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State court responds to federal judge's ruling in FLDS trust battle

Published: Tuesday, April 12 2011 1:13 a.m. MDT

SALT LAKE CITY — An embattled Utah state court judge named in lawsuits by a Utah-based polygamous sect is now defending her decisions following a searing federal court ruling and a federal court injunction that could undo the state court's work spanning six years.

In a ruling filed Monday, 3rd District Judge Denise Lindberg responded to a prior ruling by U.S. District Judge Dee Benson that all but undid the work of a state-appointed team charged with managing the funds of those within the Fundamentalist LDS Church. After a February ruling in which Benson called the trust unconstitutional and a "virtual takeover," Benson implemented an injunction that ordered that the church's assets be returned to FLDS leadership.

Benson's injunction also prevents any further sale of assets within the United Effort Plan Trust, valued at $110 million, requires that any cash coming to the trust be first used to pay property taxes in Utah and Arizona and doesn't allow church leaders to evict nonmembers or former members living in trust-owned homes or automatically void any contractual agreements put in place by state managers.

The UEP was created by the FLDS Church in 1942 on the concept of a "united order," allowing followers to share in its assets. Members consider sharing its assets a religious principle and see state intervention in the trust as a violation of their religious rights.

The trust holds most of the property and homes in the twin FLDS communities located in the border towns of Hildale, Utah, and Colorado City, Ariz. The church also holds property in Bountiful, British Columbia, and Eldorado, Texas.

Utah's state courts seized control of the trust in 2005 amid allegations of mismanagement by church leaders, including Warren Jeffs, the newly reinstated head of the church who is currently in jail in Texas, pending trial on charges of bigamy, aggravated sexual assault and assault.

Benson's actions are currently being appealed by the attorney general's offices in Utah and Arizona.

Lindberg on Monday ordered that the state-appointed special fiduciary, Bruce Wisan — who was appointed to oversee the assets of those within the FLDS sect — maintain control over those assets.

"Because the federal court's order improperly intrudes upon the absolute immunity that cloaks this court's — and the special fiduciary's — prior actions, the court hereby instructs its special fiduciary not to turn over assets, documents or anything else pertaining to the trust until further order of this court," she wrote.

She did concede, though, that no further action should be taken until the issue between the state and federal courts can be resolved.

"To minimize any conflict with the federal court, however, this court agrees that other than those actions necessary to preserve and protect the assets of the trust, the special fiduciary should not initiate any other affirmative action until there is a final appellate decision affirming, modifying or overturning the court's order," she wrote.

Lindberg objected to Benson implementing the injunction "without addressing the objections lodged by this court." She also took issue with Benson's decision to implement the injunction before the Utah Supreme Court could make a decision on a separate pending issue.

"The federal court should have deferred entry of its order until the Utah Supreme Court settled the … issue," she wrote. "The parties and federal court would then be able to determine how, if at all, the supreme court's decision affects the federal court's jurisdiction."

She reiterated that her court still has jurisdiction over the case and has been afforded, by a previous Utah Supreme Court decision, the power to oversee the administration of the UEP Trust. She said the federal court must also "accept and acknowledge the validity and constitutionality of all the actions and determinations taken by this court over the past six years."

She notes that there has been a recent conflict over who has power over the FLDS Church. Last month, church elder William E. Jessop, 41, filed papers to take over the church presidency from Jeffs. Jessop said it was a fulfillment of a Jeffs directive. Days later, a Jeffs loyalist counter-filed with paperwork removing Jessop and reinstating Jeffs.

An administrative hold on the two legal entities is in place until May 2.

Attorney Jeff Shields, who represents Wisan, said his client is in a tough spot, but is trying to defer to both courts while also protecting the assets of the trust.

"He was appointed by the court, works for the court and is accountable to the court," Shields said. "One judge is saying 'A,' and another judge is saying 'Z.' Our main priority is protecting the assets."

He said that it is still possible that the Utah Supreme Court may resolve the issues altogether if they find that the plaintiffs with the FLDS Church are barred from seeking relief because there was an undue delay in their court actions. In the meantime, Shields says his client will abide by the clear admonition that no further action is to be taken.

"We're not doing anything," he said. "We're just sitting tight."

The Utah Supreme Court will hear oral arguments in the case Tuesday.

Email: emorgan@desnews.com Twitter: DNewsCrimeTeam

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