Opinion ID: 2639853
Heading Depth: 2
Heading Rank: 1

Heading: the district court had authority to extend the deadline for rejection of claims against olympus

Text: ¶ 9 We first address the issue of whether, under the Utah Revised Limited Liability Company Act, [2] the district court had authority to extend the period for the receiver to reject Matthews' claim. ¶ 10 To interpret a statute, we always look first to the statute's plain language in an effort to give effect to the legislature's intent, to the degree it can be so discerned. See, e.g., In re Kunz, 2004 UT 71, ¶ 8, 99 P.3d 793 (Pursuant to general principles of statutory interpretation, `we ... look first to the ... plain language,' recognizing that `our primary goal is to give effect to the legislature's intent in light of the purpose the statute was meant to achieve.' (quoting Evans v. State, 963 P.2d 177, 184 (Utah 1998) (alteration in original))); State v. Hunt, 906 P.2d 311, 312 (Utah 1995) (The best evidence of the true intent and purpose of the Legislature in enacting the Act is the plain language of the Act. (quotation marks omitted)). ¶ 11 Part 12 of the Act governs dissolution of a limited liability company, and part 13 governs the winding up of a dissolved company. In order to determine the breadth of the district court's authority in the dissolution process, we consider both.
¶ 12 Matthews argues that Utah Code section 1305 is dispositive. We disagree. Part 13 governs the winding up of a dissolved limited liability company. Utah Code Ann. §§ 48-2c-1301 to -1309 (2007). Under subsection 1304, a dissolved company is required, if able, to pay or make reasonable provision to pay all claims and obligations, including those that are contingent, conditional, or unmatured and known to the company, and all those that are known to the company but for which the identity of the claimant is unknown. § 48-2c-1304(1). The Act then provides procedures for disposing of those claims, either by notification, in section 1305, or by publication, in section 1306. Both sections address giving notice to potential claimants and the subsequent deadlines for bringing and addressing claims. ¶ 13 Section 1305 provides procedures for the company to dispose of known claims by providing notification of dissolution to potential claimants. § 48-2c-1305(2). It allows the company to set a date by which claims must be received or they are barred (claim bar date). § 48-2c-1305(3)(a). A claim is also barred if, after the company provides written notice of rejection within ninety days of receiving the claim, the claimant does not commence an enforcement proceeding within another ninety days. § 48-2c-1305(3)(b). Thus, a company may be protected by placing limits on the filing of claims. ¶ 14 On the other hand, the statute also protects claimants. In addition to mandating that notice be given, [c]laims which are not rejected by the dissolved company in writing within 90 days after receipt of the claim by the dissolved company shall be considered approved. § 48-2c-1305(4). It is under this statutory provision that Matthews argues his claim has been approved. It is undisputed that Olympus failed to reject Matthews' claim within ninety days of receiving it. Accordingly, Matthews' claim would be considered approved if Olympus was bound to follow that statutory provision. However, we are not persuaded that Olympus was so bound. The statutory scheme provides some options in the winding-up process. ¶ 15 Section 1305(1) provides, A dissolved company in winding up may dispose of the known claims against it by following the procedures described in this section. (Emphasis added.) Use of the provisions of this section is permissive rather than mandatory. That is, a dissolved company may elect to follow the procedures in this section or it may choose another route. ¶ 16 Even though section 1305 is permissive, however, once a dissolved company has elected to dispose of claims according to its provisions, the company is bound by every provision of the section. The dissolved company reaps the benefit of the claim bar date and procedures but is also bound to reject claims within the specified ninety-day period or lose the right to do so. In essence, it gets the protections but is also bound by the limits. ¶ 17 Section 1305 contemplates a non-judicial dissolution. In contrast, in a judicially supervised dissolution, the court directs the winding-up process, as provided for in part 12. We turn next to a discussion of that section and its effect on the provisions of part 13.
