Court Opinion

ID: 9795133
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:21:09.063753+00
Date Added: 2024-06-11T08:26:56.850685
License: Public Domain

ORME, Judge
(concurring):
121 I concur in the court's opinion. In so doing, I must note that I find the policy reflected in sections 48-2b-125(2)(b) and -127(2) to be quite curious. If, as in this case, there are restrictions in a limited liability company's organic documents on its managers' ability to unilaterally bind the company, those restrictions will be effective across the range of mundane and comparatively insignificant contracts purportedly entered into by the company, but the restrictions will be ineffective in the case of the company's most important contracts. Thus, if the articles of organization or operating agreement provide that the managers will enter into no contract without the approval of the company's members, as memorialized in an appropriate resolution, the company can escape an unauthorized contract for janitorial services, coffee supplies, or photocopying, but is stuck with the sale of its property for less than fair value or a loan on unfavorable terms.
[ 22 Surely this is at odds with the expectations of the business community. A manager or officer typically can bind the company to comparatively unimportant contracts, but, as is provided in the Operating Agreement in this case, needs member or board approval to borrow against company assets. Financial institutions know this and are able to protect themselves by insisting on seeing articles of incorporation, bylaws, and board resolutions-or the limited liability company equivalents-as part of the mortgage loan process. A cursory review of such documents in this case would have disclosed that Jerez lacked the authority to bind the company to the proposed loan agreement.
€23 In short, I suspect that the strange result in this case is not so much the product of carefully weighed policy considerations as it is the product of a legislative oversight or lapse of some kind. That being said, I readily agree that the language of both statutory sections is clear and unambiguous and that it is not the prerogative of the courts to rewrite legislation. If the laws which dictate the result in this case need to be fixed, the repairs must come via legislative amendment rather than judicial pronouncement.