Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints et al.

Fraud

Central District

U.S. District Judge Stephen V. Wilson

Defense Attorneys: Larson Llp, Rick L. Richmond, Troy S. Tessem, Timothy C. Tanner (Now With Cox, Castle & Nicholson Llp)

Plaintiffs Attorneys: Lavely & Singer Professional Corporation, David B. Jonelis, Jake A. Camara

Rick L. Richmond

The case drew headlines because of the unusual plaintiff and his explosive claims: the prominent Mormon James Huntsman, the son and grandson of church officials and the brother of a former Utah governor, accused senior church leaders of misspending on commercial projects the $5 million he'd tithed--instead of on the worthy causes he'd intended. Huntsman v. Corporation of the President of the Church of Jesus Christ of Latter-Day Saints, 21-cv-02504 (C.D. Cal., filed March 22, 2021).

Beyond those facts lay a deeper threat to institutions that depend on donations, said defense lawyer Rick L. Richmond of Larson LLP. "If the plaintiff prevailed, this matter could have set circuit precedent in favor of those who give voluntary contributions to a nonprofit and later become dissatisfied. If you could demand your money's return, it would create a huge problem."

He added that allowing a claim for the refund of voluntary, unrestricted contributions to his client could have paved the way for similar claims against other churches, museums, theaters, orchestras, universities and all other charitable institutions, not just in California but all across the country.

Richmond and colleagues moved swiftly to cut short the litigation, persuading U.S. District Judge Stephen V. Wilson of Los Angeles to grant summary judgment in September. An appeal of Wilson's ruling is pending at the 9th U.S. Circuit Court of Appeals, said the plaintiff's lead counsel, David B. Jonelis of Lavely & Singer PC.

Added Jonelis in an email, "We look forward to the reversal of the District Court's erroneous summary judgment ruling."

The Huntsman complaint contended that church funds used to redevelop a commercial shopping center known as City Creek in Salt Lake City came in part from earnings on invested tithes.

But the church's defense argued that the funds used on the shopping center were spent exactly as the church had said they would be, and Wilson agreed.

Regarding the larger First Amendment issue, Huntsman's complaint relied on Sunday school manuals and church teachings to support the fraud claim. But the Constitution's Establishment Clause bars courts from delving into "internal ecclesiastical disputes," the judge held.

Richmond said he limited his defense largely to the financial facts to avoid a possible adverse ruling on the First Amendment dispute. "I went as narrow as I could, because this was a case of great concern to the church. It was extremely satisfying to get a great result early in the litigation."

- John Roemer

Troy S. Tessem