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Bistline v. Parker

United States Court of Appeals, Tenth Circuit

March 14, 2019

ALYSSA BISTLINE; RUBY JESSOP; SUSAN BROADBENT; GINA ROHBOCK; NOLAN BARLOW; JASON BLACK; MAY MUSSER; HOLLY BISTLINE; T.B.; M.B.; P.B.; A.B.; A.B.; DERRELL BARLOW; ALICIA ROHBOCK; R.R.; R.R.; B.J.R.; WALLACE JEFFS; LAWRENCE BARLOW; STEVEN DOCKSTADER; MARVIN COOKE; HELEN BARLOW; VERGEL BARLOW; CAROLE JESSOP; BRIELL LIBERTAE DECKER; LYNETTE WARNER; AMY NIELSON; SARAH ALLRED; THOMAS JEFFS; JANETTA JESSOP, Plaintiffs - Appellants,
v.
RODNEY R. PARKER; SNOW CHRISTENSEN & MARTINEAU, P.C., Defendants - Appellees, and WARREN STEED JEFFS, Defendant.

          Appeal from the United States District Court No. 2:16-CV-00788-TS for the District of Utah

          Brett Godfrey (Karen J. Porter with him on the brief), Godfrey Johnson, P.C., Englewood, Colorado, for Plaintiffs-Appellants.

          Mark F. James (Brent O. Hatch and Mitchell A. Stephens with him on the brief), Hatch, James & Dodge, P.C., Salt Lake City, Utah, for Defendants-Appellees.

          Before BRISCOE, SEYMOUR, and LUCERO, Circuit Judges.

          SEYMOUR, CIRCUIT JUDGE.

         TABLE OF CONTENTS

         I. Background……………………………………………………………… 5

         A. The United Effort Plan Trust………………………………………….... 5

         B. The Formation of Attorney-Client Relationships………………………. 11

         C. Concealment of Viable Causes of Action………………………………. 13

         D. Procedural History……………………………………………………… 17

         II. Standard of Review……………………………………………………... 18

         III. Discussion……………………………………………………………… 19

         A. Whether Plaintiffs' Allegations State a Claim…………………………. 21

         1. Legal Malpractice and Breach of Fiduciary Duty………………………. 21

         i. Attorney-Client relationship……………………………………………... 22

         a. Subjective beliefs of representation…………………………………….. 24

         b. Reasonableness of beliefs under the circumstances……………………. 28

         2. Fraudulent and Negligent Misrepresentation…………………………… 32

         3. Civil Conspiracy………………………………………………………... 32

         4. RICO Violations………………………………………………………… 32

         5. Violations of the TVPRA………………………………………………. 33

         i. The means used to force labor or services………………………………. 35

         ii. Specific plaintiffs' labor or services……………………………………. 37

         iii. Venture liability………………………………………………………... 40

          B. Statutes of Limitations………………………………………………….. 45

         1. Applicable Statutes of Limitations……………………………………… 47

         i. Fraudulent misrepresentation……………………………………………. 47

         ii. Negligent misrepresentation……………………………………………. 48

         iii. Malpractice, breach of fiduciary duty, and civil conspiracy…………… 49

         iv. TVPRA…………………………………………………………………. 49

         2. Tolling the Limitations Periods…………………………………………. 50

         i. The age of majority……………………………………………………… 50

         ii. Continuing tort doctrine………………………………………………… 50

         3. Tolling Through the Discovery Rule…………………………………... 52

         i. Statutory tolling………………………………………………………….. 54

         ii. Equitable tolling - fraudulent concealment……………………………... 61

         a. Concealment…………………………………………………………….. 61

         b. Reasonableness…………………………………………………………. 63

         4. Tolling for Individual Plaintiffs…………………………………………. 66

         IV. Conclusion……………………………………………………………… 71

         Plaintiffs are all former members of the Fundamentalist Church of Jesus Christ of Latter-Day Saints ("FLDS"), which illegally practices polygamy. On July 13, 2016, plaintiffs brought this action against the FLDS Prophet, Warren Jeffs ("Mr. Jeffs"), and Mr. Jeff's lawyers, the law firm of Snow Christensen & Martineau ("SC&M") and one of its partners, Rodney Parker.

