Opinion ID: 171193
Heading Depth: 1
Heading Rank: 6

Heading: Present CasePelt v. State of Utah

Text: In 1992, plaintiffs Jake C. Pelt and other named individuals, members of the beneficiary class (Beneficiaries), filed this action alleging, inter alia, that Utah breached its fiduciary duty to the class when it allegedly mismanaged the Fund. Beneficiaries seek (1) a full and accurate accounting of decades of income and disbursements from the Fund, and (2) reimbursement to the Fund for undocumented or improper disbursements and income. Like Jim, this suit was certified as a Rule 23(b)(2) class action. Utah filed a motion to dismiss, which was granted on the grounds that the federal statute that created the Fund did not create a private right of action for breach of trust. See Pelt v. Utah, 104 F.3d 1534, 1537 (10th Cir.1996) ( Pelt I ). We reversed, holding that the nature of the Act's intended operation along with subsequent court cases (of which Congress was fully cognizant when it passed the 1968 Amendments) seem to indicate that the Fund was to operate with trust-like rights and responsibilitiesincluding the beneficiaries' rights to bring suit to address breaches of fiduciary duty. Id. at 1542 (citations omitted). On remand, the parties agreed that Utah is required to produce an accounting and in June 2001, the district court entered an order establishing the parameters of Utah's duty to account as well as Beneficiaries' exceptions to such accounting. [5] The parties disagreed, however, on the issue of which years Utah is obligated to account for Fund expenditures. Beneficiaries request an accounting detailing trust activities back to the 1950's; Utah asserts that accountings performed during the previous Fund cases satisfied Utah's accounting obligation with respect to certain years. Specifically, Utah raised the affirmative defense of res judicata, arguing that a significant portion of Beneficiaries' accounting claims is barred by the preclusive effect of Sakezzie, Jim and Bigman. On December 20, 2002, the district court denied the parties' cross-motions for summary judgment on the issue of claim preclusion. In that Order, the district court held that two of the three elements of the res judicata requirements had been established: (1) that the three prior cases ended with a final decisions on the merits, and (2) that for purposes of determining res judicata, the claims in Pelt are identical to those alleged in Sakezzie, Jim and Bigman.  The district court declined to rule on the third elementwhether Beneficiaries are in privity with the plaintiffs in the previous cases. The district court held that, [i]n order to show privity between a non-party and a party to former litigation, the party who asserts that the matter is barred by claim preclusion must demonstrate that the nonparty's interests and rights were represented and protected in the prior action. The district court concluded that on the record before it, it could not determine whether Beneficiaries' interests were adequately represented in the prior actions. The district court held that Utah failed to meet its burden to establish privity, as it had not affirmatively argued that the representation in the prior cases was adequate or offered any evidence of adequate representation. Likewise, the district court held, Beneficiaries had not established that the representation in the prior cases was inadequate. Because privity remained a disputed issue of material fact, Beneficiaries' cross-motion was also denied. In 2005, after extensive discovery, Beneficiaries moved for summary judgment on the question of whether their interests were adequately represented in Sakezzie, Jim and Bigman. In January 2006, the district court held that because Beneficiaries were not adequately represented in the prior class actions and there was no evidence of any legal relationship or other form of accountability between the Bigman and Pelt plaintiffs, Beneficiaries are not bound by the judgments therein. Citing its December, 2002 Order, the district court reaffirmed its holding that Utah, which raised the affirmative defense of claim preclusion, has the burden to establish that privity, or adequacy of representation, existed in the previous cases. The district court ruled that because Beneficiaries are working with a clean slate, Utah must account for Fund expenditures during the entirety of its administration of the Fund. This appeal followed.