Opinion ID: 6218252
Heading Depth: 3
Heading Rank: 1

Heading: The Plain Meaning of Subsection 1214(1)

Text: ¶26 When interpreting a statute, “we first look to the plain language of the statute and seek to interpret it in harmony with other statutes in the same chapter and related chapters.” Kamoe v. Ridge, 2021 UT 5, ¶ 15, 483 P.3d 720 (citation omitted) (internal quotation marks omitted). Here, the plain language of subsection 1214(1), both by itself and when read in harmony with other provisions in the statute, makes clear that courts do not have the authority to dismiss or deny duly-filed elections. Once a party duly-files an election, courts only have the discretion to approve or deny the electing party’s request to set aside or modify the election. ¶27 Subsection 1214(1) states: “An election pursuant to this section is irrevocable unless the court determines that it is equitable to set aside or modify the election.” The use of the word “irrevocable” is instructive. Utah law consistently uses the word “irrevocable” to indicate that an action cannot be undone by the actor who initiated it.9 Similarly, in every instance in which some ___________________________________________________________ 8 “A district court‟s interpretation of a statute is a question of law, which we . . . review for correctness.” Harvey v. Cedar Hills City, 2010 UT 12, ¶ 10, 227 P.3d 256. The availability of an equitable remedy is a legal conclusion that is also reviewed for correctness, and the formulation and application of an equitable remedy is reviewed for an abuse of discretion. See Ockey v. Lehmer, 2008 UT 37, ¶ 42 n.38, 189 P.3d 51. 9 For example, an irrevocable trust is one that cannot be undone by the settlor. See UTAH CODE § 75-7-605(1) (“Unless the terms of a trust expressly provide that the trust is irrevocable, the settlor may revoke or amend the trust.”); In re Hoopiiaina Trust, 2006 UT 53, ¶¶ 3 n.2, 31, 144 P.3d 1129 (holding that the settlor of two trusts “could not revoke or modify the trusts” where the trusts documents provided: “This trust shall be irrevocable. At no time shall any beneficial interest in the property inure to the Settlor”). Similarly, a bidder at a public auction makes an “irrevocable offer” to buy the bid-for property and is subject to penalties if she fails to do so. See UTAH CODE § 57-1-27 (providing that a bidder at a sale of trust property by public auction makes an “irrevocable offer” and, in the event of a refusal to pay, loses her deposit and is liable for 10 Cite as: 2022 UT 6 Opinion of the Court form of the verb “revoke” is used in the Utah Revised Limited Liability Company Act, the verb implies action from the party who first initiated the specified act. See, e.g., UTAH CODE § 48-2c403(1)(e) (an LLC may “revoke[]” the authority of its registered agent.); id. § 48-2c-706 (any member of an LLC may consent to the LLC taking action without meeting or prior notice, but any member may “revoke” such consent.); id. § 48-2c-1205 (an LLC that has filed for voluntary dissolution “may revoke” such dissolution within 120 days of the dissolution). Interpreted in this context, the word “irrevocable” as used in subsection 1214(1) must refer to revocation by the party who elected to purchase the membership interest of the member who petitioned for dissolution. And the substance of this provision sets forth a general rule that once a party elects to purchase a member‟s interest under the statute, that party cannot back out of the election. ¶28 The remainder of subsection 1214(1) provides an exception to this general rule: noting that an election is irrevocable “unless the court determines that it is equitable to set aside or modify the election.” (emphasis added). The word “unless” has the same logical meaning as “except if,”10 making it clear that the court‟s equitable power to set aside an election rests only as an exception for the electing party to request if it wants to back out of an otherwise irrevocable election. Nowhere does this sentence confer to the court discretion to dismiss or deny a duly-filed election for equitable reasons. ¶29 Two additional provisions of the election statute support our conclusion that a company has an absolute right to avoid dissolution by filing a timely election. First, subsection 1214(2)(a) sets forth election filing procedures and states that if the company files an election within 90-days of the petition for dissolution, “the “any loss occasioned by the refusal”); see also UTAH R. CIV. P. 69B(f) (“Every bid [at a sheriff‟s sale] is an irrevocable offer. If a person refuses to pay the amount bid, the person is liable for the difference between the amount bid and the ultimate sale price.”). And under the Utah Adoption Act, a consent to adoption of a child, or a relinquishment of a child for adoption, “may not be revoked” once signed. UTAH CODE § 78B-6-126. 10 See Unless, CAMBRIDGE DICTIONARY, https://dictionary.cambridge.org/us/dictionary/english/unless (last visited Jan. 31, 2022) (defining “unless” as “except if”). 11 NELSON v. HILLS Opinion of the Court company shall purchase the interest in the manner provided in this section.” This is a straightforward mandate—indicating that once the company files an election, all parties are locked into that course of action. This mandate does not permit the court to object to the election on equitable grounds. ¶30 Second, subsection 1214(2)(e) states that, once an election has been filed, the dissolution proceedings “may not be discontinued or settled, nor may the petitioning member sell or otherwise dispose of his interest in the company, unless the court determines that it would be equitable to the company and the members, other than the petitioning member,” to permit such a disposition. In other words, once the company files its election in lieu of dissolution, the petitioning member is obligated to sell its interest to the company—except if the court, in the interest of equity, allows the petitioning member to “discontinue[] or settle” the proceedings or dispose of the member‟s interest in some other manner. This section does not permit the petitioning member to avoid the sale of its interest by moving the court to dismiss a dulyfiled election in equity. Instead, the petitioning member can only avoid the sale of its membership interest to the electing party by withdrawing its petition for dissolution or disposing of its membership interest with court approval. And even here, the court is only permitted to grant the petitioning member this relief if “the court determines it would be equitable to the company and the members, other than the petitioning member.” Id. § 48-2c1214(2)(e). ¶31 Therefore, the plain language of subsection 1214(1), interpreted in harmony with other provisions in the same section and chapter, makes clear that a company has an absolute right to avoid dissolution by timely filing an election to purchase the petitioning member‟s interest. The petitioning member must accept the sale of its membership interest or seek leave from the court to withdraw its petition for dissolution or dispose of its membership interest in some other manner. But the plain language of the election statute does not permit the court to dismiss a dulyfiled election on equitable grounds in order to proceed with the dissolution of the company.