         Plaintiffs allege that defendants: (1) directly worked with Mr. Jeffs to create a legal framework that would shield him from the legal ramifications of child rape, forced labor, extortion, and the causing of emotional distress by separating families; (2) created an illusion of legality to bring about plaintiffs' submission to these abuses and employed various legal instruments and judicial processes to knowingly facilitate the abuse; (3) held themselves out to be the lawyers of each FLDS member individually, thus creating a duty to them to disclose this illegal scheme; and (4) intentionally misused these attorney- client relationships to enable Mr. Jeffs' dominion and criminal enterprise. Mr. Jeffs defaulted, and the district court dismissed every cause of action against the remaining defendants under Fed.R.Civ.P. 12(b)(6). The issue on appeal is the district court's dismissal of all claims against SC&M and Mr. Parker (collectively "defendants"). Reviewing the facts in the light most favorable to plaintiffs, as we must, see SEC v. Shields, 744 F.3d 633, 640 (10th Cir. 2014), we affirm in part and reverse in part.

         I. Background

         A. The United Effort Plan Trust

         Plaintiffs allege that the legal framework defendants created to facilitate Mr. Jeffs' crimes took shape through the 1998 amendment and reinstatement of the United Effort Plan Trust ("Reinstated Trust"). The original UEP Trust ("Trust") was created in 1942 by the predecessors of the FLDS. Snow, Christensen & Martineau v. Lindberg, 299 P.3d 1058, 1061 (Utah 2013). It was founded upon the tenets of the FLDS faith, and membership was established through consecrating real and personal property to the Trust (which would then be redistributed to each family according to its "just wants and needs"). Town of Colo. City v. United Effort Trust Plan, 2013 WL 1932838 at *2 (D. Ariz. May 8, 2013). The original Trust's stated purpose was primarily "charitable and philanthropic." Lindberg, 299 P.3d at 1061. However, on September 1, 1998, the Utah Supreme Court ruled that the Trust was not charitable because it benefitted specific individuals. Jeffs v. Stubbs, 970 P.2d 1234, 1252-53 (Utah 1998). In response to this decision, the Reinstated Trust was executed on November 3, 1998. [1] In the Matter of the UEP Trust, No. 053900848 (Utah Dist. Ct. Dec. 13, 2005).

         The Reinstated Trust was theoretically amended and reinstated by Rulon Jeffs, the sole surviving beneficiary of the UEP Trust, who was Warren Jeffs' father and predecessor as Prophet of the FLDS. See Lindberg, 299 P.3d at 1062; Aplt. App. at 27- 28. However, plaintiffs allege a different mechanism laboring beneath this superficial reality. By 1997, Rulon Jeffs was growing old, in ill health, becoming progressively less aware of his surroundings, and demonstrating increasing loss of memory and cognitive function. Aplt. App. at 27. The complaint asserts that under Rulon Jeffs' leadership the FLDS had not practiced the atrocities defining plaintiffs' claims.

[T]he concept of celestial or spiritual "marriage" of children was not yet broadly practiced within the FLDS Church, at least to the extent of large-scale sexual domination of children and the use of the badges of religious ceremony to formalize the criminal sexual abuse of minors under the guise of "religious" practices. Up to that point, FLDS Church marriage practices were largely if not exclusively confined to adults, and while the polygamy laws of Utah were violated by the practice of plural marriage, underage marriage and outright child rape was not common within the FLDS Church; neither were extortion, kidnapping, forced labor or, most importantly for the purposes of this averment, the use of lawyers to create a basis of community-wide misplaced belief in the legality of what is actually fundamentally illegal conduct harming large numbers of persons.

Id. at 28. But in Rulon Jeffs' declining years, his son Warren "began to assume the mantle of authority and control." Id. at 27. In early August 1998, Rulon Jeffs suffered a massive stroke that "left him largely impaired and paved the way for [Warren] Jeffs to eventually assume complete and absolute control of the FLDS." Id. at 28. Although the Reinstated Trust was nominally executed by Rulon Jeffs, "[his] signature on the Trust instrument . . . was placed with physical assistance and guidance of others holding [his] pen hand, at the direction of [Warren Jeffs]." Id. at 32-33.

         FLDS members knew Rulon Jeffs was ill at this time, but

the extent of Rulon's incapacity was kept secret from the people. [Warren] Jeffs controlled what little information was given to them about Rulon's incapacity and claimed to be "the mouthpiece and memory of the Prophet." By "speaking for the Prophet," Warren Jeffs stepped into the Prophet's shoes and took over his roles in late 1998 and early 1999. Warren Jeffs' assertion of power and authority continued-and became complete-while Rulon Jeffs' mental and physical health continued to decline.

Id. at 111-12. Warren Jeffs had thus become acting president of the church. See M.J. v. Wisan, 371 P.3d at 24 (labeling Warren Jeffs "acting president of both the FLDS Church and the Board of Trustees of the Trust" in 2001). He retained this role until his father's death in 2002, when he formally took over the titles of both Prophet and President of the Reinstated Trust. Aplt. App. at 112.

