Almost two years ago I wrote about a federal district court dismissing James Huntsman’s lawsuit against the church. The wheels of the judiciary turn slowly, but earlier this month, we had an update to the suit.
But first, a quick summary: James Huntsman sued the church saying that it had defrauded him out of tithing dollars. He said that the church had stated multiple times that no tithing money was used to finance commercial endeavors, that he relied on the church’s statements in paying his tithing, and that, in fact, the church had used tithing dollars to build the City Creek mall and to bail out Beneficial Life. As such, he asked the court to order the church to give him his tithing money back and to impose exemplary and punitive damages.
The church responded to Huntsman’s complaint with a motion for summary judgment. A quick civil procedure primer: in a lawsuit, both sides present their story to a jury (or, on rare occasions, a judge). The jury acts as a factfinder, determining what actually happened. The judge instructs the jury on the law, and the jury is supposed to apply the law to the facts that it finds.
You can short-circuit that process, though. Essentially, a motion for summary judgment says, “Even if everything the plaintiff says is true, the plaintiff can’t win because those facts don’t support the lawsuit.” Where the law does not support the plaintiff’s assertions, this allows the parties to end the suit before discovery and before trial.
In 2021, the district court agreed with the church. Even if Huntsman was right, it said, there was no fraud.
Huntsman appealed. And earlier this month, the 9th Circuit (partially) agreed with him. It did agree with the district court that there was no fraud with respect to Beneficial Life. But, it said, a jury could find that the church used tithing money in building City Creek. As such, it remanded the case to the district court to continue with discovery and, ultimately, to hold a trial.
Was the Court of Appeals right? Frankly, I’m not convinced. It basically turns on whether a reasonable person would believe that “tithing” included not just the church’s tithing revenue, but income earned on that tithing revenue.[fn1] And honestly, that’s a pretty absurd assertion; every financial endeavor that includes both principal and income on the principal distinguishes the two. And it’s even tougher to believe given that Huntsman (remember, this is James, not John Sr. or Jr.) is a sophisticated businessperson. As such, it’s relatively unbelievable that he wouldn’t have understood that differentiation. (The dissent makes this and other points and is, frankly, more convincing imho.)
So has Hunstman won? Far from it at this point. The court merely said that, as a matter of law, it’s possible that he was defrauded. He still faces the burden of demonstrating (a) that the church’s statement that it didn’t use tithing money to build City Creek was fraudulent and (b) that he relied on that statement in paying his tithing. Both, I think, are heavy lifts, and both lifts are his.
If, that is, it even gets there. Because the church can also file a petition for rehearing. Basically, that would mean that a larger panel of the 9th Circuit would take a second look and either affirm or reverse the three-judge panel that issued this ruling. That en banc panel could uphold this month’s ruling. It could reverse it. And if it upholds the ruling, then Huntsman and the church move to discovery and a jury trial. If it reverses and grants the church’s motion for summary judgment, by contrast, the suit is over.
And, in fact, on August 14, the church requested permission to extend the deadline for filing its petition for rehearing. Three days later, the court granted that petition. The church now has until September 20 to file for a rehearing.
Will it be granted? I suspect it will, though there is no guarantee. Either way, though, given that it took two years for the 9th Circuit to issue its decision, I suspect this case is a long way from being done.
[fn1] The primary evidence seems to be whistleblower Nielson’s assertion that Ensign Peak employees used the term “tithing” to refer to both. But honestly, that’s stupid evidence. In most endeavors, people use summary insider language. Like, EPA just invests the churches money. I can’t imagine that they’d say “tithing and income on tithing” every time they wanted to talk about it. “Tithing” in that case essentially becomes a metonym for all of the assets under management.
[fn2] But counterpoint, Elon Musk is also an allegedly sophisticated businessperson, and we can see where that got him.