This is an archived article that was published on sltrib.com in 2015, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
For years, Ralph and Muriel Siebach said, they made financial contributions to Brigham Young University believing the money would be used the way they wanted.
So when they came to believe the LDS Church-owned school was not following their wishes regarding an account set up to fund research in rhetorical studies, the couple sued, asking for their money back. But a 4th District judge granted a BYU motion to dismiss the suit, ruling that only the Utah attorney general has the authority to sue to enforce the terms of a charitable gift.
The Siebachs then took their case to the Utah Court of Appeals, which heard arguments in the matter Tuesday.
Mark Flores, an attorney for the Siebachs, urged the court to reinstate the lawsuit. He said BYU decided in 2009 that the account was in violation of university internal policy and that his clients gave money on a misapprehension of how it could be used.
Robert Clark, BYU's attorney, said the attorney general is the one who has to act when there is an alleged violation of donor intent, so the Siebachs do not have standing to sue.
The three-judge panel took the case under advisement.
The Siebachs' son, James Siebach, then a BYU professor, filed an application in 1990 to establish the Rhetorical Studies Account and was approved, court documents say. The account was restricted to use for research and promotion of philosophical studies, and James Siebach was the person authorized to spend the funds, according to the lawsuit.
In 2009, BYU became concerned that the fund violated its internal policy, began an audit, froze the account and removed James Siebach as the only one authorized to use the funds, the suit said. The Provo-based school found that contributions to the account were made in violation of federal tax laws and its own internal policy, the suit alleged.
Ralph and Muriel Siebach said they weren't told about the allegations at first and contributed $50,000 to the account in September 2009. They said BYU unfroze the account, deposited the $50,000 and then refroze the account.
And, in 2011, the university unilaterally changed the Rhetorical Studies Account from "restricted" to use by James Siebach for his research to an "unrestricted" account, their suit said.
Unhappy with the situation, the Siebachs requested in 2013 that BYU return or transfer to a Fidelity Charitable account the unspent funds that they contributed to the account, the suit said. BYU agreed to return about $114,000 but then imposed unreasonable conditions on the transfer, the suit claimed.
The university countered that although there were negotiations, no agreement was reached to return money to the Siebachs, and no determination was ever made that there was a tax violation.
The Siebachs filed suit in 2013, a step they took reluctantly, said attorney Florence Vincent, who also represents the couple. The two have been "exceptionally loyal" to The Church of Jesus Christ of Latter-day Saints — they are the former president and matron of the faith's Palmyra, N.Y., temple — and have donated hundreds of thousands of dollars to BYU and BYU-Idaho during the past three decades, according to their suit.
"This is not something the Siebachs desired or wished to do," Vincent said.
The Siebachs said in their suit that their son solicited donations for the account on behalf of BYU and represented that the money would be used in accordance with the account's stated purpose. In addition, correspondence from university officials throughout the years stated "unequivocally" that BYU would honor their donative intent, according to the suit.
The suit said donors — which included others besides the Siebachs — had contributed $425,000 to the account since its establishment. The suit alleged BYU said in 2009 that the Seibachs had given $326,169 to the account, but two years later said their donation totaled $236,169.
The lawsuit sought an accounting of the Siebachs' donations; a declaration that certain funds were restricted to a specific purpose; and the recovery of "all amounts BYU mismanaged in a manner contrary to the Siebachs' donative intent."
In a motion requesting that the suit be dismissed, BYU alleged that "in effect, this lawsuit expresses the Siebachs' unhappiness over the circumstances that led to their son's resignation from the university."
The motion said a dispute arose between the university and James Siebach after a review discovered Rhetorical Studies Account funds "had been used in ways that were a concern." After an extensive investigation and audit, Siebach resigned his position and a mutual release was executed, the motion said.
According to the motion, the suit does not identify any communication by the Siebachs of their donative intent or any expenditure that allegedly was inconsistent with their wishes.
In addition, the motion said, the Siebachs lack standing to sue. BYU noted Utah has adopted the Uniform Prudent Management of Institutional Funds Act, which makes clear the state attorney general is the only party who can bring a legal action concerning the terms of a restrictive gift.
"Once a gift is completed," BYU argued in its motion, "the university is not subject to legal claims from donors whose hindsight makes them unhappy with how funds were used."
In March 2014, 4th District Judge Fred Howard dismissed the suit, ruling that "a donor who believes a donee is using a gift in a manner that is inconsistent with its terms or purpose must appeal to the state attorney general."
"The attorney general protects both the broader interest of the public in ensuring that charitable donations are utilized in a prudent and honest manner," Howard wrote, "and the narrower interest of the individual donors who wish to see their gifts utilized as intended."
Twitter: @PamelaManson