Enrolled Copy H.B. 251
1 COURT AMENDMENTS
2 2023 GENERAL SESSION
3 STATE OF UTAH
4 Chief Sponsor: Brady Brammer
5 Senate Sponsor: Kirk A. Cullimore
6
7LONG TITLE
8General Description:
9 This bill amends provisions related to courts.
10Highlighted Provisions:
11 This bill:
12 <amends provisions related to civil actions in the district court in the following titles:
13 CTitle 3, Uniform Agricultural Cooperative Association Act;
14 CTitle 7, Financial Institutions Act;
15 CTitle 16, Corporations;
16 CTitle 31A, Insurance Code;
17 CTitle 35A, Utah Workforce Services Code;
18 CTitle 48, Unincorporated Business Entity Act;
19 CTitle 57, Real Estate;
20 CTitle 61, Securities Division - Real Estate Division;
21 CTitle 70, Trademarks and Trade Names;
22 CTitle 70A, Uniform Commercial Code; and
23 CTitle 78B, Judicial Code;
24 <enacts a venue provision for the Commissioner of Financial Institutions;
25 <enacts a venue provision for the Commissioner of the Insurance Department;
26 <enacts Title 78B, Chapter 3a, Venue for Civil Actions;
27 <defines terms related to the venue of a civil action;
28 <clarifies the applicability of Title 78B, Chapter 3a, Venue for Civil Actions; H.B. 251
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29 <addresses the transfer of venue for a civil action;
30 <clarifies the residence of a business organization for purposes of venue;
31 <amends venue provisions for various types of civil actions;
32 <amends provisions related to judgments entered by the district court or justice court;
33 <amends provisions related to a mileage allowance for a judgment debtor;
34 <amends provisions related to contempt by a nonjudicial officer;
35 <amends provisions related to the filing of a notice of lis pendens;
36 <repeals statutes related to court venue, jurisdiction, and procedure;
37 <repeals statutes related to a change of venue; and
38 <makes technical and conforming changes.
39Money Appropriated in this Bill:
40 None
41Other Special Clauses:
42 This bill provides a special effective date.
43 This bill provides a coordination clause.
44 This bill provides revisor instructions.
45Utah Code Sections Affected:
46AMENDS:
47 3-1-20, as last amended by Laws of Utah 1994, Chapter 202
48 3-1-20.1, as enacted by Laws of Utah 2003, Chapter 70
49 7-1-703, as last amended by Laws of Utah 2017, Chapter 169
50 7-2-2, as last amended by Laws of Utah 2014, Chapter 189
51 7-2-5, as last amended by Laws of Utah 1983, Chapter 8
52 7-2-6, as last amended by Laws of Utah 2015, Chapter 258
53 7-2-9, as last amended by Laws of Utah 2010, Chapter 378
54 7-2-10, as last amended by Laws of Utah 2010, Chapter 378
55 7-5-13, as last amended by Laws of Utah 1989, Chapter 267 Enrolled Copy H.B. 251
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56 7-23-401, as last amended by Laws of Utah 2020, Chapter 121
57 16-6a-117, as enacted by Laws of Utah 2000, Chapter 300
58 16-6a-703, as last amended by Laws of Utah 2008, Chapter 364
59 16-6a-710, as last amended by Laws of Utah 2008, Chapter 364
60 16-6a-809, as last amended by Laws of Utah 2001, Chapters 9, 127
61 16-6a-1405, as last amended by Laws of Utah 2015, Chapter 240
62 16-6a-1414, as enacted by Laws of Utah 2000, Chapter 300
63 16-6a-1416, as enacted by Laws of Utah 2000, Chapter 300
64 16-6a-1417, as enacted by Laws of Utah 2000, Chapter 300
65 16-6a-1604, as last amended by Laws of Utah 2008, Chapter 364
66 16-6a-1609, as last amended by Laws of Utah 2002, Chapter 197
67 16-10a-126, as enacted by Laws of Utah 1992, Chapter 277
68 16-10a-303, as enacted by Laws of Utah 1992, Chapter 277
69 16-10a-703, as last amended by Laws of Utah 2008, Chapter 364
70 16-10a-720, as last amended by Laws of Utah 2010, Chapter 378
71 16-10a-1330, as last amended by Laws of Utah 2010, Chapter 378
72 16-10a-1430, as enacted by Laws of Utah 1992, Chapter 277
73 16-10a-1434, as last amended by Laws of Utah 2010, Chapter 378
74 16-10a-1532, as last amended by Laws of Utah 2000, Chapter 131
75 16-10a-1604, as last amended by Laws of Utah 2008, Chapter 364
76 16-11-13, as last amended by Laws of Utah 2000, Chapter 261
77 16-16-202, as enacted by Laws of Utah 2008, Chapter 363
78 16-16-1203, as enacted by Laws of Utah 2008, Chapter 363
79 16-16-1206, as enacted by Laws of Utah 2008, Chapter 363
80 16-16-1210, as enacted by Laws of Utah 2008, Chapter 363
81 24-1-103, as last amended by Laws of Utah 2021, Chapter 230
82 31A-2-305, as last amended by Laws of Utah 1997, Chapter 296 H.B. 251
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83 31A-5-414, as enacted by Laws of Utah 1985, Chapter 242
84 31A-5-415, as last amended by Laws of Utah 2000, Chapter 300
85 31A-15-211, as enacted by Laws of Utah 1992, Chapter 258
86 31A-16-107.5, as renumbered and amended by Laws of Utah 2015, Chapter 244
87 31A-16-110, as last amended by Laws of Utah 1986, Chapter 204
88 31A-16-111, as last amended by Laws of Utah 2000, Chapter 114
89 31A-16-112, as enacted by Laws of Utah 2015, Chapter 244
90 31A-16-117, as enacted by Laws of Utah 2015, Chapter 244
91 31A-17-610, as last amended by Laws of Utah 2007, Chapter 309
92 31A-27a-105, as last amended by Laws of Utah 2020, Chapter 32
93 31A-27a-201, as last amended by Laws of Utah 2014, Chapters 290, 300
94 31A-27a-206, as enacted by Laws of Utah 2007, Chapter 309
95 31A-27a-207, as enacted by Laws of Utah 2007, Chapter 309
96 31A-27a-209, as enacted by Laws of Utah 2007, Chapter 309
97 31A-44-501, as enacted by Laws of Utah 2016, Chapter 270
98 35A-4-308, as renumbered and amended by Laws of Utah 1996, Chapter 240
99 35A-4-314, as enacted by Laws of Utah 2013, Chapter 473
100 48-1d-111, as enacted by Laws of Utah 2013, Chapter 412
101 48-1d-116, as enacted by Laws of Utah 2013, Chapter 412
102 48-1d-901, as enacted by Laws of Utah 2013, Chapter 412
103 48-1d-902, as enacted by Laws of Utah 2013, Chapter 412
104 48-1d-903, as enacted by Laws of Utah 2013, Chapter 412
105 48-1d-909, as enacted by Laws of Utah 2013, Chapter 412
106 48-1d-1003, as enacted by Laws of Utah 2013, Chapter 412
107 48-1d-1310, as enacted by Laws of Utah 2013, Chapter 412
108 48-2e-204, as enacted by Laws of Utah 2013, Chapter 412
109 48-2e-209, as enacted by Laws of Utah 2013, Chapter 412 Enrolled Copy H.B. 251
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110 48-2e-801, as enacted by Laws of Utah 2013, Chapter 412
111 48-2e-802, as enacted by Laws of Utah 2013, Chapter 412
112 48-2e-803, as enacted by Laws of Utah 2013, Chapter 412
113 48-2e-808, as enacted by Laws of Utah 2013, Chapter 412
114 48-2e-1103, as enacted by Laws of Utah 2013, Chapter 412
115 48-3a-204, as enacted by Laws of Utah 2013, Chapter 412
116 48-3a-209, as enacted by Laws of Utah 2013, Chapter 412
117 48-3a-701, as enacted by Laws of Utah 2013, Chapter 412
118 48-3a-702, as enacted by Laws of Utah 2013, Chapter 412
119 48-3a-703, as enacted by Laws of Utah 2013, Chapter 412
120 48-3a-704, as enacted by Laws of Utah 2013, Chapter 412
121 48-3a-707, as enacted by Laws of Utah 2013, Chapter 412
122 48-3a-1003, as enacted by Laws of Utah 2013, Chapter 412
123 48-3a-1111, as enacted by Laws of Utah 2013, Chapter 412
124 57-8-44, as last amended by Laws of Utah 2014, Chapter 116
125 57-8a-301, as last amended by Laws of Utah 2014, Chapter 116
126 57-17-5, as last amended by Laws of Utah 2015, Chapter 258
127 57-19-20, as last amended by Laws of Utah 2008, Chapter 382
128 57-21-11, as last amended by Laws of Utah 1997, Chapter 375
129 57-22-6, as last amended by Laws of Utah 2017, Chapter 203
130 57-23-7, as enacted by Laws of Utah 1992, Chapter 169
131 57-23-8, as last amended by Laws of Utah 2008, Chapter 382
132 57-29-303, as enacted by Laws of Utah 2016, Chapter 381
133 57-29-304, as enacted by Laws of Utah 2016, Chapter 381
134 61-1-20, as last amended by Laws of Utah 2016, Chapter 401
135 61-1-105, as enacted by Laws of Utah 2011, Chapter 318
136 61-2-203, as last amended by Laws of Utah 2021, Chapter 259 H.B. 251
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137 61-2c-403, as last amended by Laws of Utah 2009, Chapter 372
138 61-2f-403, as last amended by Laws of Utah 2017, Chapter 182
139 61-2f-407, as last amended by Laws of Utah 2018, Chapter 213
140 61-2g-501, as last amended by Laws of Utah 2018, Chapter 213
141 70-3a-309, as enacted by Laws of Utah 2010, Chapter 200
142 70-3a-402, as last amended by Laws of Utah 2010, Chapter 200
143 70-3a-405, as enacted by Laws of Utah 2002, Chapter 318
144 70A-8-409.1, as last amended by Laws of Utah 2012, Chapter 386
145 70A-9a-513.5, as enacted by Laws of Utah 2015, Chapter 228
146 78A-6-350, as renumbered and amended by Laws of Utah 2021, Chapter 261
147 78B-1-132, as renumbered and amended by Laws of Utah 2008, Chapter 3
148 78B-5-201, as last amended by Laws of Utah 2014, Chapters 114, 151
149 78B-5-202, as last amended by Laws of Utah 2014, Chapter 151
150 78B-5-206, as renumbered and amended by Laws of Utah 2008, Chapter 3
151 78B-6-110, as last amended by Laws of Utah 2019, Chapter 491
152 78B-6-313, as enacted by Laws of Utah 2008, Chapter 3
153 78B-6-1303, as last amended by Laws of Utah 2016, Chapter 306
154 78B-6-1904, as last amended by Laws of Utah 2016, Chapter 222
155 78B-6-1905, as enacted by Laws of Utah 2014, Chapter 310
156 78B-21-102, as enacted by Laws of Utah 2017, Chapter 431
157ENACTS:
158 7-1-106, Utah Code Annotated 1953
159 31A-1-401, Utah Code Annotated 1953
160 78B-3a-101, Utah Code Annotated 1953
161 78B-3a-102, Utah Code Annotated 1953
162 78B-3a-103, Utah Code Annotated 1953
163 78B-3a-104, Utah Code Annotated 1953 Enrolled Copy H.B. 251
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164 78B-3a-206, Utah Code Annotated 1953
165RENUMBERS AND AMENDS:
166 78B-3a-201, (Renumbered from 78B-3-307, as renumbered and amended by Laws of
167Utah 2008, Chapter 3)
168 78B-3a-202, (Renumbered from 78B-3-301, as renumbered and amended by Laws of
169Utah 2008, Chapter 3)
170 78B-3a-203, (Renumbered from 78B-3-302, as renumbered and amended by Laws of
171Utah 2008, Chapter 3)
172 78B-3a-204, (Renumbered from 78B-3-303, as renumbered and amended by Laws of
173Utah 2008, Chapter 3)
174 78B-3a-205, (Renumbered from 78B-3-304, as renumbered and amended by Laws of
175Utah 2008, Chapter 3)
176REPEALS:
177 3-1-20.2, as enacted by Laws of Utah 2003, Chapter 70
178 16-6a-1415, as last amended by Laws of Utah 2008, Chapter 364
179 16-10a-1431, as last amended by Laws of Utah 2008, Chapter 364
180 34-34-14, as enacted by Laws of Utah 1969, Chapter 85
181 78B-3-305, as renumbered and amended by Laws of Utah 2008, Chapter 3
182 78B-3-306, as renumbered and amended by Laws of Utah 2008, Chapter 3
183 78B-3-308, as renumbered and amended by Laws of Utah 2008, Chapter 3
184 78B-3-309, as renumbered and amended by Laws of Utah 2008, Chapter 3
185 78B-3-310, as renumbered and amended by Laws of Utah 2008, Chapter 3
186 78B-3-311, as renumbered and amended by Laws of Utah 2008, Chapter 3
187Utah Code Sections Affected by Coordination Clause:
188 31A-5-414, as enacted by Laws of Utah 1985, Chapter 242
189 31A-5-415, as last amended by Laws of Utah 2000, Chapter 300
190 31A-16-111, as last amended by Laws of Utah 2000, Chapter 114 H.B. 251
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191
192Be it enacted by the Legislature of the state of Utah:
193 Section 1. Section 3-1-20 is amended to read:
194 3-1-20. Voluntary dissolution -- Distribution of assets -- Proceedings.
195 (1) (a) An association may be dissolved:
196 (i) at a regular meeting, or a special meeting called for that purpose;
197 (ii) after 30 days advance notice of the time, place, and object of the meeting is served
198on the members of the association as prescribed in the bylaws; and
199 (iii) by a two-thirds vote of the members voting.
200 (b) (i) The members shall elect a committee of three members to act as trustees on
201behalf of the association, and the trustees shall liquidate and distribute the association's assets
202within the time fixed by the members.
203 (ii) The trustees may bring and defend actions necessary to protect and enforce the
204rights of the association.
205 (iii) Any vacancies in the trusteeship may be filled by the remaining trustees.
206 (2) (a) If an association dissolves pursuant to this section, the trustees, a creditor, a
207member, or the attorney general may bring an action [in the district court in the county where
208the principal place of business of the association is located] in a court with jurisdiction under
209Title 78A, Judiciary and Judicial Administration.
210 (b) [The] If an action is brought against an association under Subsection (2)(a), the
211court may specify:
212 (i) appropriate notice of the time and place for the submission of claims against the
213association, which notice may require creditors of and claimants against the association to
214submit accounts and demands in writing at the specified place by a specific day[, which date
215shall be] that is at least 40 days from the date of service or first publication of the notice;
216 (ii) the payment or satisfaction of claims and demands against the association, or the
217retention of money for such purpose; Enrolled Copy H.B. 251
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218 (iii) the administration of trusts or the disposition of the property held in trust by or for
219the association;
220 (iv) the sale and disposition of any remaining property of the association and the
221distribution or division of the property or its proceeds among the members or persons entitled
222to them; and
223 (v) other matters related to the dissolution.
224 (c) All orders and judgments [shall be] are binding upon the association, [its] the
225association's property and assets, trustees, members, creditors, and all claimants against [it] the
226association.
227 (3) On dissolution, the assets of the association [shall be] are distributed in the
228following manner and order:
229 (a) to pay the association's debts and expenses;
230 (b) to return to any investors the par value of their capital;
231 (c) to pay patrons on a pro rata basis the amount of any patronage capital credited to
232their accounts; and
233 (d) if there is a surplus, to distribute [it] the surplus among those patrons who have
234been members of the association at any time during the last five years preceding dissolution or
235for a longer period of time if determined by the board of directors to be practicable, on the
236basis of patronage during that period.
237 (4) After the final settlement by the trustees, the association [shall be] is considered
238dissolved and shall cease to exist.
239 (5) The trustees shall make a report in duplicate of the proceedings held under this
240section, which shall be signed, acknowledged, and filed as required for the filing of the articles
241of incorporation.
242 (6) This section shall apply to all associations incorporated in this state.
243 Section 2. Section 3-1-20.1 is amended to read:
244 3-1-20.1. Grounds and procedure for judicial dissolution. H.B. 251
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245 (1) [An association may be dissolved in a proceeding by the attorney general] The
246attorney general may bring an action in a court with jurisdiction under Title 78A, Judiciary and
247Judicial Administration, to dissolve an association if it is established that the association:
248 (a) obtained its articles of incorporation through fraud; or
249 (b) has continued to exceed or abuse the authority conferred upon [it] the association
250by law.
251 (2) [An association may be dissolved in a proceeding brought by a shareholder] A
252shareholder may bring an action in a court with jurisdiction under Title 78A, Judiciary and
253Judicial Administration, to dissolve an association if it is established that:
254 (a) the directors are deadlocked in the management of the association affairs, the
255members are unable to break the deadlock, irreparable injury to the association is threatened or
256being suffered, or the business and affairs of the association can no longer be conducted to the
257advantage of the members generally, because of the deadlock;
258 (b) the directors, or those in control of the association, have acted, are acting, or will
259act in a manner that is illegal, oppressive, or fraudulent;
260 (c) the members are deadlocked in voting power and have failed, for a period that
261includes at least two consecutive annual meeting dates, to elect successors to directors whose
262terms have expired or would have expired on the election of their successors; or
263 (d) the association's assets are being misapplied or wasted.
264 (3) [An association may be dissolved in a proceeding by a creditor] A creditor may
265bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
266Administration, to dissolve an association if it is established that:
267 (a) the creditor's claim has been reduced to a judgment, the execution on the judgment
268has been returned unsatisfied, and the association is insolvent; or
269 (b) the association is insolvent and the association has admitted in writing that the
270creditor's claim is due and owing.
271 (4) [An association may be dissolved in a proceeding by the association to have its] An Enrolled Copy H.B. 251
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272association may bring an action in a court with jurisdiction under Title 78A, Judiciary and
273Judicial Administration, to have the association's voluntary dissolution continued under court
274supervision.
275 (5) If an action is brought under this section, it is not necessary to make members
276parties to the action to dissolve the association unless relief is sought against the members
277individually.
278 (6) In an action to dissolve an association, a court may:
279 (a) issue injunctions;
280 (b) appoint a receiver or a custodian pendente lite with all powers and duties the court
281directs; or
282 (c) take other action required to preserve the association's assets wherever located and
283carry on the business of the association until a full hearing can be held.
284 Section 3. Section 7-1-106 is enacted to read:
285 7-1-106. Venue for action or petition brought by commissioner.
286 If the commissioner brings an action in the district court under this title, the
287commissioner shall bring the action:
288 (1) in accordance with Title 78B, Chapter 3a, Venue for Civil Actions; or
289 (2) in the county where the office of the commissioner is located.
290 Section 4. Section 7-1-703 is amended to read:
291 7-1-703. Restrictions on acquisition of institutions and holding companies --
292Enforcement.
293 (1) Unless the commissioner gives prior written approval under Section 7-1-705, a
294person may not:
295 (a) acquire, directly or indirectly, control of a depository institution or depository
296institution holding company subject to the jurisdiction of the department;
297 (b) vote the stock of a depository institution or depository institution holding company
298subject to the jurisdiction of the department acquired in violation of Section 7-1-705; H.B. 251
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299 (c) acquire all or a material portion of the assets of a depository institution or a
300depository institution holding company subject to the jurisdiction of the department;
301 (d) assume all or a material portion of the deposit liabilities of a depository institution
302subject to the jurisdiction of the department;
303 (e) take any action that causes a depository institution to become a subsidiary of a
304depository institution holding company subject to the jurisdiction of the department;
305 (f) take any action that causes a person other than an individual to become a depository
306institution holding company subject to the jurisdiction of the department;
307 (g) acquire, directly or indirectly, the voting or nonvoting securities of a depository
308institution or a depository institution holding company subject to the jurisdiction of the
309department if the acquisition would result in the person obtaining more than 20% of the
310authorized voting securities of the institution if the nonvoting securities were converted into
311voting securities; or
312 (h) merge or consolidate with a depository institution or depository institution holding
313company subject to the jurisdiction of the department.
314 (2) (a) A person who willfully violates this section or a rule or order issued by the
315department under this section is subject to a civil penalty of not more than $1,000 per day
316during which the violation continues.
317 (b) The commissioner may assess the civil penalty after giving notice and opportunity
318for hearing.
319 (c) The commissioner shall collect the civil penalty by bringing an action [in the
320district court of the county in which the office of the commissioner is located.] in a court with
321jurisdiction under Title 78A, Judiciary and Judicial Administration.
322 (d) An applicant for approval of an acquisition is considered to have consented to the
323jurisdiction and venue of the court by filing an application for approval.
324 (3) The commissioner may secure injunctive relief to prevent a change in control or
325impending violation of this section. Enrolled Copy H.B. 251
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326 (4) The commissioner may lengthen or shorten any time period specified in Section
3277-1-705 if the commissioner finds it necessary to protect the public interest.
328 (5) The commissioner may exempt a class of financial institutions from this section by
329rule if the commissioner finds the exception to be in the public interest.
330 (6) The prior approval of the commissioner under Section 7-1-705 is not required for
331the acquisition by a person other than an individual of voting securities or assets of a depository
332institution or a depository institution holding company that are acquired by foreclosure or
333otherwise in the ordinary course of collecting a debt previously contracted in good faith if these
334voting securities or assets are divested within two years of acquisition. The commissioner may,
335upon application, extend the two-year period of divestiture for up to three additional one-year
336periods if, in the commissioner's judgment, the extension would not be detrimental to the
337public interest. The commissioner may adopt rules to implement the intent of this Subsection
338(6).
339 (7) (a) An out-of-state depository institution without a branch in Utah, or an
340out-of-state depository institution holding company without a depository institution in Utah,
341may acquire:
342 (i) a Utah depository institution only if it has been in existence for at least five years; or
343 (ii) a Utah branch of a depository institution only if the branch has been in existence
344for at least five years.
345 (b) For purposes of Subsection (7)(a), a depository institution chartered solely for the
346purpose of acquiring another depository institution is considered to have been in existence for
347the same period as the depository institution to be acquired, so long as it does not open for
348business at any time before the acquisition.
349 (c) The commissioner may waive the restriction in Subsection (7)(a) in the case of a
350depository institution that is subject to, or is in danger of becoming subject to, supervisory
351action under Chapter 2, Possession of Depository Institution by Commissioner, or Chapter 19,
352Acquisition of Failing Depository Institutions or Holding Companies, or, if applicable, the H.B. 251
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353equivalent provisions of federal law or the law of the institution's home state.
354 (d) The restriction in Subsection (7)(a) does not apply to an acquisition of, or merger
355transaction between, affiliate depository institutions.
356 Section 5. Section 7-2-2 is amended to read:
357 7-2-2. Action to review the commissioner's actions -- Supervision of actions of
358commissioner in possession -- Authority of commissioner and court.
359 [(1) The district court for the county in which the principal office of the institution or
360other person is situated has jurisdiction in the liquidation or reorganization of the institution or
361other person of which the commissioner has taken possession under this chapter or Chapter 19,
362Acquisition of Failing Depository Institutions or Holding Companies. As used in this chapter,
363"court" means the court given jurisdiction by this provision.]
364 [(2)] (1) Before taking possession of an institution or other person under [his] the
365commissioner's jurisdiction, or within a reasonable time after taking possession of an
366institution or other person without court order, as provided in this chapter, the commissioner
367shall [cause to be commenced in the appropriate district court, an action to provide the court
368supervisory jurisdiction] bring an action in a court with jurisdiction under Title 78A, Judiciary
369and Judicial Administration, to provide the court with supervisory jurisdiction to review the
370actions of the commissioner.
371 [(3)] (2) (a) The actions of the commissioner are subject to review of the court.
372 (b) The court [has jurisdiction to hear all objections to the actions of the commissioner
373and] may:
374 (i) hear all objections to the actions of the commissioner; and
375 (ii) rule upon all motions and actions coming before [it] the court.
376 (c) Standing to seek review of any action of the commissioner or any receiver or
377liquidator appointed by [him] the commissioner is limited to persons whose rights, claims, or
378interests in the institution would be adversely affected by the action.
379 [(4)] (3) (a) The authority of the commissioner under this chapter is of an Enrolled Copy H.B. 251
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380administrative and not judicial receivership.
381 (b) The court may not overrule a determination or decision of the commissioner if it is
382not arbitrary, capricious, fraudulent, or contrary to law.
383 (c) If the court overrules an action of the commissioner, the matter shall be remanded
384to the commissioner for a new determination by [him] the commissioner, and the new
385determination shall be subject to court review.
386 Section 6. Section 7-2-5 is amended to read:
387 7-2-5. Appointment of receiver or assignment for creditors -- Notice required --
388Commissioner taking possession.
389 [No receiver may be]
390 (1) A receiver may not be appointed by any court and [no] a deed or assignment for the
391benefit of creditors may not be filed in [any district court] a court within this state for any
392institution or other person under the jurisdiction of the commissioner, except upon notice to the
393commissioner, unless because of urgent necessity the court determines that it is necessary to do
394so to preserve the assets of the institution.
