Taghipour v. Jerez

2001 UT App 139, 26 P.3d 885, 420 Utah Adv. Rep. 8, 2001 Utah App. LEXIS 34, 2001 WL 421921
CourtCourt of Appeals of Utah
DecidedApril 26, 2001
Docket20000047-CA
StatusPublished
Cited by3 cases

This text of 2001 UT App 139 (Taghipour v. Jerez) is published on Counsel Stack Legal Research, covering Court of Appeals of Utah primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Taghipour v. Jerez, 2001 UT App 139, 26 P.3d 885, 420 Utah Adv. Rep. 8, 2001 Utah App. LEXIS 34, 2001 WL 421921 (Utah Ct. App. 2001).

Opinions

OPINION

THORNE, Judge:

T1 Plaintiffs Namvar Taghipour, Danesh Rahemi, M.D., and Jerez, Taghipour and Associates, LLC, appeal from an order dismissing their claims against defendant Mt. Olympus Financial, L.C. (Mt. Olympus). We affirm.

BACKGROUND

T2 On August 30, 1994, Taghipour, Rahe-mi, and co-defendant Edgar Jerez (Jerez) formed Jerez, Taghipour and Associates, LLC (the LLC). The group formed the LLC to purchase and develop a parcel of real estate (the Property) under a joint venture agreement. The LLC's Articles of Organization listed Jerez as a LLC member and a manager, while its Operating Agreement [887]*887provided that no loan could be contracted on behalf of the LLC without a resolution approved by its members.

T3 On August 31, 1994, the LLC acquired the Property. On January 10, 1997, Jerez, unbeknownst to the LLC's other members or managers, unilaterally entered into a loan agreement for $25,000 with Mt. Olympus on behalf of the LLC. To secure the loan, Jerez executed and delivered a trust deed on the Property to Mt. Olympus. Subsequently, Mt. Olympus dispersed $20,000 of the funds to Jerez and kept the remaining $5,000 for various fees. Jerez apparently misappropriated the $20,000. The LLC, unaware of the loan, ultimately defaulted on it and Mt. Olympus foreclosed on the Property.

{4 On June 18, 1999, plaintiffs sued Mt. Olympus and Jerez, asserting claims against Mt. Olympus for: (1) declaratory judgment, (2) negligence, and (8) partition. In response, Mt. Olympus filed a motion to dismiss. The trial court granted Mt. Olympus's motion, ruling that pursuant to Utah Code Ann. § 48-2b-127(2) (1998), the documents executed by Jerez were binding upon the LLC. Plaintiffs timely appealed.

ISSUES AND STANDARDS OF REVIEW

T5 "The propriety of a dismissal based on Utah R. Civ. P. 12(b)(6) is a question of law; therefore we review the [trial] court's ruling for correctness." Stokes v. Van Wagoner, 1999 UT 94, ¶ 6, 987 P.2d 602.

Plaintiffs argue the trial court's interpretation of section 48-2b-127(2) was in error, because a manager cannot unilaterally bind a limited liability company when the company's operating agreement or articles of organization require a majority vote or a resolution before undertaking such an act. We review questions of statutory interpretation for correctness, according no deference to the trial court's conclusions. See Adkins v. Uncle Bart's, Inc., 2000 UT 14, ¶ 11, 1 P.3d 528.

T7 Plaintiffs next argue the trial court erred by ruling, as a matter of law, that Mt. Olympus had taken the steps necessary to determine Jerez was a LLC manager. We review a trial court's rulings of law for correctness. See Munford v. Lee Servicing Co., 2000 UT App 108, ¶ 10, 999 P.2d 23.

T8 Finally, plaintiffs argue the trial court erred by dismissing their partition claim against Mt. Olympus. This also presents a question of law, which we review for correctness. See id.

ANALYSIS

A. Statutory Interpretation of Utah Code Ann. § 48-2b-127

T 9 Plaintiffs argue the Mt. Olympus loan agreement, unilaterally executed by Jerez on behalf of the LLC, is invalid because the LLC's Operating Agreement requires membership approval before such an undertaking. Plaintiffs assert that section 48-2b-127(2), a Utah Limited Liability Act provision, requires such a result.

%T10 The rules of statutory construction require that we look "first to the plain language of a statute ... and assumel[ ] that each term was used advisedly by the [LJegislature." Biddle v. Washington Terrace City, 1999 UT 110, ¶ 14, 993 P.2d 875. Further, "it is well settled that a more specific [statutory] provision always takes precedence over a more general [statutory] provision." State v. Hinson, 966 P.2d 273, 277 (Utah Ct.App.1998); see also Southern Utah Wilderness Alliance v. Board of State Lands & Forestry, 830 P.2d 233, 235 (Utah 1992).

{11 In the present matter, plaintiffs argue that Utah Code Ann. § 48-2b-125(2)(b) (1998) and Utah Code Ann. § 48-2b-127(2) (1998) should be read in harmony, and therefore, section 48-2b-125(2)(b)'s restrictions on manager authority should be incorporated into section 48-2b-127(2). In pertinent part, section 48-2b-125(2)(b) states: "If the management of the limited «liability company is vested in a manager or managers, any manager has authority to bind the limited liability company, unless otherwise provided in the articles of organization or operating agreement." Utah Code Ann. § 48-2b-125(2)(b) (1998) (emphasis added). In contrast, section 48-2b-127(2) states: "Instruments and documents providing for the acquisition, mortgage, or disposition of prop[888]*888erty of the limited liability company shall be valid and binding upon the limited liability company if they are executed by one or more managers." Id. § 48-2b-127(2).

12 The plain language of section 48-2b-127(2) provides no limitations on a manager's authority to execute specified instruments and documents, and thus, bind the limited liability company. Further, assuming, as we must, that "each term [in section 48-2b-127(2)] was used advisedly by the [Llegisla-ture," Biddle, 1999 UT 110 at ¶ 14, 993 P.2d 875, we find no reason to suggest that had the Legislature intended section 48-2b-127(2) to include the same restrictions set forth in section 48-2b-125(2)(b), the Legislature would have omitted those restrictions.

113 Additionally, plaintiffs' argument ignores the well-established rule of construction that specific statutory provisions prevail over general statutory provisions. See Hinson, 966 P.2d at 277. Section 48-2b-127(2) states, in no uncertain terms, "[{Jnstruments and documents ... shall be valid and binding upon the limited liability company if they are executed by one or more managers." Utah Code Ann. $ 48-2b-127(2) (1998) (emphasis added). Accordingly, the specific requirements of section 48-2b-127(2) must control over the general application of section 48-2b-125(2)(b)'s restrictions.

T14 Finally, we acknowledge plaintiffs' concern that "the documents listed in [section] 48-2b-127 have the greatest potential for damage to a limited liability company because they are encumbering the property of the limited liability company." However, "lt is the power and responsibility of the [Legislature to enact laws to promote the public health, safety, morals, and general welfare of society ... and [we] will not substitute our judgment for that of the [LJegisla-ture with respect to what best serves the public interest." Bastian v. King, 661 P.2d 953, 956 (Utah 1983); see also Redwood Gym v. Salt Lake County Comm'n, 624 P.2d 1138

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2001 UT App 139, 26 P.3d 885, 420 Utah Adv. Rep. 8, 2001 Utah App. LEXIS 34, 2001 WL 421921, Counsel Stack Legal Research, https://law.counselstack.com/opinion/taghipour-v-jerez-utahctapp-2001.