Opinion ID: 2634494
Heading Depth: 1
Heading Rank: 7

Heading: Judicial Immunity To the Interim CEO

Text: ¶55 At the request of the parties, the trial court used its inherent equitable power to extend judicial immunity [13] to the interim CEO. The trial court and the parties decided that to do so the interim CEO would be titled a special master. Although the designation of Mr. Holman as a special master created no confusion at the time, defendants, in these later stages of litigation, have attempted to exploit and use to their advantage the inherent ambiguity in this somewhat atypical use of the special master terminology. We reject defendants' attempts to use this ambiguity to undermine the entire substance of the trial court's rulings. In the future, however, trial courts would do well to be cautious in their use of the title special master, due to the confusion it can create. ¶56 Defendants argue that because Mr. Holman was referred to in the court's order as a special master, his role changed from that of a CEOwhose duty is to preserve corporate assets, protect them from others, and operate the company in a profitable mannerto a rule 53 special master who, as a quasi-judge, is limited to acting as a neutral magistrate. We decline to accept this argument, inconsistent as it is with the clear intent of the parties and the evidentiary record, which shows that Mr. Holman was appointed an interim CEO with the title of special master only for the purpose of providing him the judicial immunity associated with the designation. ¶57 The interim order of February 21, 2001, to which both parties stipulated, makes no reference to rule 53 and never mentions the appointment of a special master. It unambiguously establishes that the appointed officer will act as interim CEO. ¶58 Like the text of the February order, a March 5, 2001 telephonic hearing discussing the various candidates for the position also illustrates that the court and the parties understood that the interim CEO was not appointed as a neutral judicial magistrate. In that conversation, Ms. Stewart's counsel relied on the fact that the interim CEO would likely be an active participant in the corporate litigation as a basis for arguing that her candidates, a team from the accounting firm of Arthur Anderson, would be more capable of investigating and participating in those claims. ¶59 Furthermore, consistent with the role of a CEO acting in the interest of E. Excel, and inconsistent with the functions of a quasi-judicial official, all parties understood and agreed that, in order to run the company, the interim CEO would engage in ex parte communication with both parties in the dispute, as well as other employees and territorial owners. Both parties stipulated to the establishment of a procedure for Mr. Holman's necessary ex parte communications. ¶60 The parties also agreed that the interim CEO should be granted judicial immunity. In the March 5, 2001, telephonic hearing the parties expressed concern that any candidate for the job of interim CEO would be wary of accepting due to the likelihood of being drawn personally into the litigation. Consequently, it was agreed that the interim CEO would be accorded the immunities of a receiver or a master. As a result, in its March 13, 2001, order, the trial court appointed Mr. Holman as interim chief executive officer of E. Excel International, Inc., and as a special master for and on behalf of the Court . . . with all rights, protections and immunities available to a special master under the law. When the court revisited its decision to appoint the interim CEO in its January 24, 2003, order dismissing Madame Chen's motion to vacate, it reasserted that it had appointed the interim CEO and had given him the title special master because the parties insisted that he receive the same immunities and protections that a special master would receive. ¶61 We hold that it was not an abuse of the trial court's discretion to provide Mr. Holman judicial immunity for his actions as interim CEO. The nature of Mr. Holman's responsibilities and the integral role he played in the trial court's ability to properly adjudicate the present case created sufficient grounds for extending Mr. Holman judicial immunity without fully constituting him as a special master. See Sanders v. Leavitt, 2001 UT 78, ¶ 19, 37 P.3d 1052; see also Parker v. Dodgion, 971 P.2d 496, 498 (Utah 1998) (Whether a person or entity should be afforded judicial immunity depends upon the specific work or function performed. If the acts were committed 'in the performance of an integral part of the judicial process,' the policies underlying judicial immunity apply and immunity should be granted.) (quoting Bailey v. Utah State Bar, 846 P.2d 1278, 1280 (Utah 1993) (citations omitted)). Furthermore, [t]he courts that have considered the matter have held that a receiver is a court officer who shares the judge's immunity, at least if he is carrying out the orders of his appointing Judge. T & W Inv. Co. v. Kurtz, 588 F.2d 801, 802 (10th Cir. 1978). Given both the close similarity between Mr. Holman's powers as an interim CEO and those of a receiver, and the integral role he played in the court's ability to adjudicate the case, Mr. Holman should clearly be afforded the same judicial immunity as a receiver, master, or other judicial officer. ¶62 We have already noted that relying on rule 53 for the purpose of providing judicial immunity can lead to confusion regarding the source and scope of an appointee's powers, and may make use of this nomenclature problematic in future cases. In this case, however, any confusion appears to have been manufactured after the fact rather than created by the court's order itself; no disagreement about Mr. Holman's powers surfaced until after his actions unfavorably affected defendants. Had Mr. Holman's designation as a special master led to an actual overlap of the quasi-judicial powers of a traditional rule 53 special master and the executive powers of a court-appointed CEO or receiver, the designation could have created conflict issues. However, it is quite clear that did not happen here. The orders of appointment are clear, as is the fact that the parties understood and agreed to them at the time they were issued. However, we encourage trial courts presented with similar situations in the future to rely on other means of granting judicial immunity, including their inherent equitable power, rather than resorting to this somewhat unorthodox use of the title special master.