395 (2) The commissioner may, within five days after service of the notice upon [him] the
396commissioner, take possession of the institution, in which case no further proceedings shall be
397had upon the application for the appointment of a receiver or under the deed of assignment, or,
398if a receiver has been appointed or the assignee has entered upon the administration of his trust,
399the appointment shall be vacated or the assignee shall be removed upon application of the
400commissioner to the court by which the receiver was appointed or in which the assignment was
401filed, and the commissioner shall proceed to administer the assets of the institution as provided
402in this chapter.
403 Section 7. Section 7-2-6 is amended to read:
404 7-2-6. Possession by commissioner -- Notice -- Presentation, allowance, and
405disallowance of claims -- Objections to claims.
406 (1) (a) Possession of an institution by the commissioner commences when notice of H.B. 251
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407taking possession is:
408 (i) posted in each office of the institution located in this state; or
409 (ii) delivered to a controlling person or officer of the institution.
410 (b) All notices, records, and other information regarding possession of an institution by
411the commissioner may be kept confidential, and all court records and proceedings relating to
412the commissioner's possession may be sealed from public access if:
413 (i) the commissioner finds it is in the best interests of the institution and its depositors
414not to notify the public of the possession by the commissioner;
415 (ii) the deposit and withdrawal of funds and payment to creditors of the institution is
416not suspended, restricted, or interrupted; and
417 (iii) the court approves.
418 (2) (a) (i) Within 15 days after taking possession of an institution or other person under
419the jurisdiction of the department, the commissioner shall publish a notice to all persons who
420may have claims against the institution or other person to file proof of their claims with the
421commissioner before a date specified in the notice.
422 (ii) The filing date shall be at least 90 days after the date of the first publication of the
423notice.
424 (iii) The notice shall be published:
425 (A) (I) in a newspaper of general circulation in each city or county in which the
426institution or other person, or any subsidiary or service corporation of the institution, maintains
427an office; and
428 (II) published again approximately 30 days and 60 days after the date of the first
429publication; and
430 (B) as required in Section 45-1-101 for 60 days.
431 (b) (i) (A) Within 60 days of taking possession of a depository institution, the
432commissioner shall send a similar notice to all persons whose identity is reflected in the books
433or records of the institution as depositors or other creditors, secured or unsecured, parties to Enrolled Copy H.B. 251
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434litigation involving the institution pending at the date the commissioner takes possession of the
435institution, and all other potential claimants against the institution whose identity is reasonably
436ascertainable by the commissioner from examination of the books and records of the
437institution.
438 (B) No notice is required in connection with accounts or other liabilities of the
439institution that will be paid in full or be fully assumed by another depository institution or trust
440company.
441 (C) The notice shall specify a filing date for claims against the institution not less than
44260 days after the date of mailing.
443 (D) Claimants whose claims against the institution have been assumed by another
444depository institution or trust company pursuant to a merger or purchase and assumption
445agreement with the commissioner, or a federal deposit insurance agency appointed as receiver
446or liquidator of the institution, shall be notified of the assumption of their claims and the name
447and address of the assuming party within 60 days after the claim is assumed.
448 (E) Unless a purchase and assumption or merger agreement requires otherwise, the
449assuming party shall give all required notices.
450 (F) Notice shall be mailed to the address appearing in the books and records of the
451institution.
452 (ii) (A) Inadvertent or unintentional failure to mail a notice to any person entitled to
453written notice under this paragraph does not impose any liability on the commissioner or any
454receiver or liquidator appointed by [him] the commissioner beyond the amount the claimant
455would be entitled to receive if the claim had been timely filed and allowed.
456 (B) The commissioner or any receiver or liquidator appointed by [him] the
457commissioner are not liable for failure to mail notice unless the claimant establishes that [it]
458the claimant had no knowledge of the commissioner taking possession of the institution until
459after all opportunity had passed for obtaining payment through filing a claim with the
460commissioner, receiver, or liquidator. H.B. 251
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461 (c) Upon good cause shown, the court [having] with supervisory jurisdiction under
462Section 7-2-2 may extend the time in which the commissioner may serve any notice required
463by this chapter.
464 (d) (i) The commissioner has the sole power to adjudicate any claim against the
465institution, its property or other assets, tangible or intangible, and to settle or compromise
466claims within the priorities set forth in Section 7-2-15.
467 (ii) Any action of the commissioner is subject to judicial review as provided in
468Subsection (9).
469 (e) (i) A receiver or liquidator of the institution appointed by the commissioner has all
470the duties, powers, authority, and responsibilities of the commissioner under this section.
471 (ii) All claims against the institution shall be filed with the receiver or liquidator within
472the applicable time specified in this section and the receiver or liquidator shall adjudicate the
473claims as provided in Subsection (2)(d).
474 (f) The procedure established in this section is the sole remedy of claimants against an
475institution or its assets in the possession of the commissioner.
476 (3) With respect to a claim which appears in the books and records of an institution or
477other person in the possession of the commissioner as a secured claim, which, for purposes of
478this section is a claim that constitutes an enforceable, perfected lien, evidenced in writing, on
479the assets or other property of the institution:
480 (a) The commissioner shall allow or disallow each secured claim filed on or before the
481filing date within 30 days after receipt of the claim and shall notify each secured claimant by
482certified mail or in person of the basis for, and any conditions imposed on, the allowance or
483disallowance.
484 (b) For all allowed secured claims, the commissioner shall be bound by the terms,
485covenants, and conditions relating to the assets or other property subject to the claim, as set
486forth in the note, bond, or other security agreement which evidences the secured claim, unless
487the commissioner has given notice to the claimant of [his] the commissioner's intent to Enrolled Copy H.B. 251
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488abandon the assets or other property subject to the secured claim at the time the commissioner
489gave the notice described in Subsection (3)(a).
490 (c) No petition for lifting the stay provided by Section 7-2-7 may be filed with respect
491to a secured claim before the claim has been filed and allowed or disallowed by the
492commissioner in accordance with Subsection (3)(a).
493 (4) With respect to all other claims other than secured claims:
494 (a) Each claim filed on or before the filing date shall be allowed or disallowed within
495180 days after the final publication of notice.
496 (b) If notice of disallowance is not served upon the claimant by the commissioner
497within 210 days after the date of final publication of notice, the claim is considered disallowed.
498 (c) (i) The rights of claimants and the amount of a claim shall be determined as of the
499date the commissioner took possession of the institution under this chapter.
500 (ii) Claims based on contractual obligations of the institution in existence on the date
501of possession may be allowed unless the obligation of the institution is dependent on events
502occurring after the date of possession, or the amount or worth of the claim cannot be
503determined before any distribution of assets of the institution is made to claimants having the
504same priority under Section 7-2-15.
505 (d) (i) An unliquidated claim against the institution, including claims based on alleged
506torts for which the institution would have been liable on the date the commissioner took
507possession of the institution and any claims for a right to an equitable remedy for breach of
508performance by the institution, may be filed in an estimated amount.
509 (ii) The commissioner may disallow or allow the claim in an amount determined by the
510commissioner, settle the claim in an amount approved by the court, or, in [his] the
511commissioner's discretion, refer the claim to the court [designated by Section 7-2-2] with
512supervisory jurisdiction under Section 7-2-2 for determination in accordance with procedures
513designated by the court.
514 (iii) If the institution held on the date of possession by the commissioner a policy of H.B. 251
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515insurance that would apply to the liability asserted by the claimant, the commissioner, or any
516receiver appointed by [him] the commissioner may assign to the claimant all rights of the
517institution under the insurance policy in full satisfaction of the claim.
518 [(ii)] (iv) If the commissioner finds there are or may be issues of fact or law as to the
519validity of a claim, liquidated or unliquidated, or its proper allowance or disallowance under
520the provisions of this chapter, [he] the commissioner may appoint a hearing examiner to
521conduct a hearing and to prepare and submit recommended findings of fact and conclusions of
522law for final consideration by the commissioner.
523 (v) The hearing shall be conducted as provided in rules or regulations issued by the
524commissioner.
525 (vi) The decision of the commissioner shall be based on the record before the hearing
526examiner and information the commissioner considers relevant and shall be subject to judicial
527review as provided in Subsection (9).
528 (e) A claim may be disallowed if it is based on actions or documents intended to
529deceive the commissioner or any receiver or liquidator appointed by [him] the commissioner.
530 (f) The commissioner may defer payment of any claim filed on behalf of a person who
531was at any time in control of the institution within the meaning of Section 7-1-103, pending the
532final determination of all claims of the institution against that person.
533 (g) The commissioner or any receiver appointed by [him] the commissioner may
534disallow a claim that seeks a dollar amount if it is determined by the court [having] with
535supervisory jurisdiction under Section 7-2-2 that the commissioner or receiver or conservator
536will not have any assets with which to pay the claim under the priorities established by Section
5377-2-15.
538 (h) The commissioner may adopt rules to establish such alternative dispute resolution
539processes as may be appropriate for the resolution of claims filed against an institution under
540this chapter.
541 (i) (i) In establishing alternative dispute resolution processes, the commissioner shall Enrolled Copy H.B. 251
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542strive for procedures that are expeditious, fair, independent, and low cost.
543 (ii) The commissioner shall seek to develop incentives for claimants to participate in
544the alternative dispute resolution process.
545 (j) The commissioner may establish both binding and nonbinding processes, which
546may be conducted by any government or private party, but all parties, including the claimant
547and the commissioner or any receiver appointed by [him] the commissioner, must agree to the
548use of the process in a particular case.
549 (5) (a) Claims filed after the filing date are disallowed, unless:
550 (i) the claimant who did not file [his] the claimant's claim timely demonstrates that [he]
551the claimant did not have notice or actual knowledge of the proceedings in time to file a timely
552proof of claim; and
553 (ii) proof of the claim was filed prior to the last distribution of assets.
554 (b) [For the purpose of this subsection only, late filed claims] Claims filed late may be
555allowed under Subsection (5)(a)(ii) if proof was filed before the final distribution of assets of
556the institution to claimants of the same priority and are payable only out of the remaining assets
557of the institution.
558 [(b)] (c) A late filed claim may be disallowed under any other provision of this section.
559 (6) Debts owing to the United States or to any state or its subdivisions as a penalty or
560forfeiture are not allowed, except for the amount of the pecuniary loss sustained by the act,
561transaction, or proceeding out of which the penalty or forfeiture arose.
562 (7) Except as otherwise provided in Subsection 7-2-15(1)(a), interest accruing on any
563claim after the commissioner has taken possession of an institution or other person under this
564chapter may be disallowed.
565 (8) (a) A claim against an institution or its assets based on a contract or agreement may
566be disallowed unless the agreement:
567 (i) is in writing;
568 (ii) is otherwise a valid and enforceable contract; and H.B. 251
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569 (iii) has continuously, from the time of its execution, been an official record of the
570institution.
571 (b) The requirements of this Subsection (8) do not apply to claims for goods sold or
572services rendered to an institution in the ordinary course of business by trade creditors who do
573not customarily use written agreements or other documents.
574 (9) (a) (i) Objection to any claim allowed or disallowed may be made by any depositor
575or other claimant by filing a written objection with the commissioner within 30 days after
576service of the notice of allowance or disallowance.
577 (ii) The commissioner shall present the objection to the court for hearing and
578determination upon written notice to the claimant and to the filing party.
579 (iii) The notice shall set forth the time and place of hearing.
580 (iv) After the 30-day period, no objection may be filed.
581 (v) This Subsection (9) does not apply to secured claims allowed under Subsection (3).
582 (b) The hearing shall be based on the record before the commissioner and any
583additional evidence the court allowed to provide the parties due process of law.
584 (c) (i) The court may not reverse or otherwise modify the determination of the
585commissioner with respect to the claim unless [it] the court finds the determination of the
586commissioner to be arbitrary, capricious, or otherwise contrary to law.
587 (ii) The burden of proof is on the party objecting to the determination of the
588commissioner.
589 (d) An appeal from any final judgment of the court with respect to a claim may be
590taken as provided by law by the claimant, the commissioner, or any person having standing to
591object to the allowance or disallowance of the claim.
592 (10) (a) If a claim against the institution has been asserted in any judicial,
593administrative, or other proceeding pending at the time the commissioner took possession of
594the institution under this chapter or under Chapter 19, Acquisition of Failing Depository
595Institutions or Holding Companies, the claimant shall file copies of all documents of record in Enrolled Copy H.B. 251
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596the pending proceeding with the commissioner within the time for filing claims as provided in
597Subsection (2).
598 (b) [Such a claim] A claim under Subsection (10)(a) shall be allowed or disallowed
599within 90 days of the receipt of the complete record of the proceedings.
600 (c) No application to lift the stay of a pending proceeding shall be filed until the claim
601has been allowed or disallowed.
602 (d) The commissioner may petition the court [designated by Section 7-2-2] with
603supervisory jurisdiction under Section 7-2-2 to lift the stay to determine whether the claim
604should be allowed or disallowed.
605 (11) (a) All claims allowed by the commissioner and not disallowed or otherwise
606modified by the court under Subsection (9), if not paid within 30 days after allowance, shall be
607evidenced by a certificate payable only out of the assets of the institution in the possession of
608the commissioner, subject to the priorities set forth in Section 7-2-15.
609 (b) This provision does not apply to a secured claim allowed by the commissioner
610under Subsection (3)(a).
611 Section 8. Section 7-2-9 is amended to read:
612 7-2-9. Conservatorship, receivership, or liquidation of institution -- Appointment
613of receiver -- Review of actions.
614 (1) (a) Upon taking possession of the institution, the commissioner may appoint a
615receiver to perform the duties of the commissioner.
616 (b) Subject to any limitations, conditions, or requirements specified by the
617commissioner and approved by the court, a receiver shall have all the powers and duties of the
618commissioner under this chapter and the laws of this state to act as a conservator, receiver, or
619liquidator of the institution.
620 (c) Actions of the commissioner in appointing a receiver shall be subject to review only
621as provided in Section 7-2-2.
622 (2) (a) (i) If the deposits of the institution are to any extent insured by a federal deposit H.B. 251
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623insurance agency, the commissioner may appoint that agency as receiver.
624 (ii) After receiving notice in writing of the acceptance of the appointment, the
625commissioner shall file a certificate of appointment in the commissioner's office and with the
626clerk of the [district] court.
627 (iii) After the filing of the certificate, the possession of all assets, business, and
628property of the institution is considered transferred from the institution and the commissioner
629to the agency, and title to all assets, business, and property of the institution is vested in the
630agency without the execution of any instruments of conveyance, assignment, transfer, or
631endorsement.
632 (b) (i) If a federal deposit insurance agency accepts an appointment as receiver, it has
633all the powers and privileges provided by the laws of this state and the United States with
634respect to the conservatorship, receivership, or liquidation of an institution and the rights of its
635depositors, and other creditors, including authority to make an agreement for the purchase of
636assets and assumption of deposit and other liabilities by another depository institution or take
637other action authorized by Title 12 of the United States Code to maintain the stability of the
638banking system.
639 (ii) Such action by a federal deposit insurance agency may be taken upon approval by
640the court, with or without prior notice.
641 (iii) Such actions or agreements may be disapproved, amended, or rescinded only upon
642a finding by the court that the decisions or actions of the receiver are arbitrary, capricious,
643fraudulent, or contrary to law.
644 (iv) In the event of any conflict between state and federal law, including provisions for
645adjudicating claims against the institution or receiver, the receiver shall comply with the federal
646law and any resulting violation of state law does not by itself constitute grounds for the court to
647disapprove the actions of the receiver or impose any penalty for such violation.
648 (c) (i) The commissioner or any receiver appointed by [him] the commissioner shall
649possess all the rights and claims of the institution against any person whose breach of fiduciary Enrolled Copy H.B. 251
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650duty or violations of the laws of this state or the United States applicable to depository
651institutions may have caused or contributed to a condition which resulted in any loss incurred
652by the institution or to its assets in the possession of the commissioner or receiver.
653 (ii) As used in this Subsection (2)(c), fiduciary duty includes those duties and standards
654applicable under statutes and laws of this state and the United States to a director, officer, or
655other party employed by or rendering professional services to a depository institution whose
656deposits are insured by a federal deposit insurance agency.
657 (iii) Upon taking possession of an institution, no person other than the commissioner or
658receiver shall have standing to assert any such right or claim of the institution, including its
659depositors, creditors, or shareholders unless the right or claim has been abandoned by the
660commissioner or receiver with approval of the court.
661 (iv) Any judgment based on the rights and claims of the commissioner or receiver shall
662have priority in payment from the assets of the judgment debtors.
663 (d) For the purposes of this section, the term "federal deposit insurance agency" shall
664include the Federal Deposit Insurance Corporation, the National Credit Union Administration
665and any departments thereof or successors thereto, and any other federal agency authorized by
666federal law to act as a conservator, receiver, and liquidator of a federally insured depository
667institution, including the Resolution Trust Corporation and any department thereof or successor
668thereto.
669 (3) (a) The receiver may employ assistants, agents, accountants, and legal counsel.
670 (b) If the receiver is not a federal deposit insurance agency, the compensation to be
671paid such assistants, agents, accountants, and legal counsel shall be approved by the
672commissioner.
673 (c) All expenses incident to the receivership shall be paid out of the assets of the
674institution.
675 (d) If a receiver is not a federal deposit insurance agency, the receiver and any
676assistants and agents shall provide bond or other security specified by the commissioner and H.B. 251
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677approved by the court for the faithful discharge of all duties and responsibilities in connection
678with the receivership including the accounting for money received and paid.
679 (e) The cost of the bond shall be paid from the assets of the institution.
680 (f) Suit may be maintained on the bond by the commissioner or by any person injured
681by a breach of the condition of the bond.
682 (4) (a) Upon the appointment of a receiver for an institution in possession pursuant to
683this chapter, the commissioner and the department are exempt from liability or damages for any
684act or omission of any receiver appointed pursuant to this section.
685 (b) This section does not limit the right of the commissioner to prescribe and enforce
686rules regulating a receiver in carrying out its duties with respect to an institution subject to the
687jurisdiction of the department.
688 (c) Any act or omission of the commissioner or of any federal deposit insurance agency
689as a receiver appointed by [him] the commissioner while acting pursuant to this chapter shall
690be deemed to be the exercise of a discretionary function within the meaning of Section
69163G-7-301 of the laws of this state or Section 28 U.S.C. 2680(a) of the laws of the United
692States.
693 (5) (a) Actions, decisions, or agreements of a receiver under this chapter, other than
694allowance or disallowance of claims under Section 7-2-6, [shall be] are subject to judicial
695review [only as follows] if:
696 [(a)] (i) [A petition for review shall be filed with the court having jurisdiction under
697Section 7-2-2 not more than 90 days after the date] a petition is filed in a court with jurisdiction
698under Title 78A, Judiciary and Judicial Administration, within 90 days after the day on which
699the act, decision, or agreement became effective or its terms are filed with the court[.]; and
700 [(b)] (ii) [The petition shall state] the petition states in simple, concise, and direct terms
701the facts and principles of law upon which the petitioner claims the act, decision, or agreement
702of the receiver was or would be arbitrary, capricious, fraudulent, or contrary to law and how the
703petitioner is or may be damaged thereby. Enrolled Copy H.B. 251
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704 (b) The court shall dismiss any petition which fails to allege that the petitioner would
705be directly injured or damaged by the act, decision, or agreement which is the subject of the
706petition.
707 (c) Rule 11 of the Utah Rules of Civil Procedure shall apply to all parties with respect
708to the allegations set forth in a petition or response.
709 [(c)] (d) The receiver shall have 30 days after [service of the petition within which] the
710day on which the petition is served to respond.
711 [(d)] (e) All further proceedings are to be conducted in accordance with the Utah Rules
712of Civil Procedure.
713 (6) All notices required under this section shall be made in accordance with the Utah
714Rules of Civil Procedure and served upon the attorney general of the state of Utah, the
715commissioner of financial institutions, the receiver of the institution appointed under this
716chapter, and upon the designated representative of any party in interest who requests in writing
717such notice.
718 Section 9. Section 7-2-10 is amended to read:
719 7-2-10. Inventory of assets -- Listings of claims -- Report of proceedings -- Filing
720-- Inspection.
721 (1) As soon as is practical after taking possession of an institution the commissioner, or
722any receiver or liquidator appointed by [him] the commissioner, shall make or cause to be
723made in duplicate an inventory of its assets, one copy to be filed in [his] the commissioner's
724office and one with the clerk of the [district] court.
725 (2) Upon the expiration of the time fixed for presentation of claims the commissioner,
726or any receiver or liquidator appointed by [him] the commissioner, shall make in duplicate a
727full and complete list of the claims presented, including and specifying claims disallowed by
728[him] the commissioner, of which one copy shall be filed in [his] the commissioner's office and
729one copy in the office of the clerk of the [district] court.
730 (3) The commissioner, or any receiver or liquidator appointed by [him] the H.B. 251
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731commissioner, shall in like manner make and file supplemental lists showing all claims
732presented after the filing of the first list.
733 (4) The supplemental lists shall be filed every six months and at least 15 days before
734the declaration of any dividend.
735 (5) At the time of the order for final distribution the commissioner, or any receiver or
736liquidator appointed by [him] the commissioner, shall make a report in duplicate of the
737proceeding, showing the disposition of the assets and liabilities of the institution, one copy to
738be filed in [his] the commissioner's office and one with the clerk of the [district] court.
739 (6) The accounting, inventory, and lists of claims shall be open at all reasonable times
740for inspection.
741 (7) Any objection to any report or accounting shall be filed with the clerk of the
742[district] court within 30 days after the report of accounting has been filed by the
743commissioner, or any receiver or liquidator appointed by [him,] the commissioner, and shall be
744subject to judicial review only as provided in Section 7-2-9.
745 Section 10. Section 7-5-13 is amended to read:
746 7-5-13. Collective investment funds.
747 (1) A person authorized to engage in the trust business in this state may:
748 (a) establish collective investment funds that authorize participation by fiduciary or
749trust accounts of the trust company, its affiliates, or both; and
750 (b) participate in collective investment funds established by an affiliate of the trust
751company, if:
752 (i) the affiliate is authorized under the laws of its chartering authority to establish a
753collective investment fund in which its affiliates may participate; and
754 (ii) the plan establishing the collective investment fund specifically authorized the
755participation.
756 (2) Funds held by a trust company may be invested collectively in a collective
757investment fund in accordance with the rules prescribed by the appropriate governmental Enrolled Copy H.B. 251
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758regulatory agency or agencies, if this investment is not specifically prohibited under the
759instrument, judgment, decree, or order creating the regulatory relationship.
760 (3) Unless ordered to do so by a court [of competent jurisdiction], a trust company
761operating collective investment funds is not required to render a court accounting with regard
762to those funds[; but it may, by application to the district court,] but the trust company may
763petition a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to
764secure approval of such an accounting on such conditions as the court may establish.
765 (4) This section applies to all relationships in existence on or after May 1, 1989.
766 Section 11. Section 7-23-401 is amended to read:
767 7-23-401. Operational requirements for deferred deposit loans.
768 (1) If a deferred deposit lender extends a deferred deposit loan, the deferred deposit
769lender shall:
770 (a) post in a conspicuous location on its premises that can be viewed by a person
771seeking a deferred deposit loan:
772 (i) a complete schedule of any interest or fees charged for a deferred deposit loan that
773states the interest and fees using dollar amounts;
774 (ii) a number the person can call to make a complaint to the department regarding the
775deferred deposit loan; and
776 (iii) a list of states where the deferred deposit lender is registered or authorized to offer
777deferred deposit loans through the Internet or other electronic means;
778 (b) enter into a written contract for the deferred deposit loan;
779 (c) conspicuously disclose in the written contract:
780 (i) that under Subsection (3)(a), a person receiving a deferred deposit loan may make a
781partial payment in increments of at least $5 on the principal owed on the deferred deposit loan
782without incurring additional charges above the charges provided in the written contract;
783 (ii) that under Subsection (3)(b), a person receiving a deferred deposit loan may rescind
784the deferred deposit loan on or before 5 p.m. of the next business day without incurring any H.B. 251
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785charges;
786 (iii) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
787without the person receiving the deferred deposit loan requesting the rollover of the deferred
788deposit loan;
789 (iv) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
790rollover requires the person to pay the amount owed by the person under the deferred deposit
791loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
792executed; and
793 (v) (A) the name and address of a designated agent required to be provided the
794department under Subsection 7-23-201(2)(d)(vi); and
795 (B) a statement that service of process may be made to the designated agent;
796 (d) provide the person seeking the deferred deposit loan:
797 (i) a copy of the written contract described in Subsection (1)(c); and
798 (ii) written notice that the person seeking the deferred deposit loan is eligible to enter
799into an extended payment plan described in Section 7-23-403;
800 (e) orally review with the person seeking the deferred deposit loan the terms of the
801deferred deposit loan including:
802 (i) the amount of any interest rate or fee;
803 (ii) the date on which the full amount of the deferred deposit loan is due;
804 (iii) that under Subsection (3)(a), a person receiving a deferred deposit loan may make
805a partial payment in increments of at least $5 on the principal owed on the deferred deposit
806loan without incurring additional charges above the charges provided in the written contract;
807 (iv) that under Subsection (3)(b), a person receiving a deferred deposit loan may
808rescind the deferred deposit loan on or before 5 p.m. of the next business day without incurring
809any charges;
810 (v) that under Subsection (4)(b), the deferred deposit loan may not be rolled over
811without the person receiving the deferred deposit loan requesting the rollover of the deferred Enrolled Copy H.B. 251
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812deposit loan; and
813 (vi) that under Subsection (4)(c), the deferred deposit loan may not be rolled over if the
814rollover requires the person to pay the amount owed by the person under the deferred deposit
815loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
816executed;
817 (f) comply with the following as in effect on the date the deferred deposit loan is
818extended:
819 (i) Truth in Lending Act, 15 U.S.C. Sec. 1601 et seq., and its implementing federal
820regulations;
821 (ii) Equal Credit Opportunity Act, 15 U.S.C. Sec. 1691, and its implementing federal
822regulations;
823 (iii) Bank Secrecy Act, 12 U.S.C. Sec. 1829b, 12 U.S.C. Sec. 1951 through 1959, and
82431 U.S.C. Sec. 5311 through 5332, and its implementing regulations; and
825 (iv) Title 70C, Utah Consumer Credit Code;
826 (g) in accordance with Subsection (6), make an inquiry to determine whether a person
827attempting to receive a deferred deposit loan has the ability to repay the deferred deposit loan
828in the ordinary course, which may include rollovers or extended payment plans as allowed
829under this chapter;
830 (h) in accordance with Subsection (7), receive a signed acknowledgment from a person
831attempting to receive a deferred deposit loan that the person has the ability to repay the
832deferred deposit loan, which may include rollovers or extended payment plans as allowed by
833this chapter; and
834 (i) report the original loan amount, payment in full, or default of a deferred deposit
835loan to a consumer reporting agency, as defined in 15 U.S.C. Sec. 1681a, in accordance with
836procedures established by the consumer reporting agency.
