Opinion
Case No. 20020878-CA.
Filed February 12, 2004. (Not For Official Publication).
Appeal from the Second District, Farmington Department, The Honorable Glen R. Dawson.
Bradley H. Bearnson and Marty E. Moore, Logan, for Appellants.
Robert W. Hughes, Salt Lake City, for Appellees.
Before Judges Billings, Bench, and Greenwood.
MEMORANDUM DECISION
Appellants Mr. and Ms. Dygert argue that Appellees Collier and Youngberg, as members of Clearwater Oaks (LLC), are personally liable for the acts of the LLC. Appellees deny liability based on the Utah Revised Limited Liability Company Act (the Act). See Utah Code Ann. § 48-2c-101 et seq. (2002).
"A company formed under the Act is a legal entity distinct from its members." Id. at § 48-2c-104. Furthermore, "a member or manager of a company is not a proper party to proceedings by or against a company, except when the object is to enforce a member's . . . liability to the company." Id. at § 48-2c-116. Likewise, "no organizer, member, manager, or employee of a company is personally liable . . . for a debt, obligation, or liability of the company or for the acts or omissions of the company or of any other organizer, member, manager, or employee of the company." Id. at § 48-2c-601. In applying these provisions of the Act, we emphasize that "`the general rule is that a corporation is an entity separate and distinct from its officers, shareholders and directors and that they will not be held personally liable for the corporation's debts and obligations.'" Reedeker v. Salisbury, 952 P.2d 577, 582 (Utah Ct.App. 1998) (citation omitted). Similarly, "`a director is not personally liable for his corporation's contractual breaches unless he assumed personal liability, acted in bad faith or committed a tort in connection with the performance of the contract' . . . even where `the director, while acting in his official capacity, took actions that resulted in the breach.'" Id. (alteration in original) (citation omitted).
Appellees were undisputably members of an LLC who acted on behalf of the LLC in the transactions with Appellants. Appellants purchased the property from the LLC, and not from Appellees personally. All documents were signed by Appellees in their capacity as members of the LLC. Appellants do not contend that Appellees acted in any of the negotiations other than on behalf of the LLC. Absent any allegation claiming that Appellees did something separate or distinct from the acts of the LLC, Appellees may not be held liable for the acts done solely on behalf of the LLC. Appellants have not attempted to pierce the corporate veil, and there is no factual basis for any individual tort liability.
Appellants assert that Appellees owed them a legal duty, and that Appellants justifiably relied on Appellees' representations during the transaction. However, as explained herein, Appellants are not personally liable for the acts of the LLC.
We therefore affirm.
Judith M. Billings, Presiding Judge and Pamela T. Greenwood, Judge, concur.