The decision by Utah's Supreme Court upholds its own 2010 ruling that the three years the Fundamentalist Church of Jesus Christ of Latter-day Saints waited to challenge the state takeover was too long. It also bars the case from being heard by other state judges.
The ruling could help determine the outcome of a separate federal lawsuit on whether the sect, which has been condemned by the mainstream Mormon church, can regain control of its land and homes. That case was on hold before the 10th Circuit Court of Appeals in Denver pending Tuesday's decision.
Utah's courts seized the trust in 2005 amid allegations that Jeffs and other FLDS leaders had mismanaged its assets. Valued at more than $114 million, the trust holds most of the property in the twin border towns of Colorado City, Arizona, and Hildale, Utah, where most sect members have traditionally lived.
"We're going to a meeting with FLDS community leaders and see where to go next," FLDS attorney Rod Parker told Reuters.
"I think one of the big issues here is that the ruling is about whether the FLDS can raise their claims in another state court, but we're not in state court anymore. We're in federal court and the standards are different."
The Utah-based sect practices polygamy and has an estimated 10000 followers in North America.
Jeffs, considered the spiritual leader of the group, was found guilty last year of sexually assaulting two underage girls he had wed. He is in protective custody in a Texas prison, serving a life term plus 20 years.
Federal case ongoing
FLDS members established the trust in the 1940s so that all could benefit from the community's shared assets in line with their religious beliefs. But under state control, a Utah judge allowed the core religious tenets to be stripped from the trust.
In 2008, sect members sued in both state and federal court to regain control of the land, claiming the takeover violated the separation of church and state.
They lost the state court battle with the high court's 2010 dismissal, which addressed only the issue of timing and did not delve into constitutional questions.
But in a parallel federal case that same year, US District Judge Dee Benson ruled the state takeover and redesign of the trust violated the constitutional religious rights of the FLDS and said the property should go back to church leaders.
The Utah Attorney General's Office appealed, saying the state's dismissal should have prevented Benson from hearing the matter.
Appeals court judges said they could not rule on the case without clarification from the Utah Supreme Court on whether the "too late" timing of the FLDS lawsuit would in fact prevent other states judges from hearing the case.
It was this request for additional information that prompted Utah's high court to reconsider the case. But Tuesday's ruling was not necessarily the last word in the matter.
The Utah Supreme Court justices also said they recognized that the federal appeals court can adopt its own set of criteria when considering the timing issue.
Representatives of the Utah Attorney General's office could not immediately be reached for comment.