837 (2) If a deferred deposit lender extends a deferred deposit loan through the Internet or
838other electronic means, the deferred deposit lender shall provide the information described in H.B. 251
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839Subsection (1)(a) to the person receiving the deferred deposit loan:
840 (a) in a conspicuous manner; and
841 (b) prior to the person entering into the deferred deposit loan.
842 (3) A deferred deposit lender that engages in a deferred deposit loan shall permit a
843person receiving a deferred deposit loan to:
844 (a) make partial payments in increments of at least $5 on the principal owed on the
845deferred deposit loan at any time prior to maturity without incurring additional charges above
846the charges provided in the written contract; and
847 (b) rescind the deferred deposit loan without incurring any charges by returning the
848deferred deposit loan amount to the deferred deposit lender on or before 5 p.m. the next
849business day following the deferred deposit loan transaction.
850 (4) A deferred deposit lender that engages in a deferred deposit loan may not:
851 (a) collect additional interest on a deferred deposit loan with an outstanding principal
852balance 10 weeks after the day on which the deferred deposit loan is executed;
853 (b) roll over a deferred deposit loan without the person receiving the deferred deposit
854loan requesting the rollover of the deferred deposit loan;
855 (c) roll over a deferred deposit loan if the rollover requires a person to pay the amount
856owed by the person under a deferred deposit loan in whole or in part more than 10 weeks from
857the day on which the deferred deposit loan is first executed;
858 (d) extend a new deferred deposit loan to a person on the same business day that the
859person makes a payment on another deferred deposit loan if:
860 (i) the payment results in the principal of that deferred deposit loan being paid in full;
861and
862 (ii) the combined terms of the original deferred deposit loan and the new deferred
863deposit loan total more than 10 weeks of consecutive interest;
864 (e) avoid the limitations of Subsections (4)(a) and (4)(c) by extending a new deferred
865deposit loan whose proceeds are used to satisfy or refinance any portion of an existing deferred Enrolled Copy H.B. 251
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866deposit loan;
867 (f) threaten to use or use the criminal process in any state to collect on the deferred
868deposit loan;
869 (g) in connection with the collection of money owed on a deferred deposit loan,
870communicate with a person who owes money on a deferred deposit loan at the person's place of
871employment if the person or the person's employer communicates, orally or in writing, to the
872deferred deposit lender that the person's employer prohibits the person from receiving these
873communications;
874 (h) modify by contract the venue provisions in [Title 78B, Chapter 3, Actions and
875Venue] Title 78B, Chapter 3a, Venue for Civil Actions; or
876 (i) avoid the requirements of Subsection 7-23-403(1)(c) by extending an
877interest-bearing loan within seven calendar days before the day on which the 10-week period
878ends.
879 (5) Notwithstanding Subsections (4)(a) and (f), a deferred deposit lender that is the
880holder of a check used to obtain a deferred deposit loan that is dishonored may use the
881remedies and notice procedures provided in Chapter 15, Dishonored Instruments, except that
882the issuer, as defined in Section 7-15-1, of the check may not be:
883 (a) asked by the holder to pay the amount described in Subsection 7-15-1(6)(a)(iii) as a
884condition of the holder not filing a civil action; or
885 (b) held liable for the damages described in Subsection 7-15-1(7)(b)(vi).
886 (6) (a) The inquiry required by Subsection (1)(g) applies solely to the initial period of a
887deferred deposit loan transaction with a person and does not apply to any rollover or extended
888payment plan of a deferred deposit loan.
889 (b) Subject to Subsection (6)(c), a deferred deposit lender is in compliance with
890Subsection (1)(g) if the deferred deposit lender, at the time of the initial period of the deferred
891deposit loan transaction:
892 (i) obtains one of the following regarding the person seeking the deferred deposit loan: H.B. 251
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893 (A) a consumer report, as defined in 15 U.S.C. Sec. 1681a, from a consumer reporting
894agency, as defined in 15 U.S.C. Sec. 1681a; or
895 (B) written proof or verification of income from the person seeking the deferred
896deposit loan; or
897 (ii) relies on the prior repayment history with the deferred deposit lender from the
898records of the deferred deposit lender.
899 (c) If a person seeking a deferred deposit loan has not previously received a deferred
900deposit loan from that deferred deposit lender, to be in compliance with Subsection (1)(g), the
901deferred deposit lender, at the time of the initial period of the deferred deposit loan transaction,
902shall obtain a consumer report, as defined in 15 U.S.C. Sec. 1681a, from a consumer reporting
903agency, as defined in 15 U.S.C. Sec. 1681a.
904 (7) A deferred deposit lender is in compliance with Subsection (1)(h) if the deferred
905deposit lender obtains from the person seeking the deferred deposit loan a signed
906acknowledgment that is in 14-point bold font, that the person seeking the deferred deposit loan
907has:
908 (a) reviewed the payment terms of the deferred deposit loan agreement;
909 (b) received a disclosure that a deferred deposit loan may not be rolled over if the
910rollover requires the person to pay the amount owed by the person under the deferred deposit
911loan in whole or in part more than 10 weeks after the day on which the deferred deposit loan is
912first executed;
913 (c) received a disclosure explaining the extended payment plan options; and
914 (d) acknowledged the ability to repay the deferred deposit loan in the ordinary course,
915which may include rollovers, or extended payment plans as allowed under this chapter.
916 (8) (a) Before initiating a civil action against a person who owes money on a deferred
917deposit loan, a deferred deposit lender shall provide the person at least 30 days notice of
918default, describing that:
919 (i) the person must remedy the default; and Enrolled Copy H.B. 251
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920 (ii) the deferred deposit lender may initiate a civil action against the person if the
921person fails to cure the default within the 30-day period or through an extended payment plan
922meeting the requirements of Section 7-23-403.
923 (b) A deferred deposit lender may provide the notice required under this Subsection
924(8):
925 (i) by sending written notice to the address provided by the person to the deferred
926deposit lender;
927 (ii) by sending an electronic transmission to a person if electronic contact information
928is provided to the deferred deposit lender; or
929 (iii) pursuant to the Utah Rules of Civil Procedure.
930 (c) A notice under this Subsection (8), in addition to complying with Subsection (8)(a),
931shall:
932 (i) be in English, if the initial transaction is conducted in English;
933 (ii) state the date by which the person must act to enter into an extended payment plan;
934 (iii) explain the procedures the person must follow to enter into an extended payment
935plan;
936 (iv) subject to Subsection 7-23-403(7), if the deferred deposit lender requires the
937person to make an initial payment to enter into an extended payment plan:
938 (A) explain the requirement; and
939 (B) state the amount of the initial payment and the date the initial payment shall be
940made;
941 (v) state that the person has the opportunity to enter into an extended payment plan for
942a time period meeting the requirements of Subsection 7-23-403(2)(b); and
943 (vi) include the following amounts:
944 (A) the remaining balance on the original deferred deposit loan;
945 (B) the total payments made on the deferred deposit loan;
946 (C) any charges added to the deferred deposit loan amount allowed pursuant to this H.B. 251
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947chapter; and
948 (D) the total amount due if the person enters into an extended payment plan.
949 Section 12. Section 16-6a-117 is amended to read:
950 16-6a-117. Judicial relief.
951 (1) (a) A director, officer, delegate, or member may petition [the applicable district] a
952court to take an action provided in Subsection (1)(b) if for any reason it is impractical or
953impossible for a nonprofit corporation in the manner prescribed by this chapter[, its] or the
954nonprofit corporation's articles of incorporation[,] or bylaws to:
955 (i) call or conduct a meeting of [its] the nonprofit corporation's members, delegates, or
956directors; or
957 (ii) otherwise obtain the consent of [its] the nonprofit corporation's members,
958delegates, or directors.
959 (b) If a petition is filed under Subsection (1)(a), the [applicable district] court, in the
960manner [it] the court finds fair and equitable under the circumstances, may order that:
961 (i) a meeting be called; or
962 (ii) a written consent or other form of obtaining the vote of members, delegates, or
963directors be authorized.
964 [(c) For purposes of this section, the applicable district court is:]
965 [(i) the district court of the county in this state where the nonprofit corporation's
966principal office is located; or]
967 [(ii) if the nonprofit corporation has no principal office in this state:]
968 [(A) the district court of the county in which the registered office is located; or]
969 [(B) if the nonprofit corporation has no registered office in this state, the district court
970in and for Salt Lake County.]
971 (2) (a) A court [specified in Subsection (1)] shall, in an order issued pursuant to this
972section, provide for a method of notice reasonably designed to give actual notice to all persons
973who would be entitled to notice of a meeting held pursuant to this chapter, the articles of Enrolled Copy H.B. 251
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974incorporation, or bylaws.
975 (b) The method of notice described in Subsection (1) complies with this section
976whether or not the method of notice:
977 (i) results in actual notice to all persons described in Subsection (2)(a); or
978 (ii) conforms to the notice requirements that would otherwise apply.
979 (c) In a proceeding under this section, the court may determine who are the members or
980directors of a nonprofit corporation.
981 (3) An order issued pursuant to this section may dispense with any requirement relating
982to the holding of or voting at meetings or obtaining votes that would otherwise be imposed by
983this chapter[, the] or the nonprofit corporation's articles of incorporation, or bylaws, including
984any requirement as to:
985 (a) quorums; or
986 (b) the number or percentage of votes needed for approval.
987 (4) (a) Whenever practical, any order issued pursuant to this section shall limit the
988subject matter of a meeting or other form of consent authorized to items the resolution of which
989will or may enable the nonprofit corporation to continue managing [its] the nonprofit
990corporation's affairs without further resort to this section, including amendments to the articles
991of incorporation or bylaws.
992 (b) Notwithstanding Subsection (4)(a), an order under this section may authorize the
993obtaining of whatever votes and approvals are necessary for the dissolution, merger, or sale of
994assets of a nonprofit corporation.
995 (5) A meeting or other method of obtaining the vote of members, delegates, or
996directors conducted pursuant to and that complies with an order issued under this section:
997 (a) is for all purposes a valid meeting or vote, as the case may be; and
998 (b) shall have the same force and effect as if it complied with every requirement
999imposed by this chapter[, the] or the nonprofit corporation's articles of incorporation[,] or
1000bylaws. H.B. 251
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1001 (6) In addition to a meeting held under this section, a court-ordered meeting may be
1002held pursuant to Section 16-6a-703.
1003 Section 13. Section 16-6a-703 is amended to read:
1004 16-6a-703. Court-ordered meeting.
1005 [(1) (a) Upon an application described in Subsection (1)(b) the holding of a meeting of
1006the members may be summarily ordered by:]
1007 [(i) the district court of the county in this state where the nonprofit corporation's
1008principal office is located; or]
1009 [(ii) if the nonprofit corporation has no principal office in this state, the district court in
1010and for Salt Lake County.]
1011 [(b) Subsection (1)(a) applies to an application by:]
1012 (1) [(i)] (a) [any] A voting member entitled to participate in an annual meeting may
1013petition a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, if an
1014annual meeting was required to be held and was not held within 15 months after:
1015 [(A)] (i) the corporation's last annual meeting; or
1016 [(B)] (ii) if there has been no annual meeting, the date of incorporation[; or].
1017 [(ii)] (b) [any] A person who participated in a call of or demand for a special meeting
1018effective under Subsection 16-6a-702(1)[,] may petition a court with jurisdiction under Title
101978A, Judiciary and Judicial Administration, if:
1020 [(A)] (i) notice of the special meeting was not given within 30 days after[:]
1021 [(I)] the date of the call[;] or
1022 [(II)] the date the last of the demands necessary to require the calling of the meeting
1023was received by the nonprofit corporation pursuant to Subsection 16-6a-702(1)(b); or
1024 [(B)] (ii) the special meeting was not held in accordance with the notice.
1025 (2) If a petition is filed under this section, the court may summarily order the holding
1026of a meeting of the members.
1027 [(2)] (3) A court that orders a meeting under Subsection [(1)] (2) may: Enrolled Copy H.B. 251
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1028 (a) fix the time and place of the meeting;
1029 (b) determine the members entitled to participate in the meeting;
1030 (c) specify a record date for determining members entitled to notice of and to vote at
1031the meeting;
1032 (d) prescribe the form and content of the notice of the meeting;
1033 (e) (i) fix the quorum required for specific matters to be considered at the meeting; or
1034 (ii) direct that the votes represented at the meeting constitute a quorum for action on
1035the specific matters to be considered at the meeting; and
1036 (f) enter other orders necessary or appropriate to accomplish the holding of the
1037meeting.
1038 Section 14. Section 16-6a-710 is amended to read:
1039 16-6a-710. Members' list for meeting and action by written ballot.
1040 (1) (a) Unless otherwise provided by the bylaws, after fixing a record date for a notice
1041of a meeting or for determining the members entitled to take action by written ballot, a
1042nonprofit corporation shall prepare a list of the names of all [its] the nonprofit corporation's
1043members who are:
1044 (i) (A) entitled to notice of the meeting; and
1045 (B) to vote at the meeting; or
1046 (ii) to take the action by written ballot.
1047 (b) The list required by Subsection (1) shall:
1048 (i) be arranged by voting group;
1049 (ii) be alphabetical within each voting group;
1050 (iii) show the address of each member entitled to notice of, and to vote at, the meeting
1051or to take such action by written ballot; and
1052 (iv) show the number of votes each member is entitled to vote at the meeting or by
1053written ballot.
1054 (2) (a) If prepared in connection with a meeting of the members, the members' list H.B. 251
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1055required by Subsection (1) shall be available for inspection by any member entitled to vote at
1056the meeting:
1057 (i) (A) beginning the earlier of:
1058 (I) 10 days before the meeting for which the list was prepared; or
1059 (II) two business days after notice of the meeting is given; and
1060 (B) continuing through the meeting, and any adjournment of the meeting; and
1061 (ii) (A) at the nonprofit corporation's principal office; or
1062 (B) at a place identified in the notice of the meeting in the city where the meeting will
1063be held.
1064 (b) (i) The nonprofit corporation shall make the members' list required by Subsection
1065(1) available at the meeting.
1066 (ii) Any member entitled to vote at the meeting or an agent or attorney of a member
1067entitled to vote at the meeting is entitled to inspect the members' list at any time during the
1068meeting or any adjournment.
1069 (c) A member entitled to vote at the meeting, or an agent or attorney of a member
1070entitled to vote at the meeting, is entitled on written demand to inspect and, subject to
1071Subsection 16-6a-1602(3) and Subsections 16-6a-1603(2) and (3), to copy a members' list
1072required by Subsection (1):
1073 (i) during:
1074 (A) regular business hours; and
1075 (B) the period it is available for inspection; and
1076 (ii) at the member's expense.
1077 (3) (a) [On application of a] A member of a nonprofit corporation[, the applicable
1078district court may take an action described in Subsection (3)(b)] may petition a court with
1079jurisdiction under Title 78A, Judiciary and Judicial Administration, if the nonprofit corporation
1080refuses to allow a member entitled to vote at the meeting or by the written ballot, or an agent or
1081attorney of a member entitled to vote at the meeting or by the written ballot, to inspect or copy Enrolled Copy H.B. 251
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1082the members' list during the period [it] the nonprofit corporation is required to be available for
1083inspection under Subsection (2).
1084 (b) [Under Subsection (3)(a), the applicable] If a petition is filed under Subsection
1085(3)(a), the court may:
1086 (i) summarily order the inspection or copying of the members' list at the nonprofit
1087corporation's expense; and
1088 (ii) until the inspection or copying is complete:
1089 (A) postpone or adjourn the meeting for which the members' list was prepared; or
1090 (B) postpone the time when the nonprofit corporation must receive written ballots in
1091connection with which the members' list was prepared.
1092 [(c) For purposes of this Subsection (3), the applicable court is:]
1093 [(i) the district court of the county in this state where the nonprofit corporation's
1094principal office is located; or]
1095 [(ii) if the nonprofit corporation has no principal office in this state, the district court in
1096and for Salt Lake County.]
1097 (4) If a court orders inspection or copying of a members' list pursuant to Subsection
1098(3), unless the nonprofit corporation proves that it refused inspection or copying of the list in
1099good faith because it had a reasonable basis for doubt about the right of the member or the
1100agent or attorney of the member to inspect or copy the members' list:
1101 (a) the court shall order the nonprofit corporation to pay the member's costs, including
1102reasonable counsel fees, incurred in obtaining the order;
1103 (b) the court may order the nonprofit corporation to pay the member for any damages
1104the member incurred; and
1105 (c) the court may grant the member any other remedy afforded the member by law.
1106 (5) If a court orders inspection or copying of a members' list pursuant to Subsection
1107(3), the court may impose reasonable restrictions on the use or distribution of the list by the
1108member. H.B. 251
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1109 (6) Failure to prepare or make available the members' list does not affect the validity of
1110action taken at the meeting or by means of the written ballot.
1111 Section 15. Section 16-6a-809 is amended to read:
1112 16-6a-809. Removal of directors by judicial proceeding.
1113 (1) (a) [The applicable] A court may remove a director [in a proceeding commenced
1114either], in an action brought by the nonprofit corporation or by voting members holding at least
111510% of the votes entitled to be cast in the election of the director's successor, if the court finds
1116that:
1117 (i) the director engaged in:
1118 (A) fraudulent or dishonest conduct; or
1119 (B) gross abuse of authority or discretion with respect to the nonprofit corporation; or
1120 (ii) (A) a final judgment has been entered finding that the director has violated a duty
1121set forth in Section 16-6a-822; and
1122 (B) removal is in the best interests of the nonprofit corporation.
1123 [(b) For purposes of this Subsection (1), the applicable court is the:]
1124 [(i) district court of the county in this state where a nonprofit corporation's principal
1125office is located; or]
1126 [(ii) if the nonprofit corporation has no principal office in this state:]
1127 [(A) the district court of the county in which its registered office is located; or]
1128 [(B) if the nonprofit corporation has no registered office, the district court for Salt Lake
1129County.]
1130 (2) The court that removes a director may bar the director for a period prescribed by the
1131court from:
1132 (a) reelection;
1133 (b) reappointment; or
1134 (c) designation.
1135 (3) If voting members commence a proceeding under Subsection (1), the voting Enrolled Copy H.B. 251
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1136members shall make the nonprofit corporation a party defendant.
1137 (4) A director who is removed pursuant to this section may deliver to the division for
1138filing a statement to that effect pursuant to Section 16-6a-1608.
1139 Section 16. Section 16-6a-1405 is amended to read:
1140 16-6a-1405. Effect of dissolution.
1141 (1) A dissolved nonprofit corporation continues its corporate existence but may not
1142carry on any activities except as is appropriate to wind up and liquidate its affairs, including:
1143 (a) collecting its assets;
1144 (b) returning, transferring, or conveying assets held by the nonprofit corporation upon a
1145condition requiring return, transfer, or conveyance, which condition occurs by reason of the
1146dissolution, in accordance with the condition;
1147 (c) transferring, subject to any contractual or legal requirements, its assets as provided
1148in or authorized by its articles of incorporation or bylaws;
1149 (d) discharging or making provision for discharging its liabilities; and
1150 (e) doing every other act necessary to wind up and liquidate its assets and affairs.
1151 (2) Dissolution of a nonprofit corporation does not:
1152 (a) transfer title to the nonprofit corporation's property including title to water rights,
1153water conveyance facilities, or other assets of a nonprofit corporation organized to divert or
1154distribute water to its members;
1155 (b) subject its directors or officers to standards of conduct different from those
1156prescribed in this chapter;
1157 (c) change quorum or voting requirements for its board of directors or members;
1158 (d) change provisions for selection, resignation, or removal of its directors or officers,
1159or both;
1160 (e) change provisions for amending its bylaws or its articles of incorporation;
1161 (f) prevent commencement of a proceeding by or against the nonprofit corporation in
1162its corporate name; or H.B. 251
Enrolled Copy
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1163 (g) abate or suspend a proceeding pending by or against the nonprofit corporation on
1164the effective date of dissolution.
1165 (3) Nothing in this section may be applied in a manner inconsistent with a court's
1166power of judicial dissolution exercised in accordance with Section 16-6a-1414 [or
116716-6a-1415].
1168 Section 17. Section 16-6a-1414 is amended to read:
1169 16-6a-1414. Grounds and procedure for judicial dissolution.
1170 (1) [A nonprofit corporation may be dissolved in a proceeding by the] The attorney
1171general or the division director may bring an action in a court with jurisdiction under Title 78A,
1172Judiciary and Judicial Administration, to dissolve a nonprofit corporation if it is established
1173that:
1174 (a) the nonprofit corporation obtained [its] the nonprofit corporation's articles of
1175incorporation through fraud; or
1176 (b) the nonprofit corporation has continued to exceed or abuse the authority conferred
1177upon [it] the nonprofit corporation by law.
1178 (2) [A nonprofit corporation may be dissolved in a proceeding by a member or
1179director] A member or director of a nonprofit corporation may bring an action in a court with
1180jurisdiction under Title 78A, Judiciary and Judicial Administration, to dissolve the nonprofit
1181corporation if it is established that:
1182 (a) (i) the directors are deadlocked in the management of the corporate affairs;
1183 (ii) the members, if any, are unable to break the deadlock; and
1184 (iii) irreparable injury to the nonprofit corporation is threatened or being suffered;
1185 (b) the directors or those in control of the nonprofit corporation have acted, are acting,
1186or will act in a manner that is illegal, oppressive, or fraudulent;
1187 (c) the members are deadlocked in voting power and have failed, for a period that
1188includes at least two consecutive annual meeting dates, to elect successors to directors whose
1189terms have expired or would have expired upon the election of their successors; or Enrolled Copy H.B. 251
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1190 (d) the corporate assets are being misapplied or wasted.
1191 (3) [A nonprofit corporation may be dissolved in a proceeding by a creditor] A creditor
1192may bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
1193Administration, to dissolve a nonprofit corporation if it is established that:
1194 (a) (i) the creditor's claim has been reduced to judgment;
1195 (ii) the execution on the judgment has been returned unsatisfied; and
1196 (iii) the nonprofit corporation is insolvent; or
1197 (b) (i) the nonprofit corporation is insolvent; and
1198 (ii) the nonprofit corporation has admitted in writing that the creditor's claim is due and
1199owing.
1200 (4) If an action is brought under this section, it is not necessary to make directors or
1201members parties to the action to dissolve the nonprofit corporation unless relief is sought
1202against the members individually.
1203 (5) In an action under this section, the court may:
1204 (a) issue injunctions;
1205 (b) appoint a receiver or a custodian pendente lite with all powers and duties the court
1206directs; or
1207 (c) take other action required to preserve the nonprofit corporation's assets wherever
1208located and carry on the business of the nonprofit corporation until a full hearing can be held.
1209 [(4)] (6) [(a)] If a nonprofit corporation has been dissolved by voluntary or
1210administrative action taken under this part:
1211 [(i)] (a) the nonprofit corporation may bring a proceeding to wind up and liquidate its
1212business and affairs under judicial supervision in accordance with Section 16-6a-1405; and
1213 [(ii)] (b) the attorney general, a director, a member, or a creditor may bring a
1214proceeding to wind up and liquidate the affairs of the nonprofit corporation under judicial
1215supervision in accordance with Section 16-6a-1405, upon establishing the grounds set forth in
1216Subsections (1) through (3). H.B. 251
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1217 [(b) As used in Sections 16-6a-1415 through 16-6a-1417:]
1218 [(i) a "judicial proceeding to dissolve the nonprofit corporation" includes a proceeding
1219brought under this Subsection (4); and]
1220 [(ii) a "decree of dissolution" includes an order of a court entered in a proceeding under
1221this Subsection (4) that directs that the affairs of a nonprofit corporation shall be wound up and
1222liquidated under judicial supervision.]
