Opinion ID: 6218252
Heading Depth: 2
Heading Rank: 1

Heading: vicki has standing to appeal the dissolution of

Text: H&N ¶18 As a threshold matter, the parties disagree on whether Vicki has standing to appeal the district court‟s dismissal of H&N‟s election to purchase Dianne‟s membership interest in lieu of dissolution.5 Dianne and H&N (via its receiver) argue that Vicki does not have standing to challenge the dismissal of H&N‟s election because this right was reserved to the company by statute. See UTAH CODE § 48-2c-1214; see also Provo City Corp. v. Thompson, 2004 UT 14, ¶ 9, 86 P.3d 735 (“[A] party may generally assert only his or her own rights and cannot raise the claims of third parties who are not before the court.”). Nevertheless, because we find that Vicki has standing to appeal the district court‟s order to dissolve H&N, we find that Vicki also has standing on appeal to argue that the dissolution of H&N was improper because the district court should have granted H&N‟s election in lieu of dissolution. ___________________________________________________________ 5 Because H&N is now under the control of a receiver, only Vicki has appealed the district court‟s dismissal of H&N‟s election. 6 Cite as: 2022 UT 6 Opinion of the Court ¶19 Utah Code section 48-2c-1213(3) states that a “court‟s order [for dissolution] may be appealed as in other civil proceedings.” And, to appeal a judgment in other civil proceedings, “an appellant generally must show both that he or she was a party or privy to the action below and that he or she is aggrieved by that court‟s judgment.” Chen v. Stewart, 2005 UT 68, ¶ 50, 123 P.3d 416 (citation omitted). Additionally, “[o]n appeal, a party whose standing is challenged must show that he or she had standing under the traditional test in the original proceeding before the district court.” Id. (citation omitted). Here, Vicki satisfies all these requirements. ¶20 Vicki was a party to the action below, and Vicki was aggrieved by the dissolution order because, once liquidated, Vicki will no longer be a 50% member of H&N. “A member‟s interest in a company is personal property,” UTAH CODE § 48-2c-701(1), and while Vicki would be compensated for her membership interest through the liquidation proceedings, individuals are not required to sell or liquidate personal property against their will. Cf. Fox v. Piercey, 227 P.2d 763, 765 (Utah 1951) (“„Duress‟ is unlawful constraint whereby one is forced to do some act against one‟s will.”). Moreover, company interests sold pursuant to judicial dissolution or liquidation typically garner less value than interests sold without any compulsion to sell.6 ¶21 Vicki also satisfies the requirement of having standing under the traditional test in the original proceedings. Rights related to the judicial dissolution of a limited liability company are conferred by statute, and to have standing to assert statutory rights under the traditional test, a party‟s alleged injury (1) must be distinct and palpable and (2) must fall within the “zone of interest” the relevant statute seeks to protect. See In re Questar Gas Co., 2007 ___________________________________________________________ 6 See, e.g., Arthur J Shartsis, Dissolution Actions Yield Less than Fair Market Enterprise Value (Appraising for “Fair Value” Under California Corporations Code Section 2000) (2011 reprint) (originally published in BUSINESS VALUATION UPDATE), https://www.sflaw.com/wp- content/uploads/2016/02/AShartsis-Fair-Market-Value.pdf; Charles W. Murdock, The Evolution of Effective Remedies for Minority Shareholders and Its Impact Upon Valuation of Minority Shares, 65 NOTRE DAME L. REV. 425, 442 (1990). 7 NELSON v. HILLS Opinion of the Court UT 79, ¶¶ 59, 61, 175 P.3d 545; see also Forsberg v. Bovis Lend Lease, Inc., 2008 UT App 146, ¶ 9, 184 P.3d 610 (“Standing to assert rights created by statute requires that the plaintiff be within the zone of interest contemplated by [the statute] and have suffered a distinct and palpable injury.” (alteration in original) (internal quotation marks omitted)). Utah‟s LLC statute grants members of a limited liability company the right to petition a court for judicial dissolution on the grounds that the company‟s manager acted in a manner that was illegal, oppressive, or fraudulent. See UTAH CODE § 48-2c-1210(2)(b). Because a member has a statutory right to initiate judicial dissolution proceedings, it follows that the ability of a member to object to judicial dissolution is likewise within the zone of interest protected by Utah‟s LLC statute. See id. And Vicki‟s injury is distinct and palpable for the same reason she is an aggrieved party on appeal: the dissolution of H&N will cause Vicki to lose her status as a 50% member of H&N. ¶22 Therefore, Vicki meets all the requirements to appeal the district court‟s dissolution order. Vicki was a party to the action below, was aggrieved by the order to dissolve H&N, and had standing to object to the dissolution of H&N in the original proceedings. And because Vicki has standing to appeal the dissolution of H&N, she also has standing to make the argument that the district court erred in dissolving H&N because the court should have granted H&N‟s election.7 ___________________________________________________________ 7 Dianne also argues that Vicki waived any challenge to the district court‟s dismissal of H&N‟s election because Vicki failed to raise this issue in her opening brief. According to Dianne, Vicki only challenged the district court‟s actions with respect to Vicki‟s “conditional” election. We disagree. While it is true that Vicki‟s opening brief fails to artfully present the issues on appeal, the substance of Vicki‟s brief argues that the election statute “does not confer on the court equitable authority to set aside an election at the request of the party who sued for dissolution,” that “Dianne could not revoke the elections of H&N or of Vicki,” and that “neither H&N nor Vicki invoked the revocability provision of section 48-2c-1214(1).” Dianne appears to have interpreted Vicki‟s argument to this effect, as Dianne notes in her response brief that the first issue on appeal is whether “the district court exceed[ed] its discretion by setting aside H&N‟s and Vicki‟s election.” Moreover, Vicki‟s counsel clarified in both oral arguments and 8 Cite as: 2022 UT 6 Opinion of the Court