James Huntsman Lawsuit Dismissed

A quick follow-up to one of my previous posts: a federal judge dismissed James Huntsman’s fraud lawsuit against the church on Friday.

This may not have been an absolutely forgone conclusion, but it comes pretty close to one. Remember, Huntsman was suing to get his tithing money back from the church. That’s a tough ask in the first place because, other than conditional gifts, US law treats charitable donations as belonging to the recipient. Just because you later regret having made the donation doesn’t mean you can rescind it.

So Huntsman alleged that the church had fraudulently induced him to pay tithing. He relied, he said, on several statements from the church that it did not using tithing money to build City Creek when, in fact, it did use tithing money to build City Creek.

The problem with this allegation, as courts often point out, is that fraud is easy to allege but difficult to prove. And the court held that this case didn’t need to go to trial because there was no dispute by the parties about any material fact and, based on the facts and allegations, no reasonable jury could find that the church misrepresent any facts.

Huntsman pointed to Hinckley’s assertion that no tithing funds would be used to build City Creek as a misrepresentation on which he relied. The court pointed out that Huntsman did “not properly consider the full statement made by Hinckley.” Yes, Hinckley said that tithing would not be used. But he also said that earnings on reserve tithings would, in fact, be used. And that was precisely what happened.

Huntsman also brought in a statement by David Neilson, the 2019 Ensign Partners whistleblower, saying that Ensign Partners referred to all of its funds under management as “tithing.” Neilson’s statement, he said, created an issue of material fact that should go to a jury.

The court again disagreed. First, it doesn’t matter how EPA internally referred to its assets under management. Hinckley expressly differentiated tithing from return on invested tithing in the statement that Huntsman claimed to have relied on, and a colloquial view by someone else didn’t affect that. Second, EPA allocated money to City Creek in 2004, 2007, and 2009. Neilson didn’t start working at EPA until 2010, so he didn’t have any firsthand knowledge.

Huntsman also challenged a $600 million allocation to Beneficial Life. But, the court pointed out, he acknowledged that he didn’t recall any specific statement by the church regarding Beneficial Life. And you can’t have fraud if there is no specific misstatement you point toward. In that case, you’re just objecting to the use of the money and, like I said above, the fact that you regret donating doesn’t let you get your money back.

Comments

  1. Interestingly, the court ruled for Huntsman on the constitutional issue, holding that deciding his claim would not require the court to decide on disputed issues of church doctrine. Personally, I think the court was probably wrong on that point, but the fact that it granted summary judgment on the merits instead of on the constitutional issue actually makes the win even more helpful for the church because it means that Huntsman can’t (credibly) argue to his followers that the church got out of the case on a technicality.

  2. Huntsman kids continued attempt to control Utah institutions has officially entered into the late stage decline..

  3. Right. (The court did invoke the Constitution as precluding part of Huntsman’s Beneficial Life claim, though that one didn’t even rise to the level of plausible fraud claim.) This is an unequivocal and substantive loss for Huntsman.

  4. It’s worth noting that the dismissal here didn’t come on 9(b) grounds for failure to plead fraud with a lack of specificity, as I think you predicted in your last post. Instead, the judge found that the statement upon which the lawsuit was based was objectively true. That’s a not much of a distinction, since that’s two sides of the same coin–the statement as alleged isn’t false, so the judge could have couched this on procedural grounds by saying there’s a failure to plead a false statement. But I think that the way the judge decided it–reviewing the statement in detail and context–could be a deterrent for future suits much more so than just some generic 9(b) analysis.

    I also found it interesting that the first section of the opinion dismisses the idea that this is a constitutional issue, but then drops a footnote toward the end suggesting it would be if he had to reach Plaintiff’s arguments on how the church characterizes the nature of tithing. In other words, the only way for Huntsman to get to a fact issue and force this to trial is to allege that “tithing” means something different to the church than what P. Hinckley said at GC, but in order to get there, the court would have to impermissibly analyze the inner-workings of the church. I think that’s a tall order to get around on appeal.

  5. That sounds right to me, jimbob. I assumed it would be dismissed for failure to plead fraud because mostly if there’s a procedural defect, courts go with the procedural defect. Here, though, while dealing with the substance got to the same result, it was a lot more damning to the any appeals or future lawsuits.

  6. Recently there has been a discussion on the finances of the church. Since the latest OP is concerning D Michael Quinn, I thought his discovery about the financial aspect of the church was interesting.
    “In 2019… he said his findings were “an enormously faith-promoting story.”

    “If Latter-day Saints could see ‘the larger picture,’” they would “breathe a sigh of relief and see the church is not a profit-making business.”

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