1223 Section 18. Section 16-6a-1416 is amended to read:
1224 16-6a-1416. Receivership or custodianship.
1225 (1) As used in this section:
1226 (a) "Decree of dissolution" includes an order of a court entered in a proceeding under
1227Subsection 16-6a-1414(4) that directs that the affairs of a nonprofit corporation be wound up
1228and liquidated under judicial supervision.
1229 (b) "Judicial proceeding to dissolve the nonprofit corporation" includes a proceeding
1230brought under Subsection 16-6a-1414(4).
1231 [(1)] (2) (a) A court in a judicial proceeding brought to dissolve a nonprofit corporation
1232may appoint:
1233 (i) one or more receivers to wind up and liquidate the affairs of the nonprofit
1234corporation; or
1235 (ii) one or more custodians to manage the affairs of the nonprofit corporation.
1236 (b) Before appointing a receiver or custodian, the court shall hold a hearing, after
1237giving notice to:
1238 (i) all parties to the proceeding; and
1239 (ii) any interested persons designated by the court.
1240 (c) The court appointing a receiver or custodian has exclusive jurisdiction over the
1241nonprofit corporation and all of its property, wherever located.
1242 (d) The court may appoint as a receiver or custodian:
1243 (i) an individual; Enrolled Copy H.B. 251
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1244 (ii) a domestic or foreign corporation authorized to conduct affairs in this state; or
1245 (iii) a domestic or foreign nonprofit corporation authorized to conduct affairs in this
1246state.
1247 (e) The court may require the receiver or custodian to post bond, with or without
1248sureties, in an amount specified by the court.
1249 [(2)] (3) The court shall describe the powers and duties of the receiver or custodian in
1250its appointing order that may be amended from time to time. Among other powers the receiver
1251shall have the power to:
1252 (a) dispose of all or any part of the property of the nonprofit corporation, wherever
1253located:
1254 (i) at a public or private sale; and
1255 (ii) if authorized by the court; and
1256 (b) sue and defend in the receiver's own name as receiver of the nonprofit corporation
1257in all courts.
1258 [(3)] (4) The custodian may exercise all of the powers of the nonprofit corporation,
1259through or in place of its board of directors or officers, to the extent necessary to manage the
1260affairs of the nonprofit corporation in the best interests of its members and creditors.
1261 [(4)] (5) If doing so is in the best interests of the nonprofit corporation and its members
1262and creditors, the court may:
1263 (a) during a receivership, redesignate the receiver as a custodian; and
1264 (b) during a custodianship, redesignate the custodian as a receiver.
1265 [(5)] (6) The court from time to time during the receivership or custodianship may
1266order compensation paid and expense disbursements or reimbursements made from the assets
1267of the nonprofit corporation or proceeds from the sale of the assets to:
1268 (a) the receiver;
1269 (b) the custodian; or
1270 (c) the receiver's or custodian's attorney. H.B. 251
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1271 Section 19. Section 16-6a-1417 is amended to read:
1272 16-6a-1417. Decree of dissolution.
1273 (1) As used in this section:
1274 (a) "Decree of dissolution" includes an order of a court entered in a proceeding under
1275Subsection 16-6a-1414(4) that directs that the affairs of a nonprofit corporation be wound up
1276and liquidated under judicial supervision.
1277 (b) "Judicial proceeding to dissolve the nonprofit corporation" includes a proceeding
1278brought under Subsection 16-6a-1414(4).
1279 [(1)] (2) If after a hearing the court determines that one or more grounds for judicial
1280dissolution described in Section 16-6a-1414 exist:
1281 (a) the court may enter a decree:
1282 (i) dissolving the nonprofit corporation; and
1283 (ii) specifying the effective date of the dissolution; and
1284 (b) the clerk of the court shall deliver a certified copy of the decree to the division
1285which shall file it accordingly.
1286 [(2)] (3) After entering the decree of dissolution, the court shall direct:
1287 (a) the winding up and liquidation of the nonprofit corporation's affairs in accordance
1288with Section 16-6a-1405; and
1289 (b) the giving of notice to:
1290 (i) (A) the nonprofit corporation's registered agent; or
1291 (B) the division if it has no registered agent; and
1292 (ii) to claimants in accordance with Sections 16-6a-1406 and 16-6a-1407.
1293 [(3)] (4) The court's order or decision may be appealed as in other civil proceedings.
1294 Section 20. Section 16-6a-1604 is amended to read:
1295 16-6a-1604. Court-ordered inspection of corporate records.
1296 (1) (a) A director or member may [petition the applicable court] bring a petition in a
1297court with jurisdiction under Title 78A, Judiciary and Judicial Administration, against a Enrolled Copy H.B. 251
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1298nonprofit corporation if:
1299 (i) [a] the nonprofit corporation refuses to allow a director or member, or the director's
1300or member's agent or attorney, to inspect or copy any records that the director or member is
1301entitled to inspect or copy under Subsection 16-6a-1602(1); and
1302 (ii) the director or member complies with Subsection 16-6a-1602(1).
1303 (b) [If petitioned] If a petition is filed under Subsection (1)(a), the court may
1304summarily order the inspection or copying of the records demanded at the nonprofit
1305corporation's expense on an expedited basis.
1306 (2) (a) A director or member may [petition the applicable court] bring a petition in a
1307court with jurisdiction under Title 78A, Judiciary and Judicial Administration, against a
1308nonprofit corporation if:
1309 (i) [a] the nonprofit corporation refuses to allow a director or member, or the director's
1310or member's agent or attorney, to inspect or copy any records that the director or member is
1311entitled to inspect or copy pursuant to Subsections 16-6a-1602(2) and (3) within a reasonable
1312time following the director's or member's demand; and
1313 (ii) the director or member complies with Subsections 16-6a-1602(2) and (3).
1314 (b) [If the court is petitioned] If a petition is brought under Subsection (2)(a), the court
1315may summarily order the inspection or copying of the records demanded.
1316 (3) If a court orders inspection or copying of the records demanded under Subsection
1317(1) or (2), unless the nonprofit corporation proves that [it] the nonprofit corporation refused
1318inspection or copying in good faith because [it] the nonprofit corporation had a reasonable
1319basis for doubt about the right of the director or member, or the director's or member's agent or
1320attorney, to inspect or copy the records demanded:
1321 (a) the court shall also order the nonprofit corporation to pay the director's or member's
1322costs, including reasonable counsel fees, incurred to obtain the order;
1323 (b) the court may order the nonprofit corporation to pay the director or member for any
1324damages the member incurred; H.B. 251
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1325 (c) if inspection or copying is ordered pursuant to Subsection (2), the court may order
1326the nonprofit corporation to pay the director's or member's inspection and copying expenses;
1327and
1328 (d) the court may grant the director or member any other remedy provided by law.
1329 (4) If a court orders inspection or copying of records demanded, [it] the court may
1330impose reasonable restrictions on the use or distribution of the records by the demanding
1331director or member.
1332 [(5) For purposes of this section, the applicable court is:]
1333 [(a) the district court of the county in this state where the nonprofit corporation's
1334principal office is located; or]
1335 [(b) if the nonprofit corporation has no principal office in this state, the district court in
1336and for Salt Lake County.]
1337 Section 21. Section 16-6a-1609 is amended to read:
1338 16-6a-1609. Interrogatories by division.
1339 (1) (a) The division may give interrogatories reasonably necessary to ascertain whether
1340a nonprofit corporation has complied with the provisions of this chapter applicable to the
1341nonprofit corporation to:
1342 (i) any domestic or foreign nonprofit corporation subject to the provisions of this
1343chapter; and
1344 (ii) to any officer or director of a nonprofit corporation described in Subsection
1345(1)(a)(i).
1346 (b) The interrogatories described in this Subsection (1) shall be answered within:
1347 (i) 30 days after the mailing of the interrogatories; or
1348 (ii) additional time as fixed by the division.
1349 (c) The answers to the interrogatories shall be:
1350 (i) full and complete; and
1351 (ii) made in writing. Enrolled Copy H.B. 251
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1352 (d) (i) If the interrogatories are directed to an individual, the interrogatories shall be
1353answered by the individual.
1354 (ii) If directed to a nonprofit corporation, the interrogatories shall be answered by:
1355 (A) the chair of the board of directors of the nonprofit corporation;
1356 (B) all of the nonprofit corporation's directors;
1357 (C) one of the nonprofit corporation's officers; or
1358 (D) any other person authorized to answer the interrogatories as the nonprofit
1359corporation's agent.
1360 (e) (i) The division need not file any document to which the interrogatories relate until
1361the interrogatories are answered as provided in this section.
1362 (ii) Notwithstanding Subsection (1)(e)(i), the division need not file a document to
1363which the interrogatory relates if the answers to the interrogatory disclose that the document is
1364not in conformity with the provisions of this chapter.
1365 (f) The division shall certify to the attorney general, for such action as the attorney
1366general considers appropriate, all interrogatories and answers to interrogatories that disclose a
1367violation of this chapter.
1368 (2) (a) Interrogatories given by the division under Subsection (1), and the answers to
1369interrogatories, may not be open to public inspection.
1370 (b) The division may not disclose any facts or information obtained from the
1371interrogatories or answers to the interrogatories, except:
1372 (i) as the official duties of the division may require the facts or information to be made
1373public; or
1374 (ii) in the event the interrogatories or the answers to the interrogatories are required for
1375evidence in any criminal proceedings or in any other action by this state.
1376 (3) Each domestic or foreign nonprofit corporation that knowingly fails or refuses to
1377answer truthfully and fully, within the time prescribed by Subsection (1), interrogatories given
1378to the domestic or foreign nonprofit corporation by the division in accordance with Subsection H.B. 251
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1379(1) is guilty of a class C misdemeanor and, upon conviction, shall be punished by a fine of not
1380more than $500.
1381 (4) Each officer and director of a domestic or foreign nonprofit corporation who
1382knowingly fails or refuses to answer truthfully and fully, within the time prescribed by
1383Subsection (1), interrogatories given to the officer or director by the division in accordance
1384with Subsection (1) is guilty of a class B misdemeanor and, upon conviction, shall be punished
1385by a fine of not more than $1,000.
1386 (5) The attorney general may enforce this section [in an action brought in:] by bringing
1387an action in a court with jurisdiction under Title 78A, Judiciary and Judicial Administration.
1388 [(a) the district court of the county in this state where the nonprofit corporation's
1389principal office or registered office is located; or]
1390 [(b) if the nonprofit corporation has no principal or registered office in this state, in the
1391district court in and for Salt Lake County.]
1392 Section 22. Section 16-10a-126 is amended to read:
1393 16-10a-126. Petition for review of division's refusal to file document.
1394 (1) (a) If the division refuses to file a document delivered to [it] the division for filing,
1395the domestic or foreign corporation for which the filing was requested, or [its representative,
1396within 30 days after the effective date of the notice of refusal given by the division pursuant to
1397Subsection 16-10a-125(3), may appeal the refusal to the district court of the county where the
1398corporation's principal office is or will be located, or if there is none in this state, the county
1399where its registered office is or will be located] the corporation's representative, may petition a
1400court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to compel the
1401filing of the document.
1402 (b) A domestic or foreign corporation, or the corporation's representative, shall file a
1403petition under Subsection (1)(a) within 30 days after the day on which the division gives notice
1404of the refusal under Subsection 16-10a-125(3).
1405 (c) The [appeal is commenced by petitioning the court to compel the filing of the Enrolled Copy H.B. 251
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1406document and by attaching to the petition] petition under Subsection (1)(a) shall include a copy
1407of the document and the division's notice of refusal.
1408 (2) [The] If a petition is filed under Subsection (1), the court may summarily order the
1409division to file the document or take other action the court considers appropriate.
1410 (3) The court's final decision [may be appealed] is appealable as in any other civil
1411proceedings.
1412 Section 23. Section 16-10a-303 is amended to read:
1413 16-10a-303. Ultra vires.
1414 (1) Except as provided in Subsection (2), the validity of corporate action may not be
1415challenged on the ground that the corporation lacks or lacked power to act.
1416 (2) A corporation's power to act may be challenged:
1417 (a) in [a proceeding] an action by a shareholder against the corporation to enjoin the
1418act;
1419 (b) in [a proceeding] an action by the corporation, directly, derivatively, or through a
1420receiver, trustee, or other legal representative, against an incumbent or former director, officer,
1421employee, or agent of the corporation; or
1422 (c) in [a proceeding] an action by the attorney general under Section 16-10a-1430.
1423 (3) In a shareholder's [proceeding] action under Subsection (2)(a) to enjoin an
1424unauthorized corporate act, the court may enjoin or set aside the act, if equitable and if all
1425affected persons are parties to the proceeding, and may award damages for loss, other than
1426anticipated profits, suffered by the corporation or another party because of enjoining the
1427unauthorized act.
1428 Section 24. Section 16-10a-703 is amended to read:
1429 16-10a-703. Court-ordered meeting.
1430 (1) [The district court of the county in this state where a corporation's principal office
1431is located or, if it has no principal office in this state, the district court for Salt Lake County] A
1432court may summarily order a meeting of shareholders to be held: H.B. 251
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1433 (a) [on application of any] upon a petition by a shareholder of the corporation entitled
1434to participate in an annual meeting or any director of the corporation, if an annual meeting was
1435not held within 15 months after its last annual meeting, or if there has been no annual meeting,
1436the date of incorporation; or
1437 (b) [on application of any person] upon a petition by a person who participated in a call
1438of or demand for a special meeting effective under Subsection 16-10a-702(1), if:
1439 (i) notice of the special meeting was not given within 60 days after the date of the call
1440or the date the last of the demands necessary to require the calling of the meeting was delivered
1441to the corporation pursuant to Subsection 16-10a-702(1)(b), as the case may be; or
1442 (ii) the special meeting was not held in accordance with the notice.
1443 (2) The court may fix the time and place of the meeting, state whether or not it is an
1444annual or special meeting, determine the shares entitled to participate in the meeting, specify a
1445record date for determining shareholders entitled to notice of and to vote at the meeting,
1446prescribe the form and content of the meeting notice, fix the quorum required for specific
1447matters to be considered at the meeting, or direct that the votes represented at the meeting
1448constitute a quorum for action on those matters, and enter other orders necessary or appropriate
1449to accomplish the purpose or purposes of holding the meeting.
1450 Section 25. Section 16-10a-720 is amended to read:
1451 16-10a-720. Shareholders' list for meeting.
1452 (1) (a) After fixing a record date for a shareholders' meeting, a corporation shall
1453prepare a list of the names of all [its] the corporation's shareholders who are entitled to be
1454given notice of the meeting.
1455 (b) The list shall be arranged by voting group, and within each voting group by class or
1456series of shares.
1457 (c) The list shall be alphabetical within each class or series and shall show the address
1458of, and the number of shares held by, each shareholder.
1459 (2) (a) The shareholders' list shall be available for inspection by any shareholder, Enrolled Copy H.B. 251
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1460beginning on the earlier of 10 days before the meeting for which the list was prepared or two
1461business days after notice of the meeting is given and continuing through the meeting and any
1462meeting adjournments, at the corporation's principal office or at a place identified in the
1463meeting notice in the city where the meeting will be held.
1464 (b) A shareholder or a shareholder's agent or attorney is entitled on written demand to
1465the corporation and, subject to the requirements of Subsections 16-10a-1602(3) and (7), and the
1466provisions of Subsections 16-10a-1603(2) and (3), to inspect and copy the list, during regular
1467business hours and during the period [it] the list is available for inspection.
1468 (3) The corporation shall make the shareholders' list available at the meeting, and any
1469shareholder, or any shareholder's agent or attorney is entitled to inspect the list at any time
1470during the meeting or any adjournment, for any purposes germane to the meeting.
1471 (4) If the corporation refuses to allow a shareholder, or the shareholder's agent or
1472attorney, to inspect the shareholders' list before or at the meeting, or to copy the list as
1473permitted by Subsection (2), [the district court of the county where a corporation's principal
1474office is located, or, if it has none in this state, the district court for Salt Lake County, on
1475application of the shareholder, may] a court may, upon the petition of a shareholder:
1476 (a) summarily order the inspection or copying at the corporation's expense [and may];
1477and
1478 (b) postpone the meeting for which the list was prepared until the inspection or copying
1479is complete.
1480 (5) If a court orders inspection or copying of the shareholders' list pursuant to
1481Subsection (4), unless the corporation proves that [it] the corporation refused inspection or
1482copying of the list in good faith because [it] the corporation had a reasonable basis for doubt
1483about the right of the shareholder or the shareholder's agent or attorney to inspect or copy the
1484shareholders' list:
1485 (a) the court shall also order the corporation to pay the shareholder's costs, including
1486reasonable counsel fees, incurred to obtain the order; H.B. 251
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1487 (b) the court may order the corporation to pay the shareholder for any damages
1488incurred; and
1489 (c) the court may grant the shareholder any other remedy afforded by law.
1490 (6) If a court orders inspection or copying of the shareholders' list pursuant to
1491Subsection (4), the court may impose reasonable restrictions on the use or distribution of the
1492list by the shareholder.
1493 (7) Refusal or failure to prepare or make available the shareholders' list does not affect
1494the validity of action taken at the meeting.
1495 Section 26. Section 16-10a-1330 is amended to read:
1496 16-10a-1330. Judicial appraisal of shares -- Court action.
1497 (1) (a) If a demand for payment under Section 16-10a-1328 remains unresolved, the
1498corporation shall [commence a proceeding] bring an action in a court with jurisdiction under
1499Title 78A, Judiciary and Judicial Administration, within 60 days after receiving the payment
1500demand contemplated by Section 16-10a-1328, [and petition] for the court to determine the fair
1501value of the shares and the amount of interest.
1502 (b) If the corporation does not [commence the proceeding] bring an action within the
150360-day period, [it] the corporation shall pay each dissenter whose demand remains unresolved
1504the amount demanded.
1505 [(2) The corporation shall commence the proceeding described in Subsection (1) in the
1506district court of the county in this state where the corporation's principal office, or if it has no
1507principal office in this state, Salt Lake County. If the corporation is a foreign corporation, it
1508shall commence the proceeding in the county in this state where the principal office of the
1509domestic corporation merged with, or whose shares were acquired by, the foreign corporation
1510was located, or, if the domestic corporation did not have its principal office in this state at the
1511time of the transaction, in Salt Lake County.]
1512 [(3)] (2) (a) The corporation shall make all dissenters who have satisfied the
1513requirements of Sections 16-10a-1321, 16-10a-1323, and 16-10a-1328, whether or not they are Enrolled Copy H.B. 251
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1514residents of this state whose demands remain unresolved, parties to the [proceeding
1515commenced] action brought under Subsection [(2)] (1) as an action against their shares.
1516 (b) All such dissenters who are named as parties shall be served with a copy of the
1517[petition] complaint.
1518 (c) (i) Service on each dissenter may be by registered or certified mail to the address
1519stated in [his] the dissenter's payment demand made pursuant to Section 16-10a-1328.
1520 (ii) If no address is stated in the payment demand, service may be made at the address
1521stated in the payment demand given pursuant to Section 16-10a-1323.
1522 (iii) If no address is stated in the payment demand, service may be made at the address
1523shown on the corporation's current record of shareholders for the record shareholder holding
1524the dissenter's shares.
1525 (iv) Service may also be made otherwise as provided by law.
1526 [(4)] (3) (a) The jurisdiction of the court in which the [proceeding is commenced]
1527action filed under Subsection [(2)] (1) is plenary and exclusive.
1528 (b) The court may appoint one or more persons as appraisers to receive evidence and
1529recommend decision on the question of fair value.
1530 (c) The appraisers have the powers described in the order appointing them, or in any
1531amendment to it.
1532 (d) The dissenters are entitled to the same discovery rights as parties in other civil
1533proceedings.
1534 [(5)] (4) Each dissenter made a party to the [proceeding commenced] action filed under
1535Subsection [(2)] (1) is entitled to judgment:
1536 (a) for the amount, if any, by which the court finds that the fair value of [his] the
1537dissenter's shares, plus interest, exceeds the amount paid by the corporation pursuant to Section
153816-10a-1325; or
1539 (b) for the fair value, plus interest, of the dissenter's after-acquired shares for which the
1540corporation elected to withhold payment under Section 16-10a-1327. H.B. 251
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1541 Section 27. Section 16-10a-1430 is amended to read:
1542 16-10a-1430. Grounds and procedure for judicial dissolution.
1543 (1) [A corporation may be dissolved in a proceeding by the attorney general or the
1544division director] The attorney general or the division director may bring an action in a court
1545with jurisdiction under Title 78A, Judiciary and Judicial Administration, to dissolve a
1546corporation if it is established that:
1547 (a) the corporation obtained its articles of incorporation through fraud; or
1548 (b) the corporation has continued to exceed or abuse the authority conferred upon [it]
1549the corporation by law.
1550 (2) [A corporation may be dissolved in a proceeding by a shareholder] A shareholder
1551may bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
1552Administration, to dissolve a corporation if it is established that:
1553 (a) the directors are deadlocked in the management of the corporate affairs, the
1554shareholders are unable to break the deadlock, irreparable injury to the corporation is
1555threatened or being suffered, or the business and affairs of the corporation can no longer be
1556conducted to the advantage of the shareholders generally, because of the deadlock;
1557 (b) the directors or those in control of the corporation have acted, are acting, or will act
1558in a manner that is illegal, oppressive, or fraudulent;
1559 (c) the shareholders are deadlocked in voting power and have failed, for a period that
1560includes at least two consecutive annual meeting dates, to elect successors to directors whose
1561terms have expired or would have expired upon the election of their successors; or
1562 (d) the corporate assets are being misapplied or wasted.
1563 (3) [A corporation may be dissolved in a proceeding by a creditor] A creditor may
1564bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
1565Administration, to dissolve a corporation if it is established that:
1566 (a) the creditor's claim has been reduced to judgment, the execution on the judgment
1567has been returned unsatisfied, and the corporation is insolvent; or Enrolled Copy H.B. 251
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1568 (b) the corporation is insolvent and the corporation has admitted in writing that the
1569creditor's claim is due and owing.
1570 (4) [A corporation may be dissolved in a proceeding by the corporation to have its] A
1571corporation may bring an action in a court with jurisdiction under Title 78A, Judiciary and
1572Judicial Administration, to dissolve the corporation by voluntary dissolution continued under
1573court supervision.
1574 (5) If an action is brought under this section, it is not necessary to make shareholders
1575parties to the action to dissolve a corporation unless relief is sought against them individually.
1576 (6) In a proceeding under this section, a court may:
1577 (a) issue injunctions;
1578 (b) appoint a receiver or custodian pendente lite with all powers and duties the court
1579directs; or
1580 (c) take other action required to preserve the corporate assets wherever located and
1581carry on the business of the corporation until a full hearing can be held.
1582 Section 28. Section 16-10a-1434 is amended to read:
1583 16-10a-1434. Election to purchase in lieu of dissolution.
1584 (1) In [a proceeding] an action under Subsection 16-10a-1430(2) to dissolve a
1585corporation that has no shares listed on a national securities exchange or regularly traded in a
1586market maintained by one or more members of a national or affiliated securities association,
1587the corporation may elect, or if it fails to elect, one or more shareholders may elect to purchase
1588all shares of the corporation owned by the petitioning shareholder, at the fair value of the
1589shares, determined as provided in this section. An election pursuant to this section is
1590irrevocable unless the court determines that it is equitable to set aside or modify the election.
1591 (2) (a) An election to purchase pursuant to this section may be filed with the court at
1592any time within 90 days after the filing of the [petition] action under Subsection
159316-10a-1430(2) or at any later time as the court in its discretion may allow. If the corporation
1594files an election with the court within the 90-day period, or at any later time allowed by the H.B. 251
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1595court, to purchase all shares of the corporation owned by the petitioning shareholder, the
1596corporation shall purchase the shares in the manner provided in this section.
1597 (b) If the corporation does not file an election with the court within the time period, but
1598an election to purchase all shares of the corporation owned by the petitioning shareholder is
1599filed by one or more shareholders within the time period, the corporation shall, within 10 days
1600after the later of:
1601 (i) the end of the time period allowed for the filing of elections to purchase under this
1602section; or
1603 (ii) notification from the court of an election by shareholders to purchase all shares of
1604the corporation owned by the petitioning shareholder as provided in this section, give written
1605notice of the election to purchase to all shareholders of the corporation, other than the
1606petitioning shareholder. The notice shall state the name and number of shares owned by the
1607petitioning shareholder and the name and number of shares owned by each electing
1608shareholder. The notice shall advise any recipients who have not participated in the election of
1609their right to join in the election to purchase shares in accordance with this section, and of the
1610date by which any notice of intent to participate must be filed with the court.
1611 (c) Shareholders who wish to participate in the purchase of shares from the petitioning
1612shareholder shall file notice of their intention to join in the purchase by the electing
1613shareholders, no later than 30 days after the effective date of the corporation's notice of their
1614right to join in the election to purchase.