¶63 The second major issue raised in this appeal is the propriety of the trial court's decision to grant the preliminary injunction. Defendants challenge the decision on three separate grounds: first, defendants claim that the preliminary injunction was granted against Madame Chen in violation of her due process rights; second, defendants argue that even if the preliminary injunction was not granted in violation of Madame Chen's due process rights, it is facially invalid as a matter of law because barring Madame Chen, Ms. Stewart, and other members of the conspiracy from worldwide competition is far too broad; and third, defendants contend that the facts do not support the court's decision. ¶64 After reviewing the arguments and pertinent aspects of the record, we affirm the trial court's decision to reject Madame Chen's due process claims. Madame Chen voluntarily appeared in the early stages of the preliminary injunction hearings, waiving her right to notice, and she makes no showing as to how her formal absence from the suit unduly prejudiced her. Furthermore, we hold that the preliminary injunction was not an abuse of the trial court's discretion. Defendants' failure to properly marshal the evidence undermines their claims regarding both the propriety and scope of the preliminary injunction.
¶65 Defendants argue that Madame Chen's right to due process was violated because she was not joined as a party by service of process prior to the commencement of the preliminary injunction proceedings. Moreover, they assert that 50% of the evidence on the preliminary injunction question was received by the court prior to her joining as a party, and that she therefore had no opportunity to object to the evidence and present an opening argument. ¶66 In support of this position, defendants quote Murphy Bros., Inc. v. Michetti Pipe Stringing, Inc.,: In the absence of service of process . . . a court may not exercise power over a party the complaint names as defendant. 526 U.S. 344, 350 (1999). However, the complete quotation of this passage includes a parenthetical clause referring to a defendant's ability to waive the right to notice. Id. (In the absence of service of process (or waiver of service by the defendant), a court ordinarily may not exercise power over a party the complaint names as defendant[,]) (emphasis added). We find the defendants' failure to quote the passage fully particularly interesting given that the omitted parenthetical describes precisely what Madame Chen did. ¶67 Article I, section 7 of the Utah Constitution states that no person shall be deprived of life, liberty, or property, without due process of law. In interpreting this provision, we have previously recognized that 'due process is not a technical conception with a fixed content unrelated to time, place, and circumstances.' Dairy Prod. Servs., Inc. v. City of Wellsville, 2000 UT 81, ¶ 49, 13 P3d 581 (quoting Cafeteria Workers Union v. McElroy, 367 U.S. 886, 895, 81 S. Ct. 1743, 6 L. Ed.2d 1230 (1961)). Instead, due process is flexible and, being based on the concept of fairness, should afford the procedural protections that the given situation demands. Id. (internal quotation and citation omitted). Thus, [t]he requirements of due process depend upon the specific context in which they are applied. V-1 Oil Co. v. Dep't of Envtl Quality, 939 P.2d 1192, 1196 (Utah 1997). ¶68 Although the exact requirements of due process may vary from situation to situation, the minimum requirements of due process include adequate notice and an opportunity to be heard in a meaningful manner. See Dairy Prod. Serv., 2000 UT 81 at ¶ 49. To be considered a meaningful hearing, the concerns of the affected parties should be heard by an impartial decision maker. Id. Inasmuch as this question of law requires the application of the facts to the due process standard, we use a clearly erroneous standard for the necessary factual determinations. See State v. Hubbard, 2002 UT 45, ¶ 22, 48 P.3d 953. ¶69 In the present case, the minimum requirements of due process were satisfied. Madame Chen had notice and the opportunity to fairly state her case. ¶70 Hearings regarding the contempt motions filed against Madame Chen and Ms. Stewart began on October 25, 2001. On November 27, 2001, the contempt hearings were consolidated with the preliminary injunction hearings. On December 12, after hearings on November 27 and 28 and December 10 and 11, Madame Chen's counsel voluntarily entered a notice of appearance on behalf of . . . Hwan Lan Chen, also known as Madame Chen, and the corporation Apogee Incorporated. By entering such an appearance, Madame Chen effectively waived her right to be served. McDonald v. Mabee, 243 U.S. 90, 91 (1917) (Submission to the jurisdiction by appearance may take the place of service upon the person.) cited in Mallory Eng'g., Inc. v. Ted R. Brown & Assocs., Inc., 618 P.2d 1004, 1007 n.7 (Utah 1980); see also Allen v. Coates, 11 N.W. 132, 132 (Minn. 1882) (defect in service can be waived by general appearance if appearance was not induced by fraud or mistake of fact). We conclude, therefore, that the trial court satisfied the first basic requirement of due process: having entered an appearance by way of counsel, it is clear that Madame Chen had