Matthews v. Olympus Construction, L.C.

Summary

The Utah Supreme Court held that a district court overseeing the judicial dissolution of a limited liability company had authority to establish an extended deadline for rejecting claims. The court concluded that the receiver was not bound by the ninety-day rejection period because the district court had not adopted the statutory claim-disposition procedures. It reversed attorney-fee awards because the claimant's statutory argument presented an issue of first impression and was not without merit.

Holdings

1. In a judicially supervised dissolution, the district court has broad authority to direct the winding-up process and may fashion claim-disposition procedures rather than adopting the procedures in Utah Code section 48-2c-1805 or section 48-2c-1806.
2. A dissolved company or supervising court that adopts the claim-disposition procedures in section 48-2c-1805 must comply with all provisions of that section, including the ninety-day deadline for rejecting a claim.
3. Attorney fees were improperly awarded because Matthews's claim and statutory argument were not without merit.

Questions Presented

1. Whether the Utah Revised Limited Liability Company Act required Olympus to reject Matthews's claim within ninety days after receipt, or whether the district court had authority in a judicially supervised dissolution to establish a different claim-rejection deadline.
2. Whether attorney fees could be awarded under Utah Code section 78B-5-825 when Matthews's statutory argument presented an issue of first impression and had a basis in law and fact.

Disposition

other