1615 (d) All shareholders who have filed with the court an election or notice of their
1616intention to participate in the election to purchase the shares of the corporation owned by the
1617petitioning shareholder thereby become irrevocably obligated to participate in the purchase of
1618shares from the petitioning shareholders upon the terms and conditions of this section, unless
1619the court otherwise directs.
1620 (e) After an election has been filed by the corporation or one or more shareholders, the
1621[proceedings] action under Subsection 16-10a-1430(2) may not be discontinued or settled, nor Enrolled Copy H.B. 251
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1622may the petitioning shareholder sell or otherwise dispose of any shares of the corporation,
1623unless the court determines that it would be equitable to the corporation and the shareholders,
1624other than the petitioning shareholders, to permit any discontinuance, settlement, sale, or other
1625disposition.
1626 (3) If, within 60 days after the earlier of:
1627 (a) the corporation's filing of an election to purchase all shares of the corporation
1628owned by the petitioning shareholder; or
1629 (b) the corporation's mailing of a notice to its shareholders of the filing of an election
1630by the shareholders to purchase all shares of the corporation owned by the petitioning
1631shareholder, the petitioning shareholder and electing corporation or shareholders reach
1632agreement as to the fair value and terms of purchase of the petitioning shareholder's shares, the
1633court shall enter an order directing the purchase of petitioner's shares, upon the terms and
1634conditions agreed to by the parties.
1635 (4) If the parties are unable to reach an agreement as provided for in Subsection (3),
1636upon application of any party the court shall stay the proceedings under Subsection
163716-10a-1430(2) and determine the fair value of the petitioning shareholder's shares as of the
1638day before the date on which the [petition] action under Subsection 16-10a-1430(2) was filed
1639or as of any other date the court determines to be appropriate under the circumstances and
1640based on the factors the court determines to be appropriate.
1641 (5) (a) Upon determining the fair value of the shares of the corporation owned by the
1642petitioning shareholder, the court shall enter an order directing the purchase of the shares upon
1643terms and conditions the court determines to be appropriate. The terms and conditions may
1644include payment of the purchase price in installments, where necessary in the interests of
1645equity, provision for security to assure payment of the purchase price and any additional costs,
1646fees, and expenses awarded by the court, and an allocation of shares among shareholders if the
1647shares are to be purchased by shareholders.
1648 (b) In allocating the petitioning shareholders' shares among holders of different classes H.B. 251
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1649of shares, the court shall attempt to preserve the existing distribution of voting rights among
1650holders of different share classes to the extent practicable. The court may direct that holders of
1651a specific class or classes may not participate in the purchase. The court may not require any
1652electing shareholder to purchase more of the shares of the corporation owned by the petitioning
1653shareholder than the number of shares that the purchasing shareholder may have set forth in his
1654election or notice of intent to participate filed with the court as the maximum number of shares
1655he is willing to purchase.
1656 (c) Interest may be allowed at the rate and from the date determined by the court to be
1657equitable. However, if the court finds that the refusal of the petitioning shareholder to accept
1658an offer of payment was arbitrary or otherwise not in good faith, interest may not be allowed.
1659 (d) If the court finds that the petitioning shareholder had probable grounds for relief
1660under Subsection 16-10a-1430(2)(b) or (d), it may award to the petitioning shareholder
1661reasonable fees and expenses of counsel and experts employed by the petitioning shareholder.
1662 (6) Upon entry of an order under Subsection (3) or (5), the court shall dismiss the
1663[petition] action to dissolve the corporation under Section 16-10a-1430, and the petitioning
1664shareholder shall no longer have any rights or status as a shareholder of the corporation, except
1665the right to receive the amounts awarded to him by the court. The award is enforceable in the
1666same manner as any other judgment.
1667 (7) (a) The purchase ordered pursuant to Subsection (5) shall be made within 10 days
1668after the date the order becomes final, unless before that time the corporation files with the
1669court a notice of its intention to adopt articles of dissolution pursuant to Sections 16-10a-1402
1670and 16-10a-1403. The articles of dissolution must then be adopted and filed within 50 days
1671after notice.
1672 (b) Upon filing of the articles of dissolution, the corporation is dissolved in accordance
1673with the provisions of Sections 16-10a-1405 through 16-10a-1408, and the order entered
1674pursuant to Subsection (5) is no longer of any force or effect. However, the court may award
1675the petitioning shareholder reasonable fees and expenses in accordance with the provisions of Enrolled Copy H.B. 251
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1676Subsection (5)(d). The petitioning shareholder may continue to pursue any claims previously
1677asserted on behalf of the corporation.
1678 (8) Any payment by the corporation pursuant to an order under Subsection (3) or (5),
1679other than an award of fees and expenses pursuant to Subsection (5)(d), is subject to the
1680provisions of Section 16-10a-640.
1681 Section 29. Section 16-10a-1532 is amended to read:
1682 16-10a-1532. Appeal from revocation.
1683 [(1) A foreign corporation may appeal the division's revocation of its authority to
1684transact business in this state to the district court of the county in this state where the last
1685registered or principal office of the corporation was located or in Salt Lake County, within 30
1686days after the notice of revocation is mailed under Section 16-10a-1531. The foreign
1687corporation appeals by petitioning the court to set aside the revocation and attaching to the
1688petition copies of the corporation's application for authority to transact business, and any
1689amended applications, each as filed with the division, and the division's notice of revocation.]
1690 [(2)] (1) If the division revokes a foreign corporation's authority to transact business in
1691this state, the foreign corporation may petition a court with jurisdiction under Title 78A,
1692Judiciary and Judicial Administration, to set aside the revocation.
1693 (2) A foreign corporation shall file a petition under Subsection (1) within 30 days after
1694the day on which the division gives notice of the revocation under Section 16-10a-1531.
1695 (3) The petition under Subsection (1) shall include a copy of the foreign corporation's
1696application for authority to transact business, any amended applications for authority to transact
1697business, and the division's notice of revocation.
1698 (4) [The] If a petition is filed under Subsection (1), the court may summarily order the
1699division to reinstate the authority of the foreign corporation to transact business in this state or
1700[it] the court may take any other action [it] the court considers appropriate.
1701 [(3)] (5) The court's final decision [may be appealed] is appealable as in other civil
1702proceedings. H.B. 251
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1703 Section 30. Section 16-10a-1604 is amended to read:
1704 16-10a-1604. Court-ordered inspection.
1705 (1) (a) If a corporation does not allow a shareholder or director, or the shareholder's or
1706director's agent or attorney, who complies with Subsection 16-10a-1602(1) to inspect or copy
1707any records required by that subsection to be available for inspection, [the district court of the
1708county in this state in which the corporation's principal office is located, or in Salt Lake County
1709if it has no principal office in this state, may] the shareholder or director may petition a court
1710with jurisdiction under Title 78A, Judiciary and Judicial Administration.
1711 (b) If a petition is filed under Subsection (1)(a), a court may summarily order
1712inspection and copying of the records demanded at the corporation's expense[, on application
1713of the shareholder or director denied access to the records].
1714 (2) (a) If a corporation does not within a reasonable time allow a shareholder or
1715director, or the shareholder's or director's agent or attorney, who complies with Subsections
171616-10a-1602(2) and (3), to inspect and copy any records which [he] the shareholder or director
1717is entitled to inspect or copy by this part, [then upon application of the shareholder or director
1718denied access to the records, the district court of the county in this state where the corporation's
1719principal office is located or, if it has no principal office in this state, the district court for Salt
1720Lake County, may] the shareholder or director may petition a court with jurisdiction under Title
172178A, Judiciary and Judicial Administration.
1722 (b) If a petition is filed under Subsection (2)(a), the court may summarily order the
1723inspection or copying of the records demanded.
1724 (c) The court shall dispose of [an application] a petition under this subsection on an
1725expedited basis.
1726 (3) If a court orders inspection or copying of records demanded, [it] the court shall also
1727order the corporation to pay the shareholder's or director's costs incurred to obtain the order,
1728including reasonable counsel fees, unless the corporation proves that it refused inspection in
1729good faith because it had a reasonable basis for doubt about the right of the shareholder or Enrolled Copy H.B. 251
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1730director, or the shareholder's or director's agent or attorney, to inspect the records demanded.
1731 (4) If a court orders inspection or copying of records demanded, [it] the court may:
1732 (a) impose reasonable restrictions on the use or distribution of the records by the
1733demanding shareholder or director;
1734 (b) order the corporation to pay the shareholder or director for any damages incurred as
1735a result of the corporation's denial if the court determines that the corporation did not act in
1736good faith in refusing to allow the inspection or copying;
1737 (c) if inspection or copying is ordered pursuant to Subsection (2), order the corporation
1738to pay the expenses of inspection and copying if the court determines that the corporation did
1739not act in good faith in refusing to allow the inspection or copying; and
1740 (d) grant the shareholder or director any other available legal remedy.
1741 Section 31. Section 16-11-13 is amended to read:
1742 16-11-13. Purchase or redemption of shares of disqualified shareholder.
1743 (1) (a) The articles of incorporation may provide for the purchase or redemption of the
1744shares of any shareholder upon the failure to qualify or disqualification of that shareholder, or
1745the same may be provided in the bylaws or by private agreement.
1746 (b) In the absence of such a provision in the articles of incorporation, the bylaws, or by
1747private agreement, the professional corporation shall purchase the shares of a shareholder who
1748is not qualified to own shares in the corporation within 90 days after the failure to qualify or
1749disqualification of the shareholder.
1750 (2) The price for shares purchased under this section shall be their reasonable fair value
1751as of the date of failure to qualify or disqualification of the shareholder.
1752 (3) (a) If the professional corporation fails to purchase shares as required by Subsection
1753(1), any disqualified shareholder or personal representative of a disqualified shareholder may
1754[bring an action in the district court of the county in which the principal office or place of
1755practice of the professional corporation is located for the enforcement of this section. The
1756court shall have power to] bring an action in a court with jurisdiction under Title 78A, H.B. 251
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1757Judiciary and Judicial Administration, for the enforcement of this section.
1758 (b) In an action under Subsection (3)(a), the court may:
1759 (i) award the plaintiff the reasonable fair value of [his shares, or within its jurisdiction,
1760may order] the plaintiff's shares; or
1761 (ii) within the court's jurisdiction, order the liquidation of the professional corporation.
1762 (c) [Further, if] If the plaintiff is successful in the action, [he shall be] the plaintiff is
1763entitled to recover a reasonable attorney's fee and costs.
1764 (4) The professional corporation shall repurchase shares as required by this section
1765without regard to restrictions upon the repurchase of shares provided by Title 16, Chapter 10a,
1766Utah Revised Business Corporation Act.
1767 Section 32. Section 16-16-202 is amended to read:
1768 16-16-202. Signing and filing of records pursuant to judicial order.
1769 (1) If a person required by this chapter to sign or deliver a record to the division for
1770filing does not [do so, the district court, upon petition of an aggrieved person, may order] sign
1771or deliver the record to the division for filing, the court may order, upon the petition of an
1772aggrieved person:
1773 (a) the person to sign the record and deliver [it] the record to the division for filing; or
1774 (b) delivery of the unsigned record to the division for filing.
1775 (2) An aggrieved person under Subsection (1), other than the limited cooperative
1776association or foreign cooperative to which the record pertains, shall make the association or
1777foreign cooperative a party to the action brought to obtain the order.
1778 (3) An unsigned record filed pursuant to this section is effective.
1779 Section 33. Section 16-16-1203 is amended to read:
1780 16-16-1203. Judicial dissolution.
1781 [The district court may dissolve a limited cooperative association or order any action
1782that under the circumstances is appropriate and equitable:]
1783 (1) [in a proceeding initiated by the attorney general,] The attorney general may bring Enrolled Copy H.B. 251
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1784an action in a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to
1785dissolve a limited cooperative association if:
1786 (a) the association obtained [its] the association's articles of organization through
1787fraud; or
1788 (b) the association has continued to exceed or abuse the authority conferred upon [it]
1789the corporation by law[; or].
1790 (2) [in a proceeding initiated by a member,] A member may bring an action in a court
1791with jurisdiction under Title 78A, Judiciary and Judicial Administration, to dissolve a limited
1792cooperative association if:
1793 (a) the directors are deadlocked in the management of the association's affairs, the
1794members are unable to break the deadlock, and irreparable injury to the association is occurring
1795or is threatened because of the deadlock;
1796 (b) the directors or those in control of the association have acted, are acting, or will act
1797in a manner that is illegal, oppressive, or fraudulent;
1798 (c) the members are deadlocked in voting power and have failed to elect successors to
1799directors whose terms have expired for two consecutive periods during which annual members
1800meetings were held or were to be held; or
1801 (d) the assets of the association are being misapplied or wasted.
1802 (3) If an action is brought under this section, a court may dissolve a limited cooperative
1803association or order an action that under the circumstances is appropriate or equitable.
1804 Section 34. Section 16-16-1206 is amended to read:
1805 16-16-1206. Winding up.
1806 (1) A limited cooperative association continues after dissolution only for purposes of
1807winding up [its] the association's activities.
1808 (2) In winding up a limited cooperative association's activities, the board of directors
1809shall cause the association to:
1810 (a) discharge [its] the association's liabilities, settle and close [its] the association's H.B. 251
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1811activities, and marshal and distribute [its] the association's assets;
1812 (b) preserve the association or its property as a going concern for no more than a
1813reasonable time;
1814 (c) prosecute and defend actions and proceedings;
1815 (d) transfer association property; and
1816 (e) perform other necessary acts.
1817 (3) After dissolution and upon application of a limited cooperative association, a
1818member, or a holder of financial rights, [the district court] a court may order judicial
1819supervision of the winding up of the association, including the appointment of a person to wind
1820up the association's activities, if:
1821 (a) after a reasonable time, the association has not wound up [its] the association's
1822activities; or
1823 (b) the applicant establishes other good cause.
1824 (4) If a person is appointed pursuant to Subsection (3) to wind up the activities of a
1825limited cooperative association, the association shall promptly deliver to the division for filing
1826an amendment to the articles of organization to reflect the appointment.
1827 Section 35. Section 16-16-1210 is amended to read:
1828 16-16-1210. Court proceeding.
1829 (1) [Upon application] Upon a petition by a dissolved limited cooperative association
1830that has published a notice under Section 16-16-1209, [the district court in the county where
1831the association's principal office is located or, if the association does not have a principal office
1832in this state where its designated office in this state is located,] a court with jurisdiction under
1833Title 78A, Judiciary and Judicial Administration, may determine the amount and form of
1834security to be provided for payment of claims against the association that are contingent, have
1835not been made known to the association, or are based on an event occurring after the effective
1836date of dissolution but that, based on the facts known to the association, are reasonably
1837anticipated to arise after the effective date of dissolution. Enrolled Copy H.B. 251
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1838 (2) Not later than 10 days after filing [an application] a petition under Subsection (1), a
1839dissolved limited cooperative association shall give notice of the proceeding to each known
1840claimant holding a contingent claim.
1841 (3) (a) The court may appoint a representative in a proceeding brought under this
1842section to represent all claimants whose identities are unknown.
1843 (b) The dissolved limited cooperative association shall pay reasonable fees and
1844expenses of the representative, including all reasonable attorney and expert witness fees.
1845 (4) Provision by the dissolved limited cooperative association for security in the
1846amount and the form ordered by the court satisfies the association's obligations with respect to
1847claims that are contingent, have not been made known to the association, or are based on an
1848event occurring after the effective date of dissolution, and the claims may not be enforced
1849against a member that received a distribution.
1850 Section 36. Section 24-1-103 is amended to read:
1851 24-1-103. Venue.
1852 [(1)] In addition to the venue provided for under [Title 78B, Chapter 3, Part 3, Place of
1853Trial -- Venue] Title 78B, Chapter 3a, Venue for Civil Actions, or any other provisions of law,
1854a proceeding under this title may be maintained in the judicial district in which:
1855 [(a)] (1) the property is seized;
1856 [(b)] (2) any part of the property is found; or
1857 [(c)] (3) a civil or criminal action could be maintained against a claimant for the
1858offense subjecting the property to forfeiture under this title.
1859 [(2) A claimant may obtain a change of venue under Section 78B-3-309.]
1860 Section 37. Section 31A-1-401 is enacted to read:
1861 Part 4. Venue
1862 31A-1-401. Venue for action or petition filed by commissioner.
1863 If the commissioner brings an action under this title in the district court, the
1864commissioner shall bring the action: H.B. 251
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1865 (1) in accordance with Title 78B, Chapter 3a, Venue for Civil Actions; or
1866 (2) in Salt Lake County.
1867 Section 38. Section 31A-2-305 is amended to read:
1868 31A-2-305. Immunity from prosecution.
1869 (1) (a) If a natural person declines to appear, testify, or produce any record or document
1870in any proceeding instituted by the commissioner or in obedience to the subpoena of the
1871commissioner, the commissioner may [apply to a judge of the district court where the
1872proceeding is held] petition a court with jurisdiction under Title 78A, Judiciary and Judicial
1873Administration, for an order to the person to attend, testify, or produce records or documents as
1874requested by the commissioner.
1875 (b) In the event a witness asserts a privilege against self-incrimination, testimony and
1876evidence from the witness may be compelled pursuant to Title 77, Chapter 22b, Grants of
1877Immunity.
1878 (2) If a person claims the privilege against self-incrimination and refuses to appear,
1879testify, or produce documents in response to probative evidence against [him] the person in a
1880proceeding to revoke or suspend [his] the person's license, and if the testimony or documents
1881would have been admissible as evidence in a court of law except for the Fifth Amendment
1882privilege, the refusal to appear, testify, or produce documents is, for noncriminal proceedings
1883only, rebuttable evidence of the facts on which the proceeding is based.
1884 Section 39. Section 31A-5-414 is amended to read:
1885 31A-5-414. Transactions in which directors and others are interested.
1886 (1) Any material transaction between an insurance corporation and one or more of its
1887directors or officers, or between an insurance corporation and any other person in which one or
1888more of its directors or officers or any person controlling the corporation has a material
1889interest, is voidable by the corporation unless all the following exist:
1890 (a) At the time the transaction is entered into it is fair to the interests of the corporation.
1891 (b) The transaction has, with full knowledge of its terms and of the interests involved, Enrolled Copy H.B. 251
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1892been approved in advance by the board or by the shareholders.
1893 (c) The transaction has been reported to the commissioner immediately after approval
1894by the board or the shareholders.
1895 (2) A director, whose interest or status makes the transaction subject to this section,
1896may be counted in determining a quorum for a board meeting approving a transaction under
1897Subsection (1)(b), but may not vote. Approval requires the affirmative vote of a majority of
1898those present.
1899 (3) (a) The commissioner may by rule exempt certain types of transactions from the
1900reporting requirement of Subsection (1)(c).
1901 (b) The commissioner has standing to bring an action on behalf of an insurer to have a
1902contract in violation of Subsection (1) declared void. [Such an action shall be brought in the
1903Third Judicial District Court for Salt Lake County.]
1904 Section 40. Section 31A-5-415 is amended to read:
1905 31A-5-415. Officers', directors', and employees' liability and indemnification.
1906 (1) (a) Section 16-10a-841 applies to the liabilities of directors of a stock corporation.
1907 (b) Subsection 16-6a-825(3) applies to loans to trustees and officers of a mutual.
1908 (c) A director who votes for or assents to a violation of Subsection 16-6a-825(3) or
1909Section 16-10a-842 is jointly and severally liable to the corporation for any loss on the
1910distribution.
1911 (2) (a) Title 16, Chapter 10a, Part 9, Indemnification, applies to stock and mutual
1912corporations, but no indemnification may be paid until 30 or more days after sending a notice
1913to the commissioner of the full details of the proposed indemnification.
1914 (b) The commissioner may bring an action [in Third Judicial District Court for Salt
1915Lake County] in a court with jurisdiction under Title 78A, Judiciary and Judicial
1916Administration, to have such indemnification enjoined.
1917 (c) The court may enjoin the indemnification to the extent [it] the indemnification
1918would render the insurer in a hazardous condition, or exacerbate an existing financially H.B. 251
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1919hazardous condition.
1920 Section 41. Section 31A-15-211 is amended to read:
1921 31A-15-211. Enforcement authority.
1922 (1) (a) The commissioner is authorized to use the powers established for the
1923department under this title to enforce the laws of this state not specifically preempted by the
1924Liability Risk Retention Act of 1986, including the commissioner's administrative authority to
1925investigate, issue subpoena, conduct depositions and hearings, issue orders, impose monetary
1926penalties and seek injunctive relief.
1927 (b) With regard to any investigation, administrative proceedings, or litigation, the
1928commissioner shall rely on the procedural laws of this state.
1929 (2) (a) Whenever the commissioner determines that any person, risk retention group,
1930purchasing group, or insurer of a purchasing group has violated, is violating, or is about to
1931violate any provision of this part or any other insurance law of this state applicable to the
1932person or entity, or that the person or entity has failed to comply with a lawful order of the
1933commissioner, [he] the commissioner may, in addition to any other lawful remedies or
1934penalties, [file a complaint in the Third District Court of Salt Lake County] bring an action in a
1935court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to enjoin and
1936restrain any person, risk retention group, purchasing group, or insurer from engaging in the
1937violation, or to compel compliance with the order of the commissioner. [The court has
1938jurisdiction of the proceeding and has the power to enter a judgment and order for injunctive or
1939other relief.]
1940 (b) [In any action by the commissioner under this subsection] In an action by the
1941commissioner under Subsection (2)(a), service of process shall be made upon the director of
1942the Division of Corporations and Commercial Code who shall forward the order, pleadings, or
1943other process to the person, risk retention group, purchasing group, or insurer in accordance
1944with the procedures specified in Section 31A-14-204.
1945 (c) Nothing in this section may be construed to limit or abridge the authority of the Enrolled Copy H.B. 251
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1946commissioner to seek injunctive relief in any district court of the United States as provided in
1947Section 31A-15-213.
1948 (3) In an action under this section, a court has the power to enter a judgment and order
1949for injunctive or other relief.
1950 Section 42. Section 31A-16-107.5 is amended to read:
1951 31A-16-107.5. Examination of registered insurers.
1952 (1) Subject to the limitation contained in this section and the powers which the
1953commissioner has under Chapter 2, Administration of the Insurance Laws, relating to the
1954examination of insurers, the commissioner has the power to examine an insurer registered
1955under Section 31A-16-105 and its affiliates to ascertain the financial condition of the insurer,
1956including the enterprise risk to the insurer by the ultimate controlling party, or by the insurance
1957holding company system on a consolidated basis.
1958 (2) (a) The commissioner may order an insurer registered under Section 31A-16-105 to
1959produce the records, books, or other information papers in the possession of the insurer or its
1960affiliates as are reasonably necessary to determine compliance with this chapter.
1961 (b) To determine compliance with this chapter, the commissioner may order an insurer
1962registered under Section 31A-16-105 to produce information not in the possession of the
1963insurer if the insurer can obtain access to the information pursuant to contractual relationships,
1964statutory obligations, or other methods.
1965 (c) If an insurer cannot obtain the information requested by the commissioner, the
1966insurer shall provide the commissioner a detailed explanation of the reason that the insurer
1967cannot obtain the information and the identity of the holder of the information.
1968 (d) Whenever it appears to the commissioner that the detailed explanation is without
1969merit, the commissioner may require, after notice and hearing, the insurer to pay a penalty of
1970$5,000 for each day's delay, or may suspend or revoke the insurer's license.
1971 (3) The commissioner may retain, at the registered insurer's expense, attorneys,
1972actuaries, accountants, and other experts not otherwise a part of the commissioner's staff, if H.B. 251
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1973they are necessary to assist in the conduct of the examination under Subsection (1). Any
1974persons so retained are under the direction and control of the commissioner and shall act in a
1975purely advisory capacity.
1976 (4) A registered insurer who produces records, books, and papers under Subsection
1977[(1)] (2) for examination is liable for and shall pay the expense of the examination under
1978Section 31A-2-205.
1979 (5) If an insurer fails to comply with an order issued under this section, the
1980commissioner may:
1981 (a) examine the affiliates to obtain the information; or
1982 (b) issue subpoenas, administer oaths, and examine under oath any person for purposes
1983of determining compliance with this section.
1984 (6) (a) Upon the failure or refusal of any person to obey a subpoena under Subsection
1985(5), the commissioner may [petition the Third District Court of Salt Lake County] petition a
1986court to enter an order compelling the witness to appear and testify or produce documentary
1987evidence.
1988 (b) A person shall be obliged to attend as a witness at the place specified in the
1989subpoena, when subpoenaed, anywhere within the state.
1990 (c) A person subpoenaed is entitled to the same fees and mileage[, if claimed, as a
1991witness in the Third District Court of Salt Lake County, which fees,] as a witness under Section
199278B-1-119.
1993 (d) Fees, mileage, and actual expense, if any, necessarily incurred in securing the
1994attendance of witnesses, and [their] the witness's testimony, shall be itemized and charged
1995against, and be paid by, the company being examined.
1996 Section 43. Section 31A-16-110 is amended to read:
1997 31A-16-110. Enjoining violations -- Voting securities acquired in violation of law
1998or rule.