¶ 18 Olympus argues that Utah Code sections 48-2c-1210 to -1212, governing judicially supervised dissolution, grant the district court broad authority to direct the procedures for winding up a dissolved company. We agree. ¶ 19 Part 12 of the Act governs dissolution. Utah Code Ann. §§ 48-2c-1201 to -1214 (2007). It provides for three types of dissolution: voluntary, administrative, and judicial. It also directs that a dissolved company shall wind up its affairs as provided in Part 13 of this chapter. § 48-2c-1203(1). Accordingly, a voluntarily dissolved company is required to dispose of claims in conformity with either section 1305 or section 1306. Since each section is permissive, the dissolved company may choose either or both. ¶ 20 In an administrative dissolution, the company must similarly follow the provisions of part 13, but is more specifically directed to give notice to claimants in the manner provided in Sections 48-2c-1305 and 48-2c-1306. § 48-2c-1207(3)(a)(i)-(ii) (emphasis added). Thus, administratively dissolved companies may not choose between the two sections but are required to dispose of claims by both notification and publication. ¶ 21 When a company is judicially dissolved, the Act requires the court to direct the winding-up process in accordance with Part 13. § 48-2c-1213(2). It does not, however, specify the use of 1305 or 1306. Thus, the overseeing court may choose to employ either or both. In addition, the Act gives a court granting a decree of dissolution the authority to appoint a receiver to wind up and liquidate the company's affairs and to describe the powers and duties of the receiver... in its appointing order. § 48-2c-1212(1), (3). The Act thereby grants the court broad authority to direct the winding-up process. Thus, the court may choose to adopt sections 1305 and/or 1306 to dispose of claims, but it is not required to do so. It may also fashion a more suitable procedure through the use of a receiver. ¶ 22 Matthews argues that the legislature intended for all dissolved companies to be governed by part 13 of the Act, including sections 1305 and 1306, and that it would be unjust to allow judicially dissolved companies appointing receivers the authority to do otherwise. We agree that part 13 governs every dissolved company. However, when read with part 12, it appears the legislature meant to allow judicially supervised dissolutions more flexibility. ¶ 23 When a company is judicially dissolved under the Act, the overseeing court is not required to adopt the provisions of either, or both, sections 1305 or 1306 to dispose of claims against the company. If the court does adopt either section, it is bound to follow every provision of the adopted section. If it does not, it may fashion its own claim disposition procedures pursuant to the broad authority granted by part 12 of the Act.
¶ 24 As discussed, Olympus was bound to reject Matthews' claim within ninety days of receipt only if the district court adopted section 1305 of the Act for the disposition of known claims. It did not adopt section 1305, as evidenced by the court's actions. ¶ 25 In addition to filing a decree of dissolution, in May 2003 the district court appointed a receiver to carry out the winding-up activities. The court's appointing order provided: [T]he Receiver may dispose of known and unknown claims against Olympus by notice and/or publication, may set dates for the barring of such claims and may accept or reject claims all as provided in Utah Code Ann. Sections 48-2c-1305 and 1306. To the extent permitted by law, all claims filed against Olympus shall be adjudicated and determined by this Court in and as part of this proceeding. (Emphasis added.) According to the order, the court allowed the receiver to use the provisions of sections 1305 and 1306 to dispose of claims, but did not require it. Also, the court specifically retained the power to adjudicate and determine all claims. From this language and the following subsequent actions of the court, we hold that the court did not expressly adopt section 1305 but intended to fashion its own procedures. ¶ 26 Pursuant to the authority granted in the appointing order, in February 2004 the receiver moved for, and the court approved, claim filing procedures, including notice and publication procedures, and the court set a claim bar date of June 30, 2004. Matthews argues that by asking for a claim bar date and notice and claim filing procedures, Olympus was electing to follow section 1305 as allowed by the district court. However, in its approval order the court did not address procedures for dealing with timely filed claims. The court also did not provide for a claim rejection deadline, nor for notifying potential claimants of the deadline for responding to a claim rejection. Further, the approved claim notice form provided a claim definition that differed from the definition used in section 1305 by including contingent claims. These differences are inconsistent with adoption of section 1305. Olympus was not electing to follow section 1305, nor was the court adopting use of section 1305 in setting a claim bar date and other claim filing procedures. ¶ 27 Additional actions of the court provide further support for our holding. In May 2004 the court issued an order granting settlement authority to the receiver. Specifically, the receiver was authorized to determine which [c]laims to pursue for settlement as opposed to using other options such as waiting to address such claims until a later date or proceeding to litigate and defend against the claims. No reference was made to the ninety-day claim rejection deadline set forth in section 1305. In March 2005 the court approved detailed claim resolution procedures, which, among other things, set a claim objection deadline and again stated that all claims were to be resolved by court order. ¶ 28 The district court did not adopt section 1305. Accordingly, Olympus was not bound to reject Matthews' claim within ninety days of receiving the claim, and the district court was empowered to set an extended deadline.