Opinion ID: 6218252
Heading Depth: 3
Heading Rank: 2

Heading: The Purpose of Subsection 1214(1)

Text: ¶32 “The best evidence of the legislature‟s intent is the plain language of the statute,” State v. Ogden, 2018 UT 8, ¶ 31, 416 P.3d 1132 (citation omitted) (internal quotation marks omitted), and we look beyond a statute‟s plain language only if the relevant 12 Cite as: 2022 UT 6 Opinion of the Court language is ambiguous, Graves v. N.E. Services, Inc., 2015 UT 28, ¶ 67, 345 P.3d 619. We do not believe the language in subsection 1214(1) is ambiguous. However, we recognize that the district court in this case interpreted the statute differently. We also recognize that the New Hampshire Supreme Court has likewise interpreted a similar statute (governing limited liability companies in New Hampshire) to grant district courts discretion to dismiss duly-filed elections in equity. See Bendetson v. Killarney, Inc., 913 A.2d 756 (N.H. 2006). As such, we find it prudent to briefly describe how our interpretation of subsection 1214(1) aligns with the purpose of the election statute in light of its legislative history and relevant commentary. ¶33 The Utah Legislature modeled subsection 1214(1) on a similar provision found in the Utah Revised Business Corporation Act. See Brent R. Armstrong, New Revisions to Utah’s Limited Liability Company Act—the LLC Revolution Rolls On, UTAH BAR JOURNAL, August/September 2001, at 8, 12. Indeed, the language of both provisions is identical. Compare UTAH CODE § 48-2c-1214(1), with id. § 16-10a-1434(1). The Official Commentary to the Utah Revised Business Corporation Act notes that many courts “hesitate[] to award dissolution . . . because of its adverse effects on shareholders, employees, and others who may have an interest in the continuation of the business.” OFFICIAL COMMENTARY TO UTAH REVISED BUSINESS CORPORATION ACT, at 437 (Utah State Bar and Utah Business Corporation Act Revision Committee eds., 1992). The commentary continues by explaining that “it is rarely necessary to dissolve the corporation and liquidate its assets in order to provide relief.” Id. Instead, “the rights of a petitioning shareholder are fully protected by liquidating only that shareholder‟s interest and paying the fair value of such shareholder‟s shares while permitting the remaining shareholders to continue the business.” Id. As such, the commentary states that the corporate election statute “affords an orderly procedure by which a dissolution proceeding . . . can be terminated upon payment of the fair value of the petitioner‟s shares.” Id. ¶34 Notably, the commentary states that an “election to purchase is wholly voluntary, but it can be made as a matter of right within 90 days” after a petitioner files for dissolution. Id. (emphasis added). Once an election is filed, “[t]he petitioner becomes irrevocably committed to sell the shares.” Id. The commentary also notes that the law makes elections irrevocable (subject to the court‟s discretion) in order to “reduce the risk that . . . the buyout election will be used for strategic purposes.” Id. 13 NELSON v. HILLS Opinion of the Court ¶35 Read as a whole, the commentary to the Utah Revised Business Corporation Act reinforces what a comprehensive, plainmeaning reading of subsection 1214(1) already tells us: An electing company or member has an absolute right to avoid dissolution. The legislature granted electing parties this right in order to avoid the costly and often unnecessary nature of dissolution. The specific provision providing that an election “is irrevocable unless the court determines that it is equitable” to set it aside was crafted for the express purpose of reducing the risk that a party would file and then revoke an election for strategic purposes. This framework leaves no room for a court to deny a duly-filed election unilaterally in the name of equity.11