1999 (1) (a) Whenever it appears to the commissioner that any insurer or any director, Enrolled Copy H.B. 251
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2000officer, employee, or agent of an insurer has committed or is about to commit a violation of this
2001chapter or any rule or order issued by the commissioner under this chapter, the commissioner
2002may [apply to the district court of the county in which the principal office of the insurer is
2003located, or if the insurer has no principal office in this state, then to the Third District Court of
2004Salt Lake County,] petition a court for an order enjoining the insurer or a director, officer,
2005employee, or agent of the insurer from the violation.
2006 (b) The commissioner may also request other equitable relief which the nature of the
2007case and the interest of the insurer's policyholders, creditors, and shareholders or the public
2008require.
2009 (2) (a) No security which is the subject of any agreement or arrangement regarding
2010acquisition, or which is acquired or to be acquired, in contravention of the provisions of this
2011chapter or any rule or order issued by the commissioner under this chapter, may be voted at any
2012shareholders' meeting, or may be counted for quorum purposes.
2013 (b) Any action of shareholders requiring the affirmative vote of a percentage of shares
2014may be taken as though those securities were not issued and outstanding.
2015 (c) However, no action taken at that shareholders' meeting is invalidated by the voting
2016of those securities, unless the action would materially affect control of the insurer or unless the
2017[district] court has ordered that voting invalidates the action.
2018 (d) If an insurer or the commissioner has reason to believe that any security of the
2019insurer has been or is about to be acquired in contravention of the provisions of this chapter or
2020any rule or order issued by the commissioner under this chapter, the insurer or the
2021commissioner may [apply to the Third District Court of Salt Lake County or to the district
2022court for the county in which the insurer has its principal place of business,] petition a court to
2023enjoin any offer, request, invitation, or agreement of acquisition which is made in
2024contravention of Section 31A-16-103 or any rule or order issued by the commissioner under
2025this chapter to enjoin the voting of that acquired security.
2026 (e) [This court order may also] On a petition under Subsection (2)(d), a court may: H.B. 251
Enrolled Copy
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2027 (i) void any vote of that security if the vote has already been cast at any meeting of
2028shareholders[, and the court may]; and
2029 (ii) grant other equitable relief which the nature of the case and the interests of the
2030insurer's policyholders, creditors, and shareholders or the public require.
2031 [(3) Upon the application of the insurer or the commissioner, if a person has acquired
2032or is proposing to acquire any voting securities in violation of this chapter or of any rule or
2033order issued by the commissioner under this chapter, the Third District Court of Salt Lake
2034County or the district court for the county in which the insurer has its principal place of
2035business may, upon the notice which the court deems appropriate,]
2036 (3) (a) If a person has acquired or is proposing to acquire any voting securities in
2037violation of this chapter or in violation of a rule or order issued by the commissioner under this
2038chapter, the insurer or the commissioner may petition a court with jurisdiction under Title 78A,
2039Judiciary and Judicial Administration.
2040 (b) If a petition is filed under Subsection (3)(a), a court may:
2041 (i) seize or sequester any voting securities of the insurer owned directly or indirectly by
2042that person[, and]; and
2043 (ii) issue orders with respect to that person and those securities which the court
2044considers appropriate to effectuate the provisions of this chapter.
2045 (c) A petitioner under Subsection (3)(a) shall provide notice that the court deems
2046appropriate.
2047 (4) For the purposes of this chapter, the situs of the ownership of the securities of
2048domestic insurers is considered to be in this state.
2049 Section 44. Section 31A-16-111 is amended to read:
2050 31A-16-111. Required sale of improperly acquired stock -- Penalties.
2051 (1) If the commissioner finds that the acquiring person has not substantially complied
2052with the requirements of this chapter in acquiring control of a domestic insurer, the
2053commissioner may require the acquiring person to sell the acquiring person's stock of the Enrolled Copy H.B. 251
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2054domestic insurer in the manner specified in Subsection (2).
2055 (2) (a) The commissioner shall effect the sale required by Subsection (1) in the manner
2056which, under the particular circumstances, appears most likely to result in the payment of the
2057full market value for the stock by persons who have the collective competence, experience,
2058financial resources, and integrity to obtain approval under Subsection 31A-16-103(8).
2059 (b) Sales made under this section are subject to approval by [the Third Judicial District
2060Court for Salt Lake County] a court with jurisdiction under Title 78A, Judiciary and Judicial
2061Administration, which court has the authority to effect the terms of the sale.
2062 (3) The proceeds from sales made under this section shall be distributed first to the
2063person required by this section to sell the stock, but only up to the amount originally paid by
2064the person for the securities. Additional sale proceeds shall be paid to the General Fund.
2065 (4) The person required to sell and persons related to or affiliated with the seller may
2066not purchase the stock at the sale conducted under this section.
2067 (5) (a) A director or officer of an insurance holding company system violates this
2068chapter if the director or officer knowingly:
2069 (i) participates in or assents to a transaction or investment that:
2070 (A) has not been properly reported or submitted pursuant to:
2071 (I) Subsections 31A-16-105(1) and (2); or
2072 (II) Subsection 31A-16-106(1)(b); or
2073 (B) otherwise violates this chapter; or
2074 (ii) permits any of the officers or agents of the insurer to engage in a transaction or
2075investment described in Subsection (5)(a)(i).
2076 (b) A director or officer in violation of Subsection (5)(a) shall pay, in the director's or
2077officer's individual capacity, a civil penalty of not more than $20,000 per violation:
2078 (i) upon a finding by the commissioner of a violation; and
2079 (ii) after notice and hearing before the commissioner.
2080 (c) In determining the amount of the civil penalty under Subsection (5)(b), the H.B. 251
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2081commissioner shall take into account:
2082 (i) the appropriateness of the penalty with respect to the gravity of the violation;
2083 (ii) the history of previous violations; and
2084 (iii) any other matters that justice requires.
2085 (6) (a) When it appears to the commissioner that any insurer or any director, officer,
2086employee, or agent of the insurer, has committed a willful violation of this chapter, the
2087commissioner may [cause criminal proceedings to be instituted:] refer the violation to the
2088appropriate prosecutor.
2089 [(i) (A) in the district court for the county in this state in which the principal office of
2090the insurer is located; or]
2091 [(B) if the insurer has no principal office in this state, in the Third District Court for
2092Salt Lake County; and]
2093 [(ii) against the insurer or the responsible director, officer, employee, or agent of the
2094insurer.]
2095 (b) (i) An insurer that willfully violates this chapter may be fined not more than
2096$20,000.
2097 (ii) Any individual who willfully violates this chapter is guilty of a third degree felony,
2098and upon conviction may be:
2099 (A) fined in that person's individual capacity not more than $5,000;
2100 (B) imprisoned; or
2101 (C) both fined and imprisoned.
2102 (7) This section does not limit the other sanctions applicable to violations of this title
2103under Section 31A-2-308.
2104 Section 45. Section 31A-16-112 is amended to read:
2105 31A-16-112. Sanctions.
2106 (1) (a) Notwithstanding Section 31A-2-308, the following sanctions apply:
2107 (i) An insurer failing, without just cause, to file a registration statement required by this Enrolled Copy H.B. 251
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2108chapter is required, after notice and hearing, to pay a penalty of $10,000 for each day's delay, to
2109be recovered by the commissioner and the penalty so recovered shall be paid into the General
2110Fund.
2111 (ii) The maximum penalty under this section is $250,000.
2112 (b) The commissioner may reduce the penalty if the insurer demonstrates to the
2113commissioner that the imposition of the penalty would constitute a financial hardship to the
2114insurer.
2115 (2) (a) A director or officer of an insurance holding company system who knowingly
2116violates, participates in, or assents to, or who knowingly shall permit any of the officers or
2117agents of the insurer to engage in transactions or make investments that have not been properly
2118reported or submitted pursuant to Subsection 31A-16-105(1), 31A-16-106(1)(b), or
211931A-16-106(2), or that violates this chapter, shall pay, in the director's or officer's individual
2120capacity, a civil forfeiture of not more than $10,000 per violation, notwithstanding Section
212131A-2-308, after notice and hearing before the commissioner.
2122 (b) In determining the amount of the civil forfeiture, the commissioner shall take into
2123account the appropriateness of the forfeiture with respect to the gravity of the violation, the
2124history of previous violations, and such other matters as justice may require.
2125 (3) (a) Whenever it appears to the commissioner that any insurer subject to this chapter
2126or a director, officer, employee, or agent of the insurer has engaged in any transaction or
2127entered into a contract that is subject to Section 31A-16-106 and that would not have been
2128approved had the approval been requested, the commissioner may order the insurer to cease
2129and desist immediately any further activity under that transaction or contract.
2130 (b) After notice and hearing, the commissioner may also order the insurer to void any
2131contract and restore the status quo if the action is in the best interest of the policyholders,
2132creditors, or the public.
2133 (4) (a) Whenever it appears to the commissioner that an insurer or any director, officer,
2134employee, or agent of the insurer has committed a willful violation of this chapter, the H.B. 251
Enrolled Copy
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2135commissioner may refer the [case] violation to the appropriate prosecutor. [Venue for the
2136criminal action shall be in the Third District Court of Salt Lake County, against the insurer or
2137the responsible director, officer, employee, or agent of the insurer.]
2138 (b) An insurer that willfully violates this chapter may be fined not more than $250,000
2139notwithstanding Section 31A-2-308.
2140 (c) An individual who willfully violates this chapter may be fined in the individual's
2141individual capacity not more than $100,000 notwithstanding Section 31A-2-308 and is guilty of
2142a third-degree felony.
2143 (5) (a) An officer, director, or employee of an insurance holding company system who
2144willfully and knowingly subscribes to or makes or causes to be made any false statements, false
2145reports, or false filings with the intent to deceive the commissioner in the performances of the
2146commissioner's duties under this chapter, is guilty of a third-degree felony.
2147 (b) Any fines imposed shall be paid by the officer, director, or employee in the
2148officer's, director's, or employee's individual capacity.
2149 (6) Whenever it appears to the commissioner that a person has committed a violation
2150of Section 31A-16-103 and that prevents the full understanding of the enterprise risk to the
2151insurer by affiliates or by the insurance holding company system, the violation may serve as an
2152independent basis for disapproving dividends or distributions and for placing the insurer under
2153an order of supervision in accordance with Section 31A-27-503.
2154 Section 46. Section 31A-16-117 is amended to read:
2155 31A-16-117. Judicial review -- Mandamus.
2156 (1) A person aggrieved by an act, determination, rule, or order or any other action of
2157the commissioner pursuant to this chapter may seek judicial review in accordance with Title
215863G, Chapter 4, Administrative Procedures Act.
2159 (2) The filing of an appeal pursuant to this section shall stay the application of any rule,
2160order, or other action of the commissioner to the appealing party unless the court, after giving
2161party notice and an opportunity to be heard, determines that a stay would be detrimental to the Enrolled Copy H.B. 251
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2162interest of policyholders, shareholders, creditors, or the public.
2163 (3) A person aggrieved by a failure of the commissioner to act or make a determination
2164required by this chapter may petition [the Third District Court of] the district court in Salt Lake
2165County for writ in the nature of a mandamus or a peremptory mandamus directing the
2166commissioner to act or make a determination.
2167 Section 47. Section 31A-17-610 is amended to read:
2168 31A-17-610. Foreign insurers or health organizations.
2169 (1) (a) Any foreign insurer or health organization shall, upon the written request of the
2170commissioner, submit to the commissioner an RBC report as of the end of the most recent
2171calendar year by the later of:
2172 (i) the date an RBC report would be required to be filed by a domestic insurer or health
2173organization under this part; or
2174 (ii) 15 days after the request is received by the foreign insurer or health organization.
2175 (b) Any foreign insurer or health organization shall, at the written request of the
2176commissioner, promptly submit to the commissioner a copy of any RBC plan that is filed with
2177the insurance commissioner of any other state.
2178 (2) (a) The commissioner may require a foreign insurer or health organization to file an
2179RBC plan with the commissioner if:
2180 (i) there is a company action level event, regulatory action level event, or authorized
2181control level event with respect to the foreign insurer or health organization as determined
2182under:
2183 (A) the RBC statute applicable in the state of domicile of the insurer or health
2184organization; or
2185 (B) if no RBC statute is in force in that state, under this part; and
2186 (ii) the insurance commissioner of the state of domicile of the foreign insurer or health
2187organization fails to require the foreign insurer or health organization to file an RBC plan in the
2188manner specified under: H.B. 251
Enrolled Copy
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2189 (A) that state's RBC statute; or
2190 (B) if no RBC statute is in force in that state, under Section 31A-17-603.
2191 (b) If the commissioner requires a foreign insurer or health organization to file an RBC
2192plan, the failure of the foreign insurer or health organization to file the RBC plan with the
2193commissioner is grounds to order the insurer or health organization to cease and desist from
2194writing new insurance business in this state.
2195 (3) The commissioner may [make application to the Third District Court for Salt Lake
2196County] petition a court as permitted under Section 31A-27a-901 with respect to the
2197liquidation of property of a foreign insurer or health organization found in this state if:
2198 (a) a mandatory control level event occurs with respect to any foreign insurer or health
2199organization; and
2200 (b) no domiciliary receiver has been appointed with respect to the foreign insurer or
2201health organization under the rehabilitation and liquidation statute applicable in the state of
2202domicile of the foreign insurer or health organization.
2203 Section 48. Section 31A-27a-105 is amended to read:
2204 31A-27a-105. Jurisdiction.
2205 (1) (a) A delinquency proceeding under this chapter may not be commenced by a
2206person other than the commissioner of this state.
2207 (b) No court has jurisdiction to entertain, hear, or determine a delinquency proceeding
2208commenced by any person other than the commissioner of this state.
2209 (2) Other than in accordance with this chapter, a court of this state has no jurisdiction
2210to entertain, hear, or determine any complaint:
2211 (a) requesting the liquidation, rehabilitation, seizure, sequestration, or receivership of
2212an insurer; or
2213 (b) requesting a stay, an injunction, a restraining order, or other relief preliminary to,
2214incidental to, or relating to a delinquency proceeding.
2215 (3) (a) The receivership court, as of the commencement of a delinquency proceeding Enrolled Copy H.B. 251
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2216under this chapter, has exclusive jurisdiction of all property of the insurer, wherever located,
2217including property located outside the territorial limits of the state.
2218 (b) The receivership court has original but not exclusive jurisdiction of all civil
2219proceedings arising:
2220 (i) under this chapter; or
2221 (ii) in or related to a delinquency proceeding under this chapter.
2222 (4) In addition to other grounds for jurisdiction provided by the law of this state, a
2223court of this state having jurisdiction of the subject matter has jurisdiction over a person served
2224pursuant to the Utah Rules of Civil Procedure or other applicable provisions of law in an action
2225brought by the receiver if the person served:
2226 (a) in an action resulting from or incident to a relationship with the insurer described in
2227this Subsection (4)(a), is or has been an agent, broker, or other person who has at any time:
2228 (i) written a policy of insurance for an insurer against which a delinquency proceeding
2229is instituted; or
2230 (ii) acted in any manner whatsoever on behalf of an insurer against which a
2231delinquency proceeding is instituted;
2232 (b) in an action on or incident to a reinsurance contract described in this Subsection
2233(4)(b):
2234 (i) is or has been an insurer or reinsurer who has at any time entered into the contract of
2235reinsurance with an insurer against which a delinquency proceeding is instituted; or
2236 (ii) is an intermediary, agent, or broker of or for the reinsurer, or with respect to the
2237contract;
2238 (c) in an action resulting from or incident to a relationship with the insurer described in
2239this Subsection (4)(c), is or has been an officer, director, manager, trustee, organizer, promoter,
2240or other person in a position of comparable authority or influence over an insurer against which
2241a delinquency proceeding is instituted;
2242 (d) in an action concerning assets described in this Subsection (4)(d), is or was at the H.B. 251
Enrolled Copy
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2243time of the institution of the delinquency proceeding against the insurer, holding assets in
2244which the receiver claims an interest on behalf of the insurer; or
2245 (e) in any action on or incident to the obligation described in this Subsection (4)(e), is
2246obligated to the insurer in any way whatsoever.
2247 (5) (a) Subject to Subsection (5)(b), service shall be made upon the person named in
2248the petition in accordance with the Utah Rules of Civil Procedure.
2249 (b) In lieu of service under Subsection (5)(a), upon application to the receivership
2250court, service may be made in such a manner as the receivership court directs whenever it is
2251satisfactorily shown by the commissioner's affidavit:
2252 (i) in the case of a corporation, that the officers of the corporation cannot be served
2253because they have departed from the state or have otherwise concealed themselves with intent
2254to avoid service;
2255 (ii) in the case of an insurer whose business is conducted, at least in part, by an
2256attorney-in-fact, managing general agent, or other similar entity including a reciprocal, Lloyd's
2257association, or interinsurance exchange, that the individual attorney-in-fact, managing general
2258agent, or other entity, or its officers of the corporate attorney-in-fact cannot be served because
2259of the individual's departure or concealment; or
2260 (iii) in the case of a natural person, that the person cannot be served because of the
2261person's departure or concealment.
2262 (6) If the receivership court on motion of any party finds that an action should as a
2263matter of substantial justice be tried in a forum outside this state, the receivership court may
2264enter an [appropriate] order to stay further proceedings on the action in this state.
2265 (7) (a) Nothing in this chapter deprives a reinsurer of any contractual right to pursue
2266arbitration except:
2267 (i) as to a claim against the estate; and
2268 (ii) in regard to a contract rejected by the receiver under Section 31A-27a-113.
2269 (b) A party in arbitration may bring a claim or counterclaim against the estate, but the Enrolled Copy H.B. 251
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2270claim or counterclaim is subject to this chapter.
2271 [(8) An action authorized by this chapter shall be brought in the Third District Court
2272for Salt Lake County.]
2273 [(9)] (8) (a) At any time after an order is entered pursuant to Section 31A-27a-201,
227431A-27a-301, or 31A-27a-401, the commissioner or receiver may transfer the case to the
2275county of the principal office of the person proceeded against.
2276 (b) In the event of a transfer under this Subsection [(9)] (8), the court in which the
2277proceeding is commenced shall, upon application of the commissioner or receiver, direct its
2278clerk to transmit the court's file to the clerk of the court to which the case is to be transferred.
2279 (c) After a transfer under this Subsection [(9)] (8), the proceeding shall be conducted in
2280the same manner as if [it] the proceeding had been commenced in the court to which the matter
2281is transferred.
2282 [(10)] (9) (a) Except as provided in Subsection [(10)(c)] (9)(c), a person may not
2283intervene in a liquidation proceeding in this state for the purpose of seeking or obtaining
2284payment of a judgment, lien, or other claim of any kind.
2285 (b) Except as provided in Subsection [(10)(c)] (9)(c), the claims procedure set for this
2286chapter constitute the exclusive means for obtaining payment of claims from the liquidation
2287estate.
2288 (c) (i) An affected guaranty association or the affected guaranty association's
2289representative may intervene as a party as a matter of right and otherwise appear and participate
2290in any court proceeding concerning a liquidation proceeding against an insurer.
2291 (ii) Intervention by an affected guaranty association or by an affected guaranty
2292association's designated representative conferred by this Subsection [(10)(c)] (9)(c) may not
2293constitute grounds to establish general personal jurisdiction by the courts of this state.
2294 (iii) An intervening affected guaranty association or the affected guaranty association's
2295representative are subject to the receivership court's jurisdiction for the limited purpose for
2296which the affected guaranty association intervenes. H.B. 251
Enrolled Copy
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2297 [(11)] (10) (a) Notwithstanding the other provisions of this section, this chapter does
2298not confer jurisdiction on the receivership court to resolve coverage disputes between an
2299affected guaranty association and those asserting claims against the affected guaranty
2300association resulting from the initiation of a receivership proceeding under this chapter, except
2301to the extent that the affected guaranty association otherwise expressly consents to the
2302jurisdiction of the receivership court pursuant to a plan of rehabilitation or liquidation that
2303resolves its obligations to covered policyholders.
2304 (b) The determination of a dispute with respect to the statutory coverage obligations of
2305an affected guaranty association by a court or administrative agency or body with jurisdiction
2306in the affected guaranty association's state of domicile is binding and conclusive as to the
2307affected guaranty association's claim in the liquidation proceeding.
2308 [(12)] (11) Upon the request of the receiver, the receivership court or the presiding
2309judge of the [Third District Court for Salt Lake County] court with jurisdiction under Title
231078A, Judiciary and Judicial Administration, may order that one judge hear all cases and
2311controversies arising out of or related to the delinquency proceeding.
2312 [(13)] (12) A delinquency proceeding is exempt from any program maintained for the
2313early closure of civil actions.
2314 [(14)] (13) In a proceeding, case, or controversy arising out of or related to a
2315delinquency proceeding, to the extent there is a conflict between the Utah Rules of Civil
2316Procedure and this chapter, the provisions of this chapter govern the proceeding, case, or
2317controversy.
2318 Section 49. Section 31A-27a-201 is amended to read:
2319 31A-27a-201. Receivership court's seizure order.
2320 (1) The commissioner may [file in the Third District Court for Salt Lake County a
2321petition] petition a court with jurisdiction under Title 78A, Judiciary and Judicial
2322Administration:
2323 (a) with respect to: Enrolled Copy H.B. 251
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2324 (i) an insurer domiciled in this state;
2325 (ii) an unauthorized insurer; or
2326 (iii) pursuant to Section 31A-27a-901, a foreign insurer;
2327 (b) alleging that:
2328 (i) there exists grounds that would justify a court order for a formal delinquency
2329proceeding against the insurer under this chapter; and
2330 (ii) the interests of policyholders, creditors, or the public will be endangered by delay;
2331and
2332 (c) setting forth the contents of a seizure order considered necessary by the
2333commissioner.
2334 (2) (a) Upon a filing under Subsection (1), the receivership court may issue the
2335requested seizure order:
2336 (i) immediately, ex parte, and without notice or hearing;
2337 (ii) that directs the commissioner to take possession and control of:
2338 (A) all or a part of the property, accounts, and records of an insurer; and
2339 (B) the premises occupied by the insurer for transaction of the insurer's business; and
2340 (iii) that until further order of the receivership court, enjoins the insurer and its officers,
2341managers, agents, and employees from disposition of its property and from the transaction of
2342its business except with the written consent of the commissioner.
2343 (b) A person having possession or control of and refusing to deliver any of the records
2344or assets of a person against whom a seizure order is issued under this Subsection (2) is guilty
2345of a class B misdemeanor.
2346 (3) (a) A petition that requests injunctive relief:
2347 (i) shall be verified by the commissioner or the commissioner's designee; and
2348 (ii) is not required to plead or prove irreparable harm or inadequate remedy at law.
2349 (b) The commissioner shall provide only the notice that the receivership court may
2350require. H.B. 251
Enrolled Copy
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2351 (4) (a) The receivership court shall specify in the seizure order the duration of the
2352seizure, which shall be the time the receivership court considers necessary for the
2353commissioner to ascertain the condition of the insurer.
2354 (b) The receivership court may from time to time:
2355 (i) hold a hearing that the receivership court considers desirable:
2356 (A) (I) on motion of the commissioner;
2357 (II) on motion of the insurer; or
2358 (III) on its own motion; and
2359 (B) after the notice the receivership court considers appropriate; and
2360 (ii) extend, shorten, or modify the terms of the seizure order.
2361 (c) The receivership court shall vacate the seizure order if the commissioner fails to
2362commence a formal proceeding under this chapter after having had a reasonable opportunity to
2363commence a formal proceeding under this chapter.
2364 (d) An order of the receivership court pursuant to a formal proceeding under this
2365chapter vacates the seizure order.
2366 (5) Entry of a seizure order under this section does not constitute a breach or an
2367anticipatory breach of a contract of the insurer.
2368 (6) (a) An insurer subject to an ex parte seizure order under this section may petition
2369the receivership court at any time after the issuance of a seizure order for a hearing and review
2370of the basis for the seizure order.
2371 (b) The receivership court shall hold the hearing and review requested under this
2372Subsection (6) not more than 15 days after the day on which the request is received or as soon
2373thereafter as the court may allow.
2374 (c) A hearing under this Subsection (6):
2375 (i) may be held privately in chambers; and
2376 (ii) shall be held privately in chambers if the insurer proceeded against requests that [it]
2377the hearing be private. Enrolled Copy H.B. 251
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2378 (7) (a) If, at any time after the issuance of a seizure order, it appears to the receivership
2379court that a person whose interest is or will be substantially affected by the seizure order did
2380not appear at the hearing and has not been served, the receivership court may order that notice
2381be given to the person.
2382 (b) An order under this Subsection (7) that notice be given may not stay the effect of a
2383seizure order previously issued by the receivership court.
2384 (8) Whenever the commissioner makes a seizure as provided in Subsection (2), on the
2385demand of the commissioner, it shall be the duty of the sheriff of a county of this state, and of
2386the police department of a municipality in the state to furnish the commissioner with necessary
2387deputies or officers to assist the commissioner in making and enforcing the seizure order.
2388 (9) The commissioner may appoint a receiver under this section. The insurer shall pay
2389the costs and expenses of the receiver appointed.
