Taghipour v. Jerez, 2002 UT 74

Summary

The Utah Supreme Court reviewed whether a loan agreement and trust deed executed by an LLC manager were valid and binding on the LLC despite an operating-agreement provision requiring member authorization for loans. The court held that Utah Code section 48-2b-127(2), which specifically addressed instruments involving the acquisition, mortgage, or disposition of LLC property, controlled over the more general manager-authority provision and made the documents binding. The court affirmed dismissal of the plaintiffs' claims against the lender.

Holdings

1. Section 48-2b-127(2) is the more specific statute and governs instruments and documents providing for the acquisition, mortgage, or disposition of LLC property, taking precedence over the more general manager-authority provision in section 48-2b-125(2)(b).
2. The loan agreement documents executed by Jerez as the LLC's designated manager were valid and binding on the LLC under section 48-2b-127(2), notwithstanding the operating agreement's member-authorization requirement.
3. Mount Olympus was not liable to the plaintiffs for Jerez's actions because it did all that was required under section 48-2b-127(2) by relying on Jerez's execution of the documents as the LLC's manager.

Questions Presented

1. Whether Utah Code section 48-2b-127(2), rather than section 48-2b-125(2)(b), governed the validity of loan and trust-deed documents executed by an LLC manager.
2. Whether the loan documents were valid and binding on the LLC even though the operating agreement required member authorization for loans.
3. Whether Mount Olympus was liable for failing to conduct additional diligence regarding Jerez's authority to bind the LLC.

Disposition

affirmed