         The complaint describes how Warren Jeffs' activities included the "direction of legal counsel" in his father's declining years. Id. at 27. It then outlines the process by which the Reinstated Trust was intentionally designed to establish Mr. Jeffs' dominion.

         Plaintiffs allege that Warren Jeffs

was obsessed with the creation of a controlled society in which he was the absolute ruler and the wholesale rape of young girls by himself and others was treated as a ceremonially sacrosanct ritual. He sought to institutionalize this atrocious practice and to cloak it with the superficial trappings of legal acceptance, so he retained SC&M to develop an overarching scheme and plan . . .

Id. at 28. During 1997 and 1998, prior to executing the Reinstated Trust, Mr. Jeffs and Mr. Parker allegedly had meetings to discuss the "complex and ongoing series of legalistic maneuvers to be carried out by SC&M in order to provide [Mr. Jeffs] absolute, unfettered control" over the FLDS members. Id. at 32. The complaint asserts that defendants then

contrived a complex and detailed scheme to manipulate the law in such a fashion to not only take advantage of the relatively lax marital laws of Nevada, but to create a new enterprise, under the guise of the existing FLDS Church, which would be legally structured to give Jeffs absolute control over all of the bodies, possessions, homes and funds of the FLDS as beneficiaries of the UEP Trust.

Id. at 31.

         This absolute control allegedly enabled Mr. Jeffs to subject FLDS members to physical torture, extortion, severe and extreme emotional distress, unlawful imprisonment, kidnapping, and "other extreme and atrocious inhumane punishments in order to secure their utter and complete obedience." Id. at 32. Defendants benefited from creating this scheme because rewriting the Trust would give them "peace of mind that their fees would be paid." Id. at 111 ("[B]efore the UEP Trust was rewritten, the only assurance that Parker and SC&M had that they would be paid was the unsecured signature of FLDS Prophet, Rulon Jeffs, who was in his late 80s and ill.").

         The Reinstated Trust served religious purposes, as the Utah Supreme Court described:

The [Reinstated] Trust makes clear that participation in the [Reinstated] Trust is conditioned on living in accordance with the principles of the United Effort Plan and the FLDS Church as determined by spiritual leaders. It provides that
[p]articipants who, in the opinion of the Presidency of the Church, do not honor their commitments to live their lives according to the principles of the United Effort Plan and the Church shall remove themselves from the Trust property and, if they do not, the Board of Trustees may … cause their removal.

Lindberg, 299 P.3d at 1062 (quoting Reinstated Trust). This structure gave Mr. Jeffs absolute control over the church members by granting him the authority to strip them of "nearly all of their possessions, their familial connections, their shelter and their livelihoods." Aplt. App. at 34. The complaint states that the Priesthood Record, Mr. Jeffs' detailed contemporaneous account of the events that transpired in his life, contains many examples of how the Reinstated Trust was used to control the FLDS who lived on Trust lands. When revising this instrument into the Reformed Trust in 2006, one state district court concluded, and the Utah Supreme Court expressly or impliedly affirmed, that the Reinstated Trust had been drafted to facilitate illegal practices such as child rape. In the Matter of the UEP Trust, No. 053900848 (Utah Dist. Ct. Dec. 13, 2005). [2]

         Although the allegations in the complaint begin with the Reinstated Trust, plaintiffs also detail how defendants continued to take action to perpetuate this scheme. On one occasion in 2004, for instance, defendants represented the UEP Trust "in an eviction action filed in Arizona to expel a family in retaliation for the mother's refusal to consent to the 'marriage' (rape) of her fifteen-year-old daughter." Aplt. App. at 49; United Effort Plan Tr. v. Holm, 101 P.3d 641, 643 (Ariz.Ct.App. 2004). On another occasion, defendants apparently represented the FLDS in negotiations with the Attorney General of Utah, who had "offered to lessen or terminate the prosecution of bigamy and illegal polygamy if the FLDS would stop marrying (raping) underage girls." Aplt. App. at 47. Mr. Jeffs described this 2003 negotiation in his Priesthood Record and confirmed that his position was "[t]here will be no compromise." Id. (quoting Priesthood Record, January 16, 2003). Throughout these entries, Mr. Jeffs narrated Mr. Parker's involvement in the negotiations, stating:

Uncle Sam [Barlow[3] reported that he gave Rod Parker the message that I wanted any lawyers fired that would talk compromise, and Rod Parker said he stands with us. So Uncle Sam will use Rod Parker to help convince these other lawyers.
I got a call from Uncle Sam. He had me talk to Rod Parker, our lawyer from Salt Lake who flew south yesterday. He had quite a long talk with the Chief Deputy Attorney General, David Myers, who is a former judge. Rod Parker reported to me that none of our lawyers compromised our position. They only tried to convince the Attorney Generals what a useless effort this is because, you are not going to change that community, and how damaging it was to the families.