adequate notice of the proceedings. ¶71 We also conclude that although she was not present for four of the consolidated preliminary injunction/contempt hearings, Madame Chen nevertheless had an opportunity to be heard in a meaningful manner. Madame Chen was present as a party for eighteen of the twenty-two consolidated hearings. These eighteen hearings extended from December 12, 2001, to June 26, 2002. During these six months, Madame Chen never objected to the trial court's reliance on the evidence entered at the early hearing dates she had missed. Furthermore, nowhere does she describe how she was prejudiced or suffered any disadvantage by not being formally represented by counsel in these early hearings. This is particularly significant given that she was an active participant in the preliminary injunction hearing for nearly six months and had every opportunity to present evidence, call new witnesses, recall former witnesses for cross-examination, or to notify the trial judge of any technical or evidentiary objections to the trial testimony. ¶72 In rejecting her due process claims, the trial court also found that Madame Chen had actual notice of the proceedings. Madame Chen lived with Ms. Stewart, who had been involved in the litigation from the beginning, and Madame Chen also had been involved from the outset of the litigation as a coconspirator with Ms. Stewart. In light of her voluntary waiver of the right to service, the adequate time she had to present her case and challenge, if she desired, the evidence entered in her absence, and her actual notice of the proceedings, we affirm the lower court in rejecting her due process claims. Madame Chen had adequate notice and a fair opportunity to be heard before an impartial decision maker.
¶73 Defendants' challenge to the propriety of the court's decision to enter the preliminary injunction and to its scope, barring defendants from world-wide competition with E. Excel, is entirely unsupported by the evidence. ¶74 Defendants claim the evidence establishes only that Madame Chen was a mother, matriarch of a traditional Chinese family, temporary director of E. Excel, and potential competitor to E. Excel through her participation in the Apogee enterprise. Defendants, however, fail to properly marshal the evidence in support of the trial court's findings upon which the preliminary injunction is based. As a result, they do not adequately challenge the trial court's findings. Because they have not properly marshaled the evidence supporting the findings, we accept the trial court's findings on that basis alone. Wilson Supply, Inc. v. Fraden Mfg. Corp., 2002 UT 94, ¶ 26, 54 P.3d 1177. Given the court's factual findings, we affirm the trial court's decision to grant the preliminary injunction as well within its discretion. ¶75 Unfortunately, as is manifest by the defendants' failure to marshal in the present case, the requirements of marshaling still do not appear to be understood with the sense of clarity and urgency we desire. As a result of this lack of understanding, and the fact that defendants' failure to marshal in this case proves virtually fatal to their claims, we take the opportunity to reiterate the requirements of marshaling.
¶76 In order to challenge a court's factual findings, an appellant must first marshal all the evidence in support of the finding and then demonstrate that the evidence is legally insufficient to support the finding even when viewing it in a light most favorable to the court below. Wilson Supply, 2002 UT 94 at ¶ 21. Where a trial court's rulings on highly fact-dependent issues are challenged, this court grants broader than normal discretion to the trial court. See State v. Pena, 869 P.2d 932, 936-38 (Utah 1994); see also Soter's, Inc. v. Deseret Fed. Sav. & Loan Ass'n, 857 P.2d 935, 939-42 (Utah 1993) (recognizing waiver to be a factually sensitive issue requiring the trial court's exercise of discretion in applying the law to facts). As a result, where the legal standard is extremely fact-sensitive, the appellant has the duty to marshal the evidence. See In re Estate of Beesley, 883 P.2d 1343, 1347-49 (Utah 1994). This duty requires an appellant to marshal all the evidence in favor of the facts as found by the trial court and then demonstrate that even viewing the evidence in a light most favorable to the court below, the evidence is insufficient to support the findings of fact. Id. (quoting Saunders v. Sharp, 806 P.2d 198, 199 (Utah 1991)). ¶77 More recently, the Utah Court of Appeals explained that in order to properly discharge the duty of marshaling the evidence, the challenger must present, in comprehensive and fastidious order, every scrap of competent evidence introduced at trial which supports the very findings the appellant resists. Neely v. Bennett, 2002 UT App 189, ¶ 11, 51 P.3d 724 (emphasis omitted). This does not mean that the party may simply provide an exhaustive review of all evidence presented at trial. Id. ¶ 12 n.1. Rather, appellants must provide a precisely focused summary of all the evidence supporting the findings they challenge. Id. This summary must correlate all particular items of evidence with the challenged findings and then convince us that the trial court erred in the assessment of that evidence