2390 Section 50. Section 31A-27a-206 is amended to read:
2391 31A-27a-206. Confidentiality.
2392 (1) (a) Except as provided in Subsection (1)(b), in a delinquency proceeding or a
2393judicial review under Section 31A-27a-201:
2394 (i) all records of the insurer, department files, court records and papers, and other
2395documents, so far as they pertain to or are a part of the record of the proceedings, are
2396confidential; and
2397 (ii) a clerk of the court shall hold a paper filed with the clerk in a confidential file as
2398permitted by law.
2399 [(ii) a paper filed with the clerk of the Third District Court for Salt Lake County shall
2400be held by the clerk in a confidential file as permitted by law.]
2401 (b) The items listed in Subsection (1)(a) are subject to Subsection (1)(a):
2402 (i) except to the extent necessary to obtain compliance with an order entered in
2403connection with the proceeding; and
2404 (ii) unless and until: H.B. 251
Enrolled Copy
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2405 (A) the [Third District Court for Salt Lake County] court, after hearing argument in
2406chambers, orders otherwise;
2407 (B) the insurer requests that the matter be made public; or
2408 (C) the commissioner applies for an order under Section 31A-27a-207.
2409 (2) (a) If the recipient agrees to maintain the confidentiality of the document, material,
2410or other information, the commissioner or rehabilitator may share a document, materials, or
2411other information in the possession, custody, or control of the department, pertaining to an
2412insurer that is the subject of a delinquency proceeding under this chapter with:
2413 (i) another state, federal, and international regulatory agency;
2414 (ii) the National Association of Insurance Commissioners and its affiliates or
2415subsidiaries;
2416 (iii) a state, federal, and international law enforcement authority;
2417 (iv) an auditor appointed by the receivership court in accordance with Section
241831A-27a-805; or
2419 (v) a representative of an affected guaranty association.
2420 (b) If the domiciliary receiver believes that certain information is sensitive, the receiver
2421may share that information subject to a continuation of the confidentiality obligations beyond
2422the period allowed in Subsection (3).
2423 (c) This section does not limit the power of the commissioner to disclose information
2424under other applicable law.
2425 (3) (a) A domiciliary receiver shall permit a commissioner or a guaranty association of
2426another state to obtain a listing of policyholders and certificate holders residing in the
2427requestor's state, including current addresses and summary policy information, if the
2428commissioner or the guaranty association of another state agrees:
2429 (i) to maintain the confidentiality of the record; and
2430 (ii) that the record will be used only for regulatory or guaranty association purposes.
2431 (b) Access to a record under this Subsection (3) may be limited to normal business Enrolled Copy H.B. 251
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2432hours.
2433 (c) If the domiciliary receiver believes that certain information described in this
2434Subsection (3) is sensitive and disclosure might cause a diminution in recovery, the receiver
2435may apply for a protective order imposing additional restrictions on access.
2436 (4) (a) The confidentiality obligations imposed by this section shall end upon the entry
2437of an order of liquidation against the insurer, unless:
2438 (i) otherwise agreed to by the parties; or
2439 (ii) pursuant to an order of the receivership court.
2440 (b) A continuation of confidentiality as provided in Subsection (2) does not apply to an
2441insurer record necessary for a guaranty association to discharge its statutory responsibilities.
2442 (5) A waiver of an applicable privilege or claim of confidentiality does not occur as a
2443result of a disclosure, or any sharing of documents, materials, or other information, made
2444pursuant to this section.
2445 Section 51. Section 31A-27a-207 is amended to read:
2446 31A-27a-207. Grounds for rehabilitation or liquidation.
2447 (1) The commissioner may [file in the Third District Court for Salt Lake County a
2448petition] petition a court with jurisdiction under Title 78A, Judiciary and Judicial
2449Administration, with respect to an insurer domiciled in this state or an unauthorized insurer for
2450an order of rehabilitation or liquidation on any one or more of the following grounds:
2451 (a) the insurer is impaired;
2452 (b) the insurer is insolvent;
2453 (c) subject to Subsection (2), the insurer is about to become insolvent;
2454 (d) (i) the insurer neglects or refuses to comply with an order of the commissioner to
2455make good within the time prescribed by law any deficiency;
2456 (ii) if a stock company, if its capital and minimum required surplus is impaired; or
2457 (iii) if a company other than a stock company, if its surplus is impaired;
2458 (e) the insurer, its parent company, its subsidiary, or its affiliate: H.B. 251
Enrolled Copy
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2459 (i) converts, wastes, or conceals property of the insurer; or
2460 (ii) otherwise improperly disposes of, dissipates, uses, releases, transfers, sells, assigns,
2461hypothecates, or removes the property of the insurer;
2462 (f) the insurer is in such condition that the insurer could not meet the requirements for
2463organization and authorization as required by law, except as to the amount of:
2464 (i) the original surplus required of a stock company under Sections 31A-5-211 and
246531A-8-209; and
2466 (ii) the surplus required of a company other than a stock company in excess of the
2467minimum surplus required to be maintained;
2468 (g) the insurer, its parent company, its subsidiary, or its affiliate:
2469 (i) conceals, removes, alters, destroys, or fails to establish and maintain records and
2470other pertinent material adequate for the determination of the financial condition of the insurer
2471by examination under Section 31A-2-203; or
2472 (ii) fails to properly administer claims or maintain claims records that are adequate for
2473the determination of its outstanding claims liability;
2474 (h) at any time after the issuance of an order under Subsection 31A-2-201(4), or at the
2475time of instituting a proceeding under this chapter, it appears to the commissioner that upon
2476good cause shown, it is not in the best interest of the policyholders, creditors, or the public to
2477proceed with the conduct of the business of the insurer;
2478 (i) the insurer is in such condition that the further transaction of business would be
2479hazardous financially, according to Subsection 31A-17-609(3) or otherwise, to its
2480policyholders, creditors, or the public;
2481 (j) there is reasonable cause to believe that:
2482 (i) there has been:
2483 (A) embezzlement from the insurer;
2484 (B) wrongful sequestration or diversion of the insurer's property;
2485 (C) forgery or fraud affecting the insurer; or Enrolled Copy H.B. 251
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2486 (D) other illegal conduct in, by, or with respect to the insurer; and
2487 (ii) the act described in Subsection (1)(j)(i) if established would endanger assets in an
2488amount threatening the solvency of the insurer;
2489 (k) control of the insurer is in a person who is:
2490 (i) dishonest;
2491 (ii) untrustworthy; or
2492 (iii) so lacking in insurance company managerial experience or capability as to be
2493hazardous to policyholders, creditors, or the public;
2494 (l) if:
2495 (i) a person who in fact has executive authority in the insurer, whether an officer,
2496manager, general agent, director, trustee, employee, shareholder, or other person:
2497 (A) refuses to be examined under oath by the commissioner concerning the insurer's
2498affairs, whether in this state or elsewhere; or
2499 (B) if examined under oath, refuses to divulge pertinent information reasonably known
2500to the person; and
2501 (ii) after reasonable notice of the facts described in Subsection (1)(l)(i), the insurer fails
2502promptly and effectively to terminate:
2503 (A) the employment or status of the person; and
2504 (B) all of the person's influence on management;
2505 (m) after demand by the commissioner under Section 31A-2-203 or under this chapter,
2506the insurer fails to promptly make available for examination:
2507 (i) any of its own property, accounts, or records; or
2508 (ii) so far as it pertains to the insurer, property, accounts, or records of:
2509 (A) a subsidiary or related company within the control of the insurer; or
2510 (B) a person having executive authority in the insurer;
2511 (n) without first obtaining the written consent of the commissioner, the insurer:
2512 (i) transfers, or attempts to transfer, in a manner contrary to Section 31A-5-508 or H.B. 251
Enrolled Copy
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251331A-16-103, substantially its entire property or business; or
2514 (ii) enters into a transaction the effect of which is to merge, consolidate, or reinsure
2515substantially its entire property or business in or with the property or business of any other
2516person;
2517 (o) the insurer or its property has been or is the subject of an application for the
2518appointment of a receiver, trustee, custodian, conservator, sequestrator, or similar fiduciary of
2519the insurer or its property otherwise than as authorized under the insurance laws of this state;
2520 (p) within the previous five years the insurer willfully and continuously violates:
2521 (i) its charter or articles of incorporation;
2522 (ii) its bylaws;
2523 (iii) an insurance law of this state; or
2524 (iv) a valid order of the commissioner;
2525 (q) the insurer fails to pay within 60 days after the due date:
2526 (i) (A) an obligation to any state or any subdivision of a state; or
2527 (B) a judgment entered in any state, if the court in which the judgment is entered has
2528jurisdiction over the subject matter; and
2529 (ii) except that nonpayment is not a ground until 60 days after a good faith effort by the
2530insurer to contest the obligation has been terminated, whether it is before the commissioner or
2531in the courts;
2532 (r) the insurer systematically:
2533 (i) engages in the practice of:
2534 (A) reaching settlements with and obtaining releases from claimants; and
2535 (B) unreasonably delaying payment, or failing to pay the agreed-upon settlements; or
2536 (ii) attempts to compromise with claimants or other creditors on the ground that it is
2537financially unable to pay its claims or obligations in full;
2538 (s) the insurer fails to file its annual report or other financial report required by statute
2539within the time allowed by law; Enrolled Copy H.B. 251
- 95 -
2540 (t) the board of directors or the holders of a majority of the shares entitled to vote, or a
2541majority of those individuals entitled to the control of those entities specified in Section
254231A-27a-104, request or consent to rehabilitation or liquidation under this chapter;
2543 (u) (i) the insurer does not comply with its domiciliary state's requirements for issuance
2544to it of a certificate of authority; or
2545 (ii) the insurer's certificate of authority is revoked by its state of domicile; or
2546 (v) when authorized by Chapter 17, Part 6, Risk-Based Capital.
2547 (2) For purposes of this section, an insurer is about to become insolvent if it is
2548reasonably anticipated that the insurer will not have liquid assets to meet its current obligations
2549for the next 90 days.
2550 Section 52. Section 31A-27a-209 is amended to read:
2551 31A-27a-209. Effect of order of rehabilitation or liquidation.
2552 (1) The filing or recording of an order of receivership with the following imparts the
2553same notice as a deed, bill of sale, or other evidence of title filed or recorded would have
2554imparted:
2555 (a) the [Third District Court for Salt Lake County] court;
2556 (b) the recorder of deeds of the county in which the principal business of the insurer is
2557conducted; or
2558 (c) in the case of real estate, with the recorder of deeds of the county where the
2559property is located.
2560 (2) The filing of a petition commencing delinquency proceedings under this chapter or
2561the entry of an order of seizure, rehabilitation, or liquidation does not constitute a breach or an
2562anticipatory breach of any contract or lease of the insurer.
2563 (3) (a) The receiver may appoint one or more special deputies.
2564 (b) A special deputy:
2565 (i) has the powers and responsibilities of the receiver granted under this section, unless
2566specifically limited by the receiver; and H.B. 251
Enrolled Copy
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2567 (ii) serves at the pleasure of the receiver.
2568 (c) The receiver may employ or contract with:
2569 (i) legal counsel;
2570 (ii) one or more actuaries;
2571 (iii) one or more accountants;
2572 (iv) one or more appraisers;
2573 (v) one or more consultants;
2574 (vi) one or more clerks;
2575 (vii) one or more assistants; and
2576 (viii) other personnel as may be considered necessary.
2577 (d) A special deputy or other person with whom the receiver contracts under this
2578Subsection (3):
2579 (i) is considered to be an agent of the commissioner only in the commissioner's
2580capacity as receiver; and
2581 (ii) is not considered an agent of the state.
2582 (e) The provisions of any law governing the procurement of goods and services by the
2583state do not apply to a contract entered into by the commissioner as receiver.
2584 (f) The compensation of a special deputy, employee, or contractor and all expenses of
2585taking possession of the insurer and of conducting the receivership shall be:
2586 (i) determined by the receiver, with the approval of the receivership court in
2587accordance with Section 31A-27a-115; and
2588 (ii) paid out of the property of the insurer.
2589 (g) (i) If the receiver, in the receiver's sole discretion, considers it necessary to the
2590proper performance of the receiver's duties under this chapter, the receiver may appoint an
2591advisory committee of policyholders, claimants, or other creditors including guaranty
2592associations.
2593 (ii) The committee described in this Subsection (3)(g) serves: Enrolled Copy H.B. 251
- 97 -
2594 (A) at the pleasure of the receiver; and
2595 (B) without compensation and without reimbursement for expenses.
2596 (iii) The receiver or the receivership court in proceedings conducted under this chapter
2597may not appoint any other committee of any nature.
2598 Section 53. Section 31A-44-501 is amended to read:
2599 31A-44-501. Application for court order for rehabilitation or liquidation.
2600 (1) The department may request that the attorney general petition [a district court in the
2601state] a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, or a
2602federal bankruptcy court that has exercised jurisdiction over a provider's facility, for an order
2603that appoints a trustee to rehabilitate or liquidate the facility if:
2604 (a) the department determines that:
2605 (i) the provider is financially unsound or is unable to meet the income or available cash
2606projections described in the provider's disclosure statement; and
2607 (ii) the provider's ability to fully perform the provider's obligations under a continuing
2608care contract is endangered; or
2609 (b) the provider is bankrupt, insolvent, or has filed for protection from creditors under
2610a federal or state reorganization, bankruptcy, or insolvency law.
2611 (2) A court that evaluates a petition filed under Subsection (1) regarding a provider:
2612 (a) shall evaluate the best interests of a person that has contracted with the provider;
2613and
2614 (b) may require the proceeds of a lien imposed under Section 31A-44-601 to be used to
2615pay an entrance fee to another facility on behalf of a resident of the provider's facility.
2616 Section 54. Section 35A-4-308 is amended to read:
2617 35A-4-308. Bonds to ensure compliance.
2618 (1) (a) The division, whenever [it] the division considers it necessary to ensure
2619compliance with this chapter, may require any employer, subject to the contribution imposed
2620hereunder, to deposit with [it] the division any bond or security as the division shall determine. H.B. 251
Enrolled Copy
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2621 (b) The bond or security may be sold by the division at public sale, if it becomes
2622necessary, in order to recover any tax, interest, or penalty due.
2623 (c) Notice of the sale may be served upon the employer who deposited the securities
2624personally or by mail. If by mail, notice sent to the last-known address as the same appears in
2625the records of the division is sufficient for purposes of this requirement.
2626 (d) Upon the sale, the surplus, if any, above the amounts due, shall be returned to the
2627employer who deposited the security.
2628 (2) (a) If an employer fails to comply with Subsection (1), [the district court of the
2629county in which the employer resides or in which the employer employs workers] a court shall,
2630upon the commencement of a suit by the division for that purpose, enjoin the employer from
2631further employing workers in this state or continuing in business until the employer has
2632complied with Subsection (1).
2633 (b) Upon filing of a suit for such purpose by the division, the court shall set a date for
2634hearing and cause notice to be served upon the employer. The hearing shall be not less than
2635five nor more than 15 days from the service of the notice.
2636 Section 55. Section 35A-4-314 is amended to read:
2637 35A-4-314. Disclosure of information for debt collection -- Court order --
2638Procedures -- Use of information restrictions -- Penalties.
2639 (1) The division shall disclose to a creditor who has obtained judgment against a debtor
2640the name and address of the last known employer of the debtor if:
2641 (a) the judgment creditor obtains a court order requiring disclosure of the information
2642as described in Subsection (2); and
2643 (b) the judgment creditor completes the requirements described in Subsection (3),
2644including entering into a written agreement with the division.
2645 (2) (a) A court shall grant an order to disclose the information described in Subsection
2646(1) if, under the applicable Utah Rules of Civil Procedure:
2647 (i) the judgment creditor files a motion with the court, which includes a copy of the Enrolled Copy H.B. 251
- 99 -
2648judgment, and serves a copy of the motion to the judgment debtor and the division;
2649 (ii) the judgment debtor and the division have the opportunity to respond to the motion;
2650and
2651 (iii) the court denies or overrules any objection to disclosure in the judgment debtor's
2652and the division's response.
2653 (b) A court may not grant an order to disclose the information described in Subsection
2654(1), if the court finds that the division has established that disclosure will have a negative effect
2655on:
2656 (i) the willingness of employers to report wage and employment information; or
2657 (ii) the willingness of individuals to file claims for unemployment benefits.
2658 (c) The requirements of Subsection 63G-2-202(7) and Section 63G-2-207 do not apply
2659to information sought through a court order as described in this section.
2660 (3) If a court order is granted in accordance with this section, a judgment creditor shall:
2661 (a) provide to the division a copy of the order requiring the disclosure;
2662 (b) enter into a written agreement with the division, in a form approved by the division;
2663 (c) pay the division a reasonable fee that reflects the cost for processing the request as
2664established by department rule; and
2665 (d) comply with the data safeguard and security measures described in 20 C.F.R. Sec.
2666603.9 with respect to information received from the division under this section.
2667 (4) If a judgment creditor complies with Subsection (3), the division shall provide the
2668information to the judgment creditor within 14 business days after the day on which the
2669creditor complies with Subsection (3).
2670 (5) A judgment creditor may not:
2671 (a) use the information obtained under this section for a purpose other than satisfying
2672the judgment between the creditor and debtor; or
2673 (b) disclose or share the information with any other person.
2674 (6) The division may audit a judgment creditor or other party receiving information H.B. 251
Enrolled Copy
- 100 -
2675under this section for compliance with the data safeguard and security measures described in 20
2676C.F.R. Sec. 603.9.
2677 (7) If a judgment creditor or other party fails to comply with the data safeguard and
2678security measures under 20 C.F.R. Sec. 603.9, the judgment creditor or other party is subject to
2679a civil penalty of no more than $10,000 enforceable by the Utah Office of the Attorney General
2680as follows:
2681 (a) the attorney general, on the attorney general's own behalf or on behalf of the
2682division, [may file an action in district court] may bring an action in a court with jurisdiction
2683under Title 78A, Judiciary and Judicial Administration, to enforce the civil penalty; and
2684 (b) if the attorney general prevails in enforcing the civil penalty against the judgment
2685creditor or other party:
2686 (i) the attorney general is entitled to an award for reasonable attorney fees, court costs,
2687and investigative expenses; and
2688 (ii) the civil penalty shall be deposited into the special administrative expense account
2689described in Subsection 35A-4-506(1).
2690 Section 56. Section 48-1d-111 is amended to read:
2691 48-1d-111. Signing and filing pursuant to judicial order.
2692 (1) If a person required by this chapter to sign a record or deliver a record to the
2693division for filing under this chapter does not do so, any other person that is aggrieved may
2694petition [the district court] a court with jurisdiction under Title 78A, Judiciary and Judicial
2695Administration, to order:
2696 (a) the person to sign the record;
2697 (b) the person to deliver the record to the division for filing; or
2698 (c) the division to file the record unsigned.
2699 (2) If a petitioner under Subsection (1) is not the partnership or foreign limited liability
2700partnership to which the record pertains, the petitioner shall make the partnership or foreign
2701limited liability partnership a party to the action. Enrolled Copy H.B. 251
- 101 -
2702 (3) A record filed under Subsection (1)(c) is effective without being signed.
2703 Section 57. Section 48-1d-116 is amended to read:
2704 48-1d-116. Duty of division to file -- Review of refusal to file -- Transmission of
2705information by division.
2706 (1) The division shall file a record delivered to the division for filing which satisfies
2707this chapter. The duty of the division under this section is ministerial.
2708 (2) When the division files a record, the division shall record it as filed on the date and
2709at the time of its delivery. After filing a record, the division shall deliver to the person that
2710submitted the record a copy of the record with an acknowledgment of the date and time of
2711filing and, in the case of a statement of denial, also to the partnership to which the statement
2712pertains.
2713 (3) If the division refuses to file a record, the division, not later than 15 business days
2714after the record is delivered, shall:
2715 (a) return the record or notify the person that submitted the record of the refusal; and
2716 (b) provide a brief explanation in a record of the reason for the refusal.
2717 (4) (a) If the division refuses to file a record, the person that submitted the record may
2718petition [the district court] a court with jurisdiction under Title 78A, Judiciary and Judicial
2719Administration, to compel filing of the record.
2720 (b) The record and the explanation of the division of the refusal to file must be attached
2721to the petition.
2722 (c) The court may decide the matter in a summary proceeding.
2723 (5) The filing of or refusal to file a record does not create a presumption that the
2724information contained in the record is correct or incorrect.
2725 (6) Except as otherwise provided by Section 16-17-301 or by law other than this
2726chapter, the division may deliver any record to a person by delivering it:
2727 (a) in person to the person that submitted it;
2728 (b) to the address of the person's registered agent; H.B. 251
Enrolled Copy
- 102 -
2729 (c) to the principal office of the person; or
2730 (d) to another address the person provides to the division for delivery.
2731 Section 58. Section 48-1d-901 is amended to read:
2732 48-1d-901. Events causing dissolution.
2733 A partnership is dissolved, and [its] the partnership's activities and affairs must be
2734wound up, upon the occurrence of any of the following:
2735 (1) in a partnership at will, the partnership has notice of a person's express will to
2736withdraw as a partner, other than a partner that has dissociated under Subsections 48-1d-701(2)
2737through (10), but, if the person specifies a withdrawal date later than the date the partnership
2738had notice, on the later date;
2739 (2) in a partnership for a definite term or particular undertaking:
2740 (a) within 90 days after a person's dissociation by death or otherwise under Subsections
274148-1d-701(6) through (10) or wrongful dissociation under Subsection 48-1d-702(2), the
2742affirmative vote or consent of at least half of the remaining partners to wind up the
2743partnership's activities and affairs, for which purpose a person's rightful dissociation pursuant
2744to Subsection 48-1d-702(2)(b)(i) constitutes the expression of that partner's consent to wind up
2745the partnership's activities and affairs;
2746 (b) the express consent of all the partners to wind up the partnership's activities and
2747affairs; or
2748 (c) the expiration of the term or the completion of the undertaking;
2749 (3) an event or circumstance that the partnership agreement states causes dissolution;
2750 (4) [on application] upon a petition brought by a partner, the entry [by the district court
2751of an order] of a court order dissolving the partnership on the ground that:
2752 (a) the conduct of all or substantially all the partnership's activities and affairs is
2753unlawful;
2754 (b) the economic purpose of the partnership is likely to be unreasonably frustrated;
2755 (c) another partner has engaged in conduct relating to the partnership's activities and Enrolled Copy H.B. 251
- 103 -
2756affairs which makes it not reasonably practicable to carry on the business in partnership with
2757that partner; or
2758 (d) it is not otherwise reasonably practicable to carry on the partnership's activities and
2759affairs in conformity with the partnership agreement;
2760 (5) [on application] upon a petition brought by a transferee, the entry [by the district
2761court of an order] of a court order dissolving the partnership on the ground that it is equitable to
2762wind up the partnership's activities and affairs:
2763 (a) after the expiration of the term or completion of the undertaking, if the partnership
2764was for a definite term or particular undertaking at the time of the transfer or entry of the
2765charging order that gave rise to the transfer; or
2766 (b) at any time, if the partnership was a partnership at will at the time of the transfer or
2767entry of the charging order that gave rise to the transfer; or
2768 (6) the passage of 90 consecutive days during which the partnership does not have at
2769least two partners.
2770 Section 59. Section 48-1d-902 is amended to read:
2771 48-1d-902. Winding up.
2772 (1) (a) A dissolved partnership shall wind up [its] the partnership's activities and affairs
2773[and, except].
2774 (b) Except as otherwise provided in Section 48-1d-903, [the partnership] a partnership
2775only continues after dissolution [only] for the purpose of winding up.
2776 (2) In winding up [its] a partnership's activities and affairs, the partnership:
2777 (a) shall discharge the partnership's debts, obligations, and other liabilities, settle and
2778close the partnership's activities and affairs, and marshal and distribute the assets of the
2779partnership; and
2780 (b) may:
2781 (i) deliver to the division for filing a statement of dissolution stating the name of the
2782partnership and that the partnership is dissolved; H.B. 251
Enrolled Copy
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2783 (ii) preserve the partnership's activities and affairs and property as a going concern for
2784a reasonable time;
2785 (iii) prosecute and defend actions and proceedings, whether civil, criminal, or
2786administrative;
2787 (iv) transfer the partnership's property;
2788 (v) settle disputes by mediation or arbitration;
2789 (vi) deliver to the division for filing a statement of termination stating the name of the
2790partnership and that the partnership is terminated; and
2791 (vii) perform other acts necessary or appropriate to the winding up.
2792 (3) A person whose dissociation as a partner resulted in dissolution may participate in
2793winding up as if still a partner, unless the dissociation was wrongful.
2794 (4) If a dissolved partnership does not have a partner and no person has the right to
2795participate in winding up under Subsection (3), the personal or legal representative of the last
2796person to have been a partner may wind up the partnership's activities and affairs. If the
2797representative does not exercise that right, a person to wind up the partnership's activities and
2798affairs may be appointed by the consent of transferees owning a majority of the rights to
2799receive distributions at the time the consent is to be effective. A person appointed under this
2800Subsection (4) has the powers of a partner under Section 48-1d-904 but is not liable for the
2801debts, obligations, and other liabilities of the partnership solely by reason of having or
2802exercising those powers or otherwise acting to wind up the partnership's activities and affairs.
2803 (5) [On the application of] Upon a petition brought by any partner or person entitled
2804under Subsection (3) to participate in winding up, [the district] a court may order judicial
2805supervision of the winding up of a dissolved partnership, including the appointment of a person
2806to wind up the partnership's activities and affairs, if:
2807 (a) the partnership does not have a partner, and within a reasonable time following the
2808dissolution no person has been appointed under Subsection (4); or
2809 (b) the applicant establishes other good cause. Enrolled Copy H.B. 251
- 105 -
2810 Section 60. Section 48-1d-903 is amended to read:
2811 48-1d-903. Rescinding dissolution.
2812 (1) A partnership may rescind [its] the partnership's dissolution, unless a statement of
2813termination applicable to the partnership is effective or [the district] the court has entered an
2814order under Subsection 48-1d-901(4) or (5) dissolving the partnership.
2815 (2) Rescinding dissolution under this section requires:
2816 (a) the affirmative vote or consent of each partner;
2817 (b) if a statement of dissolution applicable to the partnership has been filed by the
2818division but has not become effective, delivery to the division for filing of a statement of
2819withdrawal under Section 48-1d-114 applicable to the statement of dissolution; and
2820 (c) if a statement of dissolution applicable to the partnership is effective, the delivery to
2821the division for filing of a statement of correction under Section 48-1d-115 stating that
2822dissolution has been rescinded under this section.
2823 (3) If a partnership rescinds [its] the partnership's dissolution:
2824 (a) the partnership resumes carrying on its activities and affairs as if dissolution had
2825never occurred;
2826 (b) subject to Subsection (3)(c), any liability incurred by the partnership after the
2827dissolution and before the rescission is effective is determined as if dissolution had never
2828occurred; and
2829 (c) the rights of a third party arising out of conduct in reliance on the dissolution before
2830the third party knew or had notice of the rescission may not be adversely affected.
2831 Section 61. Section 48-1d-909 is amended to read:
2832 48-1d-909. Court proceedings.
2833 (1) (a) A dissolved limited liability partnership that has published a notice under
2834Section 48-1d-908 may [file an application with the district court in the county where the
2835dissolved limited liability partnership's principal office is located or, if the principal office is
2836not located in this state, where the office of its registered agent is located,] petition a court with H.B. 251
Enrolled Copy
- 106 -
2837jurisdiction under Title 78A, Judiciary and Judicial Administration, for a determination of the
2838amount and form of security to be provided for payment of claims that are contingent, have not
2839been made known to the dissolved limited liability partnership, or are based on an event
2840occurring after the effective date of dissolution but which, based on the facts known to the
2841dissolved limited liability partnership, are reasonably expected to arise after the effective date
2842of dissolution.
2843 (b) Security is not required for any claim that is or is reasonably anticipated to be
2844barred under Subsection 48-1d-907(3).
2845 (2) [Not] No later than 10 days after the filing of an application under Subsection (1),
2846the dissolved limited liability partnership shall give notice of the proceeding to each claimant
2847holding a contingent claim known to the dissolved limited liability partnership.
2848 (3) (a) In any proceeding under this section, the [district] court may appoint a guardian
2849ad litem to represent all claimants whose identities are unknown.
2850 (b) The reasonable fees and expenses of the guardian, including all reasonable expert
2851witness fees, must be paid by the dissolved limited liability partnership.
2852 (4) A dissolved limited liability partnership that provides security in the amount and
2853form ordered by the [district] court under Subsection (1) satisfies the dissolved limited liability
2854partnership's obligations with respect to claims that are contingent, have not been made known
2855to the dissolved limited liability partnership, or are based on an event occurring after the
2856effective date of dissolution, and the claims may not be enforced against a partner or transferee
2857who receives assets in liquidation.
2858 (5) This section applies only to a debt, obligation, or other liability incurred while a
2859partnership was a limited liability partnership.
2860 Section 62. Section 48-1d-1003 is amended to read:
2861 48-1d-1003. Required notice or approval.
2862 (1) A domestic or foreign entity that is required to give notice to, or obtain the approval
2863of, a governmental agency or officer of this state to be a party to a merger must give the notice Enrolled Copy H.B. 251
- 107 -
2864or obtain the approval to be a party to an interest exchange, conversion, or domestication.
2865 (2) Property held for a charitable purpose under the law of this state by a domestic or
2866foreign entity immediately before a transaction under this part becomes effective may not, as a
2867result of the transaction, be diverted from the objects for which it was donated, granted,
2868devised, or otherwise transferred unless, to the extent required by or pursuant to the law of this
2869state concerning cy pres or other law dealing with nondiversion of charitable assets, the entity
2870obtains [an appropriate order of the district court] a court order specifying the disposition of the
2871property.
2872 (3) A bequest, devise, gift, grant, or promise contained in a will or other instrument of
2873donation, subscription, or conveyance that is made to a merging entity that is not the surviving
2874entity and that takes effect or remains payable after the merger inures to the surviving entity. A
2875trust obligation that would govern property if transferred to the nonsurviving entity applies to
2876property that is transferred to the surviving entity under this section.
2877 Section 63. Section 48-1d-1310 is amended to read:
2878 48-1d-1310. Purchase of interest upon death, incapacity, or disqualification of
2879member.
2880 (1) Subject to this part, one or more of the following may provide for the purchase of a
2881partner's interest in a professional services partnership upon the death, incapacity, or
2882disqualification of the partner:
2883 (a) the partnership agreement; or
2884 (b) a private agreement.
2885 (2) In the absence of a provision described in Subsection (1), a professional services
2886partnership shall purchase the interest of a partner who is deceased, incapacitated, or no longer
2887qualified to own an interest in the professional services partnership within 90 days after the day
2888on which the professional services partnership is notified of the death, incapacity, or
2889disqualification.
2890 (3) If a professional services partnership purchases a partner's interest under Subsection H.B. 251
Enrolled Copy
- 108 -
2891(2), the professional services company shall purchase the interest at a price that is the
2892reasonable fair market value as of the date of death, incapacity, or disqualification.
2893 (4) If a professional services partnership fails to purchase a partner's interest as
2894required by Subsection (2) at the end of the 90-day period described in Subsection (2), [one of
2895the following may bring an action in the district court of the county in which the principal
2896office or place of practice of the professional services partnership is located] the following
2897persons may bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
2898Administration, to enforce Subsection (2):
2899 (a) the personal representative of a deceased partner;
2900 (b) the guardian or conservator of an incapacitated partner; or
2901 (c) the disqualified partner.
2902 (5) A court in which an action is brought under Subsection (4) may:
2903 (a) award the person bringing the action the reasonable fair market value of the
2904interest; or
2905 (b) within [its] the court's jurisdiction, order the liquidation of the professional services
2906partnership.
2907 (6) If a person described in Subsections (4)(a) through (c) is successful in an action
2908under Subsection (4), the court shall award the person reasonable attorney's fees and costs.
2909 Section 64. Section 48-2e-204 is amended to read:
2910 48-2e-204. Signing and filing pursuant to judicial order.
2911 (1) If a person required by this chapter to sign a record or deliver a record to the
2912division for filing under this chapter does not do so, any other person that is aggrieved may
2913petition [the district court] a court with jurisdiction under Title 78A, Judiciary and Judicial
2914Administration, to order:
2915 (a) the person to sign the record;
2916 (b) the person to deliver the record to the division for filing; or
2917 (c) the division to file the record unsigned. Enrolled Copy H.B. 251
- 109 -
2918 (2) If the petitioner under Subsection (1) is not the limited partnership or foreign
2919limited partnership to which the record pertains, the petitioner shall make the limited
2920partnership or foreign limited partnership a party to the action.
2921 (3) A record filed under Subsection (1)(c) is effective without being signed.
2922 Section 65. Section 48-2e-209 is amended to read:
2923 48-2e-209. Duty of division to file -- Review of refusal to file -- Transmission of
2924information by the division.
2925 (1) The division shall file a record delivered to the division for filing which satisfies
2926this chapter. The duty of the division under this section is ministerial.
2927 (2) When the division files a record, the division shall record it as filed on the date and
2928at the time of its delivery. After filing a record, the division shall deliver to the person that
2929submitted the record a copy of the record with an acknowledgment of the date and time of
2930filing.
2931 (3) If the division refuses to file a record, the division, not later than 15 business days
2932after the record is delivered, shall:
2933 (a) return the record or notify the person that submitted the record of the refusal; and
2934 (b) provide a brief explanation in a record of the reason for the refusal.
2935 (4) (a) If the division refuses to file a record, the person that submitted the record may
2936petition [the district court] a court with jurisdiction under Title 78A, Judiciary and Judicial
2937Administration, to compel filing of the record.
2938 (b) The record and the explanation of the division of the refusal to file must be attached
2939to the petition.
2940 (c) The court may decide the matter in a summary proceeding.
2941 (5) The filing of or refusal to file a record does not create a presumption that the
2942information contained in the filing is correct or incorrect.
2943 (6) Except as otherwise provided by Section 16-17-301 or by law other than this
2944chapter, the division may deliver any record to a person by delivering it: H.B. 251
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2945 (a) in person to the person that submitted it;
2946 (b) to the address of the person's registered agent;
2947 (c) to the principal office of the person; or
2948 (d) to another address the person provides to the division for delivery.
2949 Section 66. Section 48-2e-801 is amended to read:
2950 48-2e-801. Events causing dissolution.
2951 (1) A limited partnership is dissolved, and [its] the limited partnership's activities and
2952affairs must be wound up, upon the occurrence of any of the following:
2953 (a) an event or circumstance that the partnership agreement states causes dissolution;
2954 (b) the affirmative vote or consent of all general partners and of limited partners
2955owning a majority of the rights to receive distributions as limited partners at the time the vote
2956or consent is to be effective;
2957 (c) after the dissociation of a person as a general partner:
2958 (i) if the limited partnership has at least one remaining general partner, the vote or
2959consent to dissolve the limited partnership not later than 90 days after the dissociation by
2960partners owning a majority of the rights to receive distributions as partners at the time the vote
2961or consent is to be effective; or
2962 (ii) if the limited partnership does not have a remaining general partner, the passage of
296390 days after the dissociation, unless before the end of the period:
2964 (A) consent to continue the activities and affairs of the limited partnership and admit at
2965least one general partner is given by limited partners owning a majority of the rights to receive
2966distributions as limited partners at the time the consent is to be effective; and
2967 (B) at least one person is admitted as a general partner in accordance with the consent;
2968 (d) the passage of 90 consecutive days after the dissociation of the limited partnership's
2969last limited partner, unless before the end of the period the limited partnership admits at least
2970one limited partner;
2971 (e) the passage of 90 consecutive days during which the limited partnership has only Enrolled Copy H.B. 251
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2972one partner, unless before the end of the period:
2973 (i) the limited partnership admits at least one person as a partner;
2974 (ii) if the previously sole remaining partner is only a general partner, the limited
2975partnership admits the person as a limited partner; and
2976 (iii) if the previously sole remaining partner is only a limited partner, the limited
2977partnership admits a person as a general partner;
2978 (f) [on application] upon a petition brought by a partner, the entry [by the district court
2979of an order] of a court order dissolving the limited partnership on the grounds that:
2980 (i) the conduct of all or substantially all the limited partnership's activities and affairs is
2981unlawful; or
2982 (ii) it is not reasonably practicable to carry on the limited partnership's activities and
2983affairs in conformity with the partnership agreement; or
2984 (g) the signing and filing of a statement of administrative dissolution by the division
2985under Section 48-2e-810.
2986 (2) If an event occurs that imposes a deadline on a limited partnership under
2987Subsection (1) and before the limited partnership has met the requirements of the deadline,
2988another event occurs that imposes a different deadline on the limited partnership under
2989Subsection (1):
2990 (a) the occurrence of the second event does not affect the deadline caused by the first
2991event; and
2992 (b) the limited partnership's meeting of the requirements of the first deadline does not
2993extend the second deadline.
2994 Section 67. Section 48-2e-802 is amended to read:
2995 48-2e-802. Winding up.
2996 (1) (a) A dissolved limited partnership shall wind up [its] the limited partnership's
2997activities and affairs[, and, except].
2998 (b) Except as otherwise provided in Section 48-2e-803, the limited partnership only H.B. 251
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2999continues after dissolution [only] for the purpose of winding up.
3000 (2) In winding up [its] the limited partnership's activities and affairs, the limited
3001partnership:
3002 (a) shall discharge the limited partnership's debts, obligations, and other liabilities,
3003settle and close the limited partnership's activities and affairs, and marshal and distribute the
3004assets of the limited partnership; and
3005 (b) may:
3006 (i) amend its certificate of limited partnership to state that the limited partnership is
3007dissolved;
3008 (ii) preserve the limited partnership activities, affairs, and property as a going concern
3009for a reasonable time;
3010 (iii) prosecute and defend actions and proceedings, whether civil, criminal, or
3011administrative;
3012 (iv) transfer the limited partnership's property;
3013 (v) settle disputes by mediation or arbitration;
3014 (vi) deliver to the division for filing a statement of termination stating the name of the
3015limited partnership and that the limited partnership is terminated; and
3016 (vii) perform other acts necessary or appropriate to the winding up.
3017 (3) (a) If a dissolved limited partnership does not have a general partner, a person to
3018wind up the dissolved limited partnership's activities and affairs may be appointed by the
3019affirmative vote or consent of limited partners owning a majority of the rights to receive
3020distributions as limited partners at the time the vote or consent is to be effective.
3021 (b) A person appointed under this Subsection (3):
3022 [(a)] (i) has the powers of a general partner under Section 48-2e-804 but is not liable
3023for the debts, obligations, and other liabilities of the limited partnership solely by reason of
3024having or exercising those powers or otherwise acting to wind up the dissolved limited
3025partnership's activities and affairs; and Enrolled Copy H.B. 251
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3026 [(b)] (ii) shall deliver promptly to the division for filing an amendment to the
3027certificate of limited partnership stating:
3028 [(i)] (A) that the limited partnership does not have a general partner;
3029 [(ii)] (B) the name and street and mailing addresses of the person; and
3030 [(iii)] (C) that the person has been appointed pursuant to this subsection to wind up the
3031limited partnership.
3032 [(4) On the application of any]
3033 (4) Upon a petition brought by a partner, [the district] a court may order judicial
3034supervision of the winding up of a dissolved limited partnership, including the appointment of
3035a person to wind up the limited partnership's activities and affairs, if:
3036 (a) the limited partnership does not have a general partner and within a reasonable time
3037following the dissolution no person has been appointed pursuant to Subsection (3); or
3038 (b) the applicant establishes other good cause.
3039 Section 68. Section 48-2e-803 is amended to read:
3040 48-2e-803. Rescinding dissolution.
3041 (1) A limited partnership may rescind [its] the limited partnership's dissolution, unless
3042a statement of termination applicable to the limited partnership is effective, [the district] a court
3043has entered an order under Subsection 48-2e-801(1)(f) dissolving the limited partnership, or the
3044division has dissolved the limited partnership under Section 48-2e-810.
3045 (2) Rescinding dissolution under this section requires:
3046 (a) the affirmative vote or consent of each partner; and
3047 (b) if the limited partnership has delivered to the division for filing an amendment to
3048the certificate of limited partnership stating that the partnership is dissolved and if:
3049 (i) the amendment is not effective, the filing by the limited partnership of a statement
3050of withdrawal under Section 48-2e-207 applicable to the amendment; or
3051 (ii) the amendment is effective, the delivery by the limited partnership to the division
3052for filing of an amendment to the certificate of limited partnership stating that the dissolution H.B. 251
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3053has been rescinded under this section.
3054 (3) If a limited partnership rescinds [its] the limited partnership's dissolution:
3055 (a) the limited partnership resumes carrying on [its] the limited partnership's activities
3056and affairs as if dissolution had never occurred;
3057 (b) subject to Subsection (3)(c), any liability incurred by the limited partnership after
3058the dissolution and before the rescission is effective is determined as if dissolution had never
3059occurred; and
3060 (c) the rights of a third party arising out of conduct in reliance on the dissolution before
3061the third party knew or had notice of the rescission may not be adversely affected.
3062 Section 69. Section 48-2e-808 is amended to read:
3063 48-2e-808. Court proceedings.
3064 (1) (a) A dissolved limited partnership that has published a notice under Section
306548-2e-807 may [file an application with the district court in the county where the dissolved
3066limited partnership's principal office is located, or, if the principal office is not located in this
3067state, where the office of its registered agent is located,] petition a court with jurisdiction under
3068Title 78A, Judiciary and Judicial Administration, for a determination of the amount and form
3069of security to be provided for payment of claims that are contingent, have not been made
3070known to the dissolved limited partnership, or are based on an event occurring after the
3071effective date of dissolution but which, based on the facts known to the dissolved limited
3072partnership, are reasonably expected to arise after the effective date of dissolution.
3073 (b) Security is not required for any claim that is or is reasonably anticipated to be
3074barred under Subsection 48-2e-807(3).
3075 (2) [Not] No later than 10 days after the filing of an application under Subsection (1),
3076the dissolved limited partnership shall give notice of the proceeding to each claimant holding a
3077contingent claim known to the dissolved limited partnership.
3078 (3) (a) In a proceeding brought under this section, the court may appoint a guardian ad
3079litem to represent all claimants whose identities are unknown. Enrolled Copy H.B. 251
- 115 -
3080 (b) The reasonable fees and expenses of the guardian, including all reasonable expert
3081witness fees, must be paid by the dissolved limited partnership.
3082 (4) A dissolved limited partnership that provides security in the amount and form
3083ordered by the court under Subsection (1) satisfies the dissolved limited partnership's
3084obligations with respect to claims that are contingent, have not been made known to the
3085dissolved limited partnership, or are based on an event occurring after the effective date of
3086dissolution, and such claims may not be enforced against a partner or transferee that received
3087assets in liquidation.
3088 Section 70. Section 48-2e-1103 is amended to read:
3089 48-2e-1103. Required notice or approval.
3090 (1) A domestic or foreign entity that is required to give notice to, or obtain the approval
3091of, a governmental agency or officer of this state to be a party to a merger must give the notice
3092or obtain the approval to be a party to an interest exchange, conversion, or domestication.
3093 (2) Property held for a charitable purpose under the law of this state by a domestic or
3094foreign entity immediately before a transaction under this part becomes effective may not, as a
3095result of the transaction, be diverted from the objects for which it was donated, granted,
3096devised, or otherwise transferred unless, to the extent required by or pursuant to the law of this
3097state concerning cy pres or other law dealing with nondiversion of charitable assets, the entity
3098obtains [an appropriate order of the district court] a court order specifying the disposition of the
3099property.
3100 (3) A bequest, devise, gift, grant, or promise contained in a will or other instrument of
3101donation, subscription, or conveyance that is made to a merging entity that is not the surviving
3102entity and that takes effect or remains payable after the merger inures to the surviving entity. A
3103trust obligation that would govern property if transferred to the nonsurviving entity applies to
3104property that is transferred to the surviving entity under this section.
3105 Section 71. Section 48-3a-204 is amended to read:
3106 48-3a-204. Signing and filing pursuant to judicial order. H.B. 251
Enrolled Copy
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3107 (1) If a person required by this chapter to sign a record or deliver a record to the
3108division for filing under this chapter does not do so, any other person that is aggrieved may
3109petition [the district court] a court with jurisdiction under Title 78A, Judiciary and Judicial
3110Administration, to order:
3111 (a) the person to sign the record;
3112 (b) the person to deliver the record to the division for filing; or
3113 (c) the division to file the record unsigned.
3114 (2) If a petitioner under Subsection (1) is not the limited liability company or foreign
3115limited liability company to which the record pertains, the petitioner shall make the limited
3116liability company or foreign limited liability company a party to the action.
3117 (3) A record filed under Subsection (1)(c) is effective without being signed.
3118 Section 72. Section 48-3a-209 is amended to read:
3119 48-3a-209. Duty of division to file -- Review of refusal to file -- Transmission of
3120information by division.
3121 (1) The division shall file a record delivered to the division for filing which satisfies
3122this chapter. The duty of the division under this section is ministerial.
3123 (2) When the division files a record, the division shall record it as filed on the date and
3124at the time of its delivery. After filing a record, the division shall deliver to the person that
3125submitted the record a copy of the record with an acknowledgment of the date and time of
3126filing and, in the case of a statement of denial, also to the limited liability company to which
3127the statement pertains.
3128 (3) If the division refuses to file a record, the division shall, not later than 15 business
3129days after the record is delivered:
3130 (a) return the record or notify the person that submitted the record of the refusal; and
3131 (b) provide a brief explanation in a record of the reason for the refusal.
3132 (4) (a) If the division refuses to file a record, the person that submitted the record may
3133petition [the district court] a court with jurisdiction under Title 78A, Judiciary and Judicial Enrolled Copy H.B. 251
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3134Administration, to compel filing of the record.
3135 (b) The record and the explanation of the division of the refusal to file must be attached
3136to the petition.
3137 (c) The court may decide the matter in a summary proceeding.
3138 (5) The filing of or refusal to file a record does not create a presumption that the
3139information contained in the record is correct or incorrect.
3140 (6) Except as otherwise provided by Section 16-17-301 or by law other than this
3141chapter, the division may deliver any record to a person by delivering it:
3142 (a) in person to the person that submitted it;
3143 (b) to the address of the person's registered agent;
3144 (c) to the principal office of the person; or
3145 (d) to another address the person provides to the division for delivery.
3146 Section 73. Section 48-3a-701 is amended to read:
3147 48-3a-701. Events causing dissolution.
3148 A limited liability company is dissolved, and its activities and affairs must be wound
3149up, upon the occurrence of any of the following:
3150 (1) an event or circumstance that the operating agreement states causes dissolution;
3151 (2) the consent of all the members;
3152 (3) the passage of 90 consecutive days during which the limited liability company has
3153no members unless:
3154 (a) consent to admit at least one specified person as a member is given by transferees
3155owning the rights to receive a majority of distributions as transferees at the time the consent is
3156to be effective; and
3157 (b) at least one person becomes a member in accordance with the consent;
3158 (4) [on application by] upon a petition brought by a member, the entry [by the district
3159court of an order] of a court order dissolving the limited liability company on the grounds that:
3160 (a) the conduct of all or substantially all of the limited liability company's activities and H.B. 251
Enrolled Copy
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3161affairs is unlawful; or
3162 (b) it is not reasonably practicable to carry on the limited liability company's activities
3163and affairs in conformity with the certificate of organization and the operating agreement;
3164 (5) [on application by] upon a petition brought by a member, the entry [by the district
3165court of an order] of a court order dissolving the limited liability company on the grounds that
3166the managers or those members in control of the limited liability company:
3167 (a) have acted, are acting, or will act in a manner that is illegal or fraudulent; or
3168 (b) have acted, are acting, or will act in a manner that is oppressive and was, is, or will
3169be directly harmful to the applicant; or
3170 (6) the signing and filing of a statement of administrative dissolution by the division
3171under Subsection 48-3a-708(3).
3172 Section 74. Section 48-3a-702 is amended to read:
3173 48-3a-702. Election to purchase in lieu of dissolution.
3174 (1) (a) In a proceeding under Subsection 48-3a-701(5) to dissolve a limited liability
3175company, the limited liability company may elect or, if [it] the limited liability company fails to
3176elect, one or more members may elect to purchase the interest in the limited liability company
3177owned by the applicant member at the fair market value of the interest, determined as provided
3178in this section.
3179 (b) An election pursuant to this Subsection (1) is irrevocable unless [the district] a
3180court determines that it is equitable to set aside or modify the election.
3181 (2) (a) An election to purchase pursuant to this section may be filed with [the district] a
3182court at any time within 90 days after the filing of the petition in a proceeding under Subsection
318348-3a-701(5) or at any later time as the [district] court in [its] the court's discretion may allow.
3184 (b) If the limited liability company files an election with [the district] a court within the
318590-day period, or at any later time allowed by the [district] court, to purchase the interest in the
3186limited liability company owned by the applicant member, the limited liability company shall
3187purchase the interest in the manner provided in this section. Enrolled Copy H.B. 251
- 119 -
3188 (3) (a) If the limited liability company does not file an election with [the district] a
3189court within the time period, but an election to purchase the interest in the limited liability
3190company owned by the applicant member is filed by one or more members within the time
3191period, the limited liability company shall, within 10 days after the later of the end of the time
3192period allowed for the filing of elections to purchase under this section or notification from the
3193[district] court of an election by members to purchase the interest in the limited liability
3194company owned by the applicant member as provided in this section, give written notice of the
3195election to purchase to all members of the limited liability company, other than the applicant
3196member.
3197 (b) The notice shall state the name and the percentage interest in the limited liability
3198company owned by the applicant member and the name and the percentage interest in the
3199limited liability company owned by each electing member.
3200 (c) The notice shall advise any recipients who have not participated in the election of
3201their right to join in the election to purchase the interest in the limited liability company in
3202accordance with this section and of the date by which any notice of intent to participate must be
3203filed with the [district] court.
3204 (4) Members who wish to participate in the purchase of the interest in