Id. at 47 (quoting Priesthood Record, January 21, 2003), 48 (quoting Priesthood Record, January 22, 2003) (emphasis added). The complaint contains numerous such averments and specific factual assertions of defendants' ongoing actions to enable and facilitate Jeffs' reign of terror over plaintiffs and other FLDS members.

         B. The Formation of Attorney-Client Relationships

         Significantly, plaintiffs allege that SC&M continually held itself out as representing individual FLDS members. Citing a number of specific factual allegations from the complaint, their opening brief describes the defendant law firm as "knowingly misus[ing] its self-acclaimed status as the victims' personal, individual legal counsel to bring about their submission," Aplt. Br. at 4; "creating a means to ensure that each individual FLDS member was responsible for SC&M's fees," id at 22; and "empower[ing] the firm to act as Jeffs' enforcers, compelling absolute submission on the part of its own clientele," id at 42. The complaint alleges that over the years these representations and assurances were repeatedly made to FLDS members themselves, as well as to courts, governmental agencies, and the public at-large. Aplt. App. at 42-43, 67, 70. At church services, the FLDS congregation was also regularly given legal updates by Sam Barlow regarding their personal representation by defendants.

         Plaintiffs in fact contend that SC&M has never withdrawn from its legal representation of the FLDS members. Plaintiffs claim they were told that their only access to legal counsel was through SC&M and that they were therefore required to personally pay the firm's legal fees. Aplt. Br. at 15. They allege in the complaint that Mr. Jeffs would consistently "call[] out to the FLDS in weekly meetings to pay the lawyers: [because] there is a 'great need for financial help . . . resting upon us.'" Id. at 48. For example, on one occasion, Mr. Jeffs purportedly told the FLDS members "we owe the lawyers $400, 000.00 and it will grow quickly." Id. at 56 (emphasis added). At another time, in early 2013, the complaint describes "a call from Jeffs to all FLDS to 'bow their backs' and submit everything they had to pay more attorney fees." Id. at 114. During one phase, "FLDS leadership regularly demanded more and more money from all FLDS for attorney fees . . . [and] $1, 000 to $2, 000 donations were [] demanded from each parishioner at least once a month," id. at 85-86; during another, "[c]alls for amounts up to $1, 000 came almost weekly," id. at 103.

After the Texas raid in 2008, the call for attorney fees grew intense. All FLDS people were ordered to contribute all their extra income. The FLDS leadership ordered all FLDS people to max their credit cards, get additional jobs, take loans on their cars and business equipment, and do anything possible to get more money to contribute toward attorney fees.

Id. at 113. Plaintiffs further assert that some of this money came from the labor of children, who would work countless hours just to see their paychecks taken for attorney fees. See, e.g., id. at 91.

         C. Concealment of Viable Causes of Action

         The complaint alleges that at the same time plaintiffs were "assured that they were being protected by their lawyers, [defendants were] working continuously from at least 1997 to the present day to keep [them] and similarly situated persons completely in the dark" about the illegal conduct violating their rights. Id. at 43. Defendants were aware of restrictions imposed on FLDS members by Mr. Jeffs, who effectively ended members' "access to any information and media from outside the[ir] community." Id. at 46. This constraint was allegedly accomplished through, in part, Jeffs' July 16, 2002[4] "address entitled 'Our Prophet's Call - Leave Apostates [non-members] Alone Severely,' in which he commanded the FLDS to 'severely' restrict and limit their communications with the outside world." Id. at 34.

It was accompanied by Jeffs' strict commands to strictly shun all non-FLDS Church information by not watching television, reading newspapers or magazines, listening to the radio, reading books, or using the internet. In this way, Jeffs prevented the FLDS adherents from learning about the fraud being perpetrated on them, that their rights were being violated and how those rights were being violated with the help of Parker and SC&M. This was intended to and did prevent discovery by Plaintiffs of the nature and extent of the various breaches of duties owed to them by Parker and SC&M.