to its findings. W. Valley City v. Majestic Inv., Co., 818 P.2d 1311, 1315 (Utah Ct. App. 1991). What appellants cannot do is merely re-argue the factual case they presented in the trial court. Oneida/SLIC v. Oneida Cold Storage & Warehouse Inc., 872 P.2d 1051, 1053 (Utah Ct. App. 1994). ¶78 The process of marshaling is thus fundamentally different from that of presenting the evidence at trial. The challenging party must temporarily remove its own prejudices and fully embrace the adversary's position; he or she must play the devil's advocate. Harding v. Bell, 2002 UT 108, ¶ 19, 57 P.3d 1093. In so doing, appellants must present the evidence in a light most favorable to the trial court, Utah Med. Prods., Inc. v. Searcy, 958 P.2d 228, 232 (Utah 1998), and not attempt to construe the evidence in a light favorable to their case. In re Estate of Bartell, 776 P.2d 885, 886 (Utah 1989). Appellants cannot merely present carefully selected facts and excerpts from the record in support of their position. Oneida, 872 P.2d at 1053. Nor can they simply restate or review evidence that points to an alternate finding or a finding contrary to the trial court's finding of fact. Wilson Supply, 2002 UT 94 at ¶ 22. Furthermore, appellants cannot shift the burden of marshaling by falsely claiming that there is no evidence in support of the trial court's findings. Id. This would inappropriately force an appellee to marshal the evidence in order to refute an appellant's assertion of the absence of evidence. Id. In sum, to properly marshal the evidence the challenging party must demonstrate how the court found the facts from the evidence and then explain why those findings contradict the clear weight of the evidence. Oneida, 872 P.2d at 1054. ¶79 The purpose of this rigorous and strict requirement is to promote two interrelated court objectives: efficiency and fairness. Id. at 1053. A proper marshaling of the evidence promotes efficiency by avoiding retrying the facts and by assisting the appellate court in its decision-making and opinion writing. Id. It promotes fairness by requiring that the appellants bear the expense and time of marshaling the evidence rather than putting the appellee in the precarious position of performing the appellant's work at considerable time and expense. Id. at 1053-54. This deference to a trial court's findings is based on and fosters the principle that appellants rather than appellees bear the greater burden on appeal. Id. at 1053. ¶80 If the marshaling requirement is not met, the appellate court has grounds to affirm the court's findings on that basis alone. Wilson Supply, 2002 UT 94 at ¶ 26. If appellants have failed to properly marshal the evidence, we assume that the evidence supports the trial court's findings. Utah Med. Prods., 958 P.2d at 233.
¶81 Both of defendants' claims regarding the propriety and scope of the preliminary injunction, regardless of the initial trappings, involve the application of a highly fact-sensitive legal standard. [15] Because of the factually sensitive nature of a court's decision to enter a preliminary injunction, to properly challenge such an order an appellant must set forth findings of fact . . . [which] shall not be set aside unless clearly erroneous. Utah R. Civ. P. 52(a). As we have discussed extensively, in order to show that these findings of fact are clearly erroneous, an appellant is required to marshal the evidence in support of the findings and show that they are against the clear weight of this evidence. Utah Med. Prods., 958 P.2d at 232. ¶82 Defendants claim that there is no evidence supporting the trial court's findings. Their assertion, however, does not satisfy the marshaling requirements. In situations where there is virtually nothing in the record that would support the trial court's findings, a claim of no evidence might be sufficient. However, an appellee need only point to a scintilla of evidence that supports a court's findings in order to refute an appellant's claim of no evidence. Wilson Supply, 2002 UT 94 at ¶ 22. Here, plaintiffs have met and surpassed that burden. They identify several of the trial court's findings of fact used to justify the preliminary injunction, along with citations to the record containing evidence that does indeed support these findings. These citations to the record include, among other things, detailed evidence of Madame Chen's central role in the establishment of the competing Apogee enterprise. Plaintiffs have presented more than enough evidence to persuade us that the trial court's findings were amply supported by evidence. [16] ¶83 Defendants have merely ignored damaging findings and avoided confronting problematic facts by claiming that there is no evidence. They restate evidence favorable to their position, point out facts that would support findings contrary to the trial court's findings, and attempt to recast damaging evidence in a light more favorable to their position. This is essentially an attempt to reargue the facts before us. Without proper marshaling of the evidence, we refuse to set aside the ruling of the trial court or the findings upon which it is based. We have been given no reason to believe they were erroneous, and have many convincing reasons to believe they were justified.