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Show iGrove Losses : State Liable? 1 By BARBARA RATTLE The question of whether or not the State of Utah, through its banking j commissioner, can be held liable for the approximately $20 million lost to the now-defunct Grove Finance Co. i last week came before the Utah Supreme Court, which has dramatically expanded the realm of injuries for which government can be held accountable since the finance firm's demise. The justices last Tuesday heard arguments in a case involving an appeal from Third District Court Judge Kenneth Rigtrup's dismissal last Spring of a Grove investor's class action suit against former Dept. of 4 Financial Institutions commissioner J Mirvin D. Borthick and the State of Utah. Grounds for dismissal was governmental immunity. Counsel for the investor Robert J. DeBry said a decision is expected in our or five months and regardless of ' in whose favor the high court rules, j me decision "will set the tone for a great deal of other litigation." DeBry said to his knowledge this is the first Grove Finance case to come before the Utah Supreme Court. He is' seeking restitution to the tune of $20 million on behalf of all investors, estimated at 1,800 according to documents filed with the high court and Utah's bankruptcy court. The investors argue Borthick failed to perform his statuory duties that would have protected their deposits, which they claim were in large part pension and old age retirement funds consisting of "life savings." Borthick had a mandatory duty to inspect and supervise Grove's financial integrity and failed to visit the firm or examine its workings and never notified the investors of numerous improprities in Grove's business activities, the in-' in-' vestors claim. At stake is governmental immunity, im-munity, which the investors assert is not applicable to the case. Neither is the doctrine sovereign immunity, they argue, and Borthick is not protected by the common law doc- -trine of official immunity. The investors in-vestors claim the sovereign immunity doctrine is unconstitutional in that it affords citizens no remedy by due course of law if they are wronged by the state. The state is being defended by Utah Attorney General David L. Wilkinson and Assistant Attorney General Stephen J. Sorenson. They deny Borthick had any duty to supervise or inspect Grove and argue the Governmental Immunity Act requires complaining parties like the investors to file a written notice of claim for money damages with the Attorney General or the state agency in question within one year after the cause of action arises as a prerequisite to bringing suit. They claim the investors did not do so and argue both the sovereign and official immunity doctrines apply and are constitutional and that the investor's suit w;as properly dismissed because it states a claim for which relief cannot be granted. The investors' claims will be weighed by the high court against legal tests set out by the justices in three recent decisions. The first two rulings held government is not immune im-mune from suits brought by people injured at public recreational complexes com-plexes and the most recent ruling, issued two weeks ago, said a Clearfield Clear-field woman can sue that city for damages caused to her home when the city's sewer system back up, allegedly due to negligent maintenance. main-tenance. That decision clearly set out the limitations and tests formulated by the court and substantially reduced the spectrum of injuries from which government can claim immunity. im-munity. In those cases, the court held government is not immune from suits that stem from injuries resulting from the exercise of something other than a "governmental function." The justices defined that function as "an Continued on Page A-3 Grove Continued from Front Page activity of such a unique nature that it can only be performed by a governmental govern-mental agency or one that is essential to the core of governmental activity." Under that test, the activity in question has to be something the government alone must do, not merely something it is allowed to do, in order to receive immunity. Just because the legislature has empowered em-powered a governmental agency to undertake a certain activity does not necessarily qualify that activity for immunity, the cases have held. From THE ENTERPRISE Reprinted by permission |