Id. at 34-35 (emphasis added). Jeffs also forbade any communication with prior members that he had sent away or excommunicated, and he commanded the FLDS to stop patronizing businesses of non-FLDS members or using medical services outside of the FLDS community, even under emergency circumstances. Id. at 46, 73, 110; see also id. at 78-79.

         These restrictions compounded already existing limitations which resulted from the seclusion and isolation of the FLDS community. As the Utah Supreme Court explained in 1998, decades ago the FLDS Church "decided to settle its membership in an isolated area to avoid interference with their religious practices." Jeffs v. Stubbs, 970 P.2d at 1239. The complaint includes many specific allegations of plaintiffs' confinement in increasingly secluded and hidden communities throughout remote parts of the country, see, e.g., Aplt. App. at 46, 92, 98, 133, with this sequestration being both compelled and intensified by FLDS-directed security[5] and law enforcement personnel, see, e.g., id. at 104 ("Steven was regularly followed by the private FLDS Church security force that protects Defendant Jeffs[] and the FLDS enterprise and by law enforcement in Short Creek who, despite being deputized officers, are loyal to Defendant Jeffs."); id. at 122 (After Amy Nielson learned at her deposition that Mr. Jeffs had denounced himself as a religious fraud, she planned to escape but was told that her home "was under constant video surveillance"); see also id. at 81, 113, 129. One plaintiff describes how she was "moved [twenty-six] times between secret homes and compounds in Texas, South Dakota, Colorado, Nevada, Wyoming, Arizona and Utah," id. at 118 (emphasis added), and how she was "treated essentially as a prisoner . . . and was seldom allowed to leave the secret houses and compounds in which she was hidden without being accompanied and watched by a Priesthood Caretaker," id. Another plaintiff alleges a period of placement in hiding "inside a walled and gated compound . . . where they were cut-off from all communications with everyone, except those who lived with them in that compound." Id. at 125. Local law enforcement and church security officers were "ordered" by church leaders to monitor one plaintiff "in case he attempted to leave and take his younger siblings with him," id. at 105, while another plaintiff "desperately tried to run away several times but was caught by the FLDS police," id. at 136. The general allegations further describe FLDS members being "ordered by Jeffs to move to Texas to live in and around . . . secret 'lands of refuge,' in 'safe houses,' or at other secret locations in various western states, as well as in Canada." Id. at 54.

         According to plaintiffs, both the restricted access to external communication and the physical isolation were supplemented by plaintiffs' lack of education. Several plaintiffs recount the rigorously limited nature of their education within FLDS communities. See, e.g., id. at 83, 91-92. One plaintiff describes how

she had had only a small taste of life outside the religion. She had been allowed to attend Kindergarten before Defendant Jeffs pulled the FLDS children out of the public schools. . . . She had also attended religious schools where they taught reading, writing, while indoctrinating the children until those schools were also shut down. Then when she was thirteen-years-old the religious schools were replaced by homeschooling and Alyssa herself became a teacher of reading, math and the basics to thirty or forty other children.

Id. at 95-96. The complaint thus alleges plaintiffs' continuing unawareness of their claims as ensured through a combination of physical isolation, forbidden access to media, and inadequate and biased education, all circumstances of which defendants purportedly had knowledge.

         Although plaintiffs were kept ignorant of the crimes being perpetrated against them, awareness of these atrocities and accompanying media attention was growing in the external world. Law enforcement initiated various criminal and fraud investigations into Mr. Jeffs, throughout which the alleged active concealment by defendants continued unabated. Mr. Jeffs was arrested in Nevada in August of 2006 and was incarcerated in Utah pending trial for charges related to his arrangement of illegal marriages between adult men and young girls. While awaiting trial, Mr. Jeffs "repeatedly confesse[d] that he [wa]s a religious fraud and ha[d] deceived the FLDS," and he gave instructions to defendants that the FLDS members be told so they could "begin to put their families back together." Id. at 56. Plaintiffs assert that these instructions were ignored by defendants, who kept Mr. Jeffs' admissions from the FLDS. Id. Moreover, they allege that

[i]n April of 2007, Jeffs was frustrated that his efforts to tell the FLDS he [was] a fraud had been stymied, so he attempted to admit in open court that he is a fraud, that he is not a prophet and had never been the Prophet. He [was] stopped by his defense lawyers. Although Parker was heavily involved in Jeffs' criminal defense in Utah, he attempted to keep his involvement secret by meeting with the rest of the defense team at a home in Santa Clara, Utah and other places and by not appearing at the trial. Despite knowing that Jeffs was still trying to publicly confess that he was a religious fraud, Parker made no effort to advise the FLDS that their "Prophet" was, by his own ...

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