members of the FLDS Church, but this incidental effect is not sufficient to support an implied attorney-client relationship. Considering the totality of the circumstances, Plaintiffs have failed to plead facts supporting either a subjective or objectively reasonable belief that Defendants' represented Ms. Musser as an individual. Therefore, Ms. Musser's claims of legal malpractice and breach of fiduciary duty are dismissed as inadequately pleaded.
Generally, "to prevail in an action for negligent misrepresentation, plaintiffs must identify a `representor [who] makes an affirmative assertion which is false.'"
The Complaint alleges that Defendants had a duty to disclose information about Jeffs to Plaintiffs, and that this duty arose from the Utah Rules of Professional Conduct, including Rule 1.4. However, the duty of communication is only owed to those with whom the lawyer has formed an express or implied attorney-client relationship. As discussed above, there is no factual support for either an express or an implied attorney-client relationship between Defendants and Ms. Musser. The elements of these claims have not been adequately pleaded; therefore, the claims are dismissed.
The elements of a civil RICO claim are (1) investment in, control of, or conduct of (2) an enterprise (3) through a pattern (4) of racketeering activity.
Plaintiffs allege that Defendants participated in the conduct of an enterprise (the FLDS Church and the Trust) through a pattern of racketeering activity by providing ongoing advice and by enforcing the UEP Trust, which was a source of Jeffs' power. Plaintiffs allege that Defendants continued to provide legal advice and services to Jeffs despite knowing that Jeffs had admitted that he was a fraud, and despite being aware of rapes, kidnapping, extortion, and other racketeering activities being perpetrated by Jeffs.
Plaintiffs' allegations regarding Defendants' participation in the operation or management of a RICO enterprise are conclusory and lack factual support. It is not sufficient to allege that Defendants used "legalities and artifices incidental to their role as lawyers" to further the goals of the FLDS Church. Typical legal services do not rise to the level of control required for RICO liability.
A claim of civil conspiracy has five elements: "(1) a combination of two or more persons, (2) an object to be accomplished, (3) a meeting of the minds on the object or course of action, (4) one or more unlawful, overt acts, and (5) damages as a proximate result thereof."
In their seventh cause of action, Plaintiffs claim that Defendants are civilly liable for aiding and abetting the commission of the felonies. However, the Supreme Court has refused to rely on 18 U.S.C. § 2 "as the basis for recognizing a private aiding and abetting right of action."
In the sixth cause of action, Plaintiffs allege that Parker and SC&M helped Jeffs provide and/or obtain labor or services in violation of 18 U.S.C. § 1589, and that Parker and SC&M benefitted from that labor. Section 1589 provides two theories of liability regarding forced labor. In addition, 18 U.S.C. § 1583 forbids kidnap and enslavement.
The Complaint alleges that Jeffs caused children to be kidnapped and held at the YFZ compound, which was later raided. However, the Complaint makes no connection between Defendants and the alleged kidnapping aside from the tenuous connection that the YFZ camp was on "Trust Lands" and that Defendants helped amend and reinstate the Trust. This connection does not approach adequately pleading that Defendants "kidnap[ped] or carrie[d] away another person" or enticed a person into slavery, or obstructed enforcement of 18 U.S.C. § 1583.
Section 1589(a) makes it unlawful to "knowingly provide[] or obtain[] the labor or services of a person" using "force, threats of serious harm to that person," "the abuse or threatened abuse of law or legal process," or "any scheme, plan, or pattern intended to cause the person to believe that, if that person did not perform such labor or services, that person . . . would suffer serious harm. . . ."
Plaintiffs allege that Jeffs used force, threats of force, or threats of serious harm in order to extract forced labor or sexual servitude from FLDS members. Plaintiffs do not allege, however, that Defendants Parker and SC&M did so. Plaintiffs suggest that Defendants are nonetheless liable because Defendants drafted the Trust documents that made Jeffs' revelations guiding tenets in how the Trust was managed. Plaintiffs' theory would make attorneys vicariously liable for the acts of a client in the mismanagement of a trust simply because the attorneys prepared documents giving the client discretion in how the trust was managed. This theory is not sufficient to state a claim under 18 U.S.C. § 1589(a).
Plaintiffs' also claim that Defendants engaged in a scheme, plan, or pattern intended to cause the FLDS community to believe that they would suffer serious harm or physical restraint if they did not perform forced labor or services. The only actions alleged by Plaintiffs are that Defendants helped with Trust documents and that Parker represented an FLDS man facing a prosecution for rape. This is insufficient to support a claim of a "scheme, plan or pattern" designed to cause the beliefs alleged by Plaintiffs. In sum, Plaintiffs have not pleaded sufficient facts to support a TVPRA claim based on subsections (1), (2), or (4) of Section 1589(a).
The TVPRA defines "abuse or threatened abuse of law or legal process" as "the use or threatened use of a law or legal process, whether administrative, civil, or criminal, in any manner or for any purpose for which the law was not designed, in order to exert pressure" on the victim to take, or refrain from taking, some action.
Plaintiffs refer to the amended Trust as an unlawful framework. Plaintiffs cite Snow, Christensen & Martineau v. Lindberg, in support of this assertion.
Plaintiffs theorize that because one of the reinstated Trust's purposes was to further FLDS doctrines, and because some FLDS doctrines are illegal, the drafters of the Trust furthered illegal acts. This theory is not sufficient to support Plaintiffs' claim that Defendants abused a legal process under 18 U.S.C. § 1589(a)(3). The Trust's provisions and the authority it gives are centered on the distribution of property in a way that would meet the just wants and needs of the FLDS community. Plaintiffs cite no authority for the proposition that allowing a client to distribute trust property on the basis of religious principles is an abuse of a legal process.
Nothing from the Trust or the facts alleged indicate that Defendants drafted Trust documents with the intent to make FLDS members believe that they would suffer harm if they did not perform forced labor. Therefore, Plaintiffs fail to adequately plead facts that would support a TVPRA claim based on subsection (3) of Section 1589(a).
Section 1589(b) makes it a punishable offense to knowingly benefit, "financially or by receiving anything of value, from participation in a venture which has engaged in the providing or obtaining of labor or services by any of the means described in subsection (a)," which have been discussed above.
Several Plaintiffs allege that FLDS employers withheld all or part of their paychecks in order to pay legal fees. For example, Plaintiff May Musser claimed that she was required to perform heavy manual labor as a child, and then was required to work at the Hilldale Clinic at the age of thirteen under her older sister's name. Her paychecks were made payable to her older sister and were surrendered to the FLDS Church. Plaintiff Richard Rohbok claimed that he sometimes worked 24 out of every 32 hours for an FLDS-owned concrete company. The company allegedly withheld money involuntarily from Mr. Rohbok's paychecks and never paid Mr. Rohbok overtime. Eventually, the FLDS-owned company withheld Mr. Rohbok's entire paycheck for what he understood to be attorney's fees, and then advised him to take out a title loan to make ends meet. Mr. Rohbok's wife turned to appetite suppressants to better feed their children, and was eventually hospitalized for malnutrition. Other Plaintiffs allege that they were expected to donate $1,000 each month for legal fees, and one Plaintiff alleged that when he failed to make the donation, the FLDS Church withheld feed for his livestock. Plaintiffs claim that Defendants knew of and approved the circumstances under which attorney's fees were being collected.
Regardless of whether Defendants knowingly benefitted from alleged forced labor, Plaintiffs have failed to adequately plead that Defendants "participat[ed] in a venture" to provide or obtain that labor. The term "venture" is defined as "an undertaking that involves risk," and is typically associated with "a speculative commercial enterprise."
Here, Defendants represented the FLDS Church, assisted in the amendment of the Trust, and represented some FLDS members. Defendants' alleged actions do not equate to participation in Jeffs' alleged venture to profit from forced labor. Without some indication that Defendants took some action to operate or manage the venture, the fact that Jeffs allegedly misused Trust property as leverage to compel forced labor is not enough to make Defendants liable under Section 1589(b). Therefore, even if the money for SC&M's fees was obtained by Jeffs in a way that violated Section 1589(a), Plaintiffs have inadequately pleaded that Parker and SC&M participated in that venture, and this claim is therefore dismissed.
It is therefore
ORDERED that Defendant's Motion to Dismiss (Docket No. 11) is GRANTED.
