McNeil Engineering & Land Surveying, LLC v. Bennett
268 P.3d 854
Utah Ct. App.2011Background
- ME & LS is one of several McNeil family LLCs formed from MEI's 1996 restructuring; MEI acts as umbrella, leasing employees to ME & LS and others.
- ME & LS has no direct employees; all personnel are leased from MEI who pay salaries and benefits but perform work exclusively for ME & LS or other McNeil LLCs.
- Second Amendment to ME & LS Operating Agreement (Nov. 1, 2001) governs withdrawal of a member, including Section 12.8(a) defining withdrawal when a member voluntarily resigns or terminates employment with the Company for specified reasons.
- Bennett resigned from MEI on August 17, 2005, owning 252 ME & LS shares (26.58%); he claimed resignation from MEI should not terminate ME & LS employment, and sought book value for his shares.
- ME & LS exercised its option to repurchase Bennett's membership at book value on June 29, 2006; Bennett rejected on August 1, 2006, asserting continued membership.
- Trial courts initially held Bennett's resignation did not unambiguously terminate ME & LS employment; the trial court later entered judgment in Bennett's favor, which was appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is 'employment' ambiguous in Section 12.8(a)? | Bennett contends 'employment' means direct ME & LS employment only. | ME & LS argues 'employment' includes leased employees and should be construed broadly. | Second Amendment is facially ambiguous; both readings are reasonably supported. |
| Should extrinsic evidence be considered to resolve ambiguity? | Evidence shows Bennett's resignation from MEI reflected in ME & LS context. | Extrinsic evidence may clarify intent but does not prove a single meaning. | Extrinsic evidence may be considered; questions of fact remain regarding the parties' intent. |
| Does the contract interpretation require reversal of summary judgment and remand for fact-finding on intent? | Trial court correctly interpreted; Bennett relied on contract language and behavior. | Court misapplied ambiguity standard by narrowing to direct ME & LS employment. | Summary judgment reversed and case remanded for factual resolution of intent. |
Key Cases Cited
- Ward v. Intermountain Farmers Ass'n, 907 P.2d 264 (Utah 1995) (ambiguity may be informed by surrounding circumstances)
- Daines v. Vincent, 190 P.3d 1269 (Utah 2008) (ambiguity determined by language and credible extrinsic evidence)
- Selvig v. Blockbuster Enters., LC, 266 P.3d 691 (Utah 2011) (intent may be inferred from contract language and conduct)
- Green River Canal Co. v. Thayn, 84 P.3d 1134 (Utah 2003) (interpretation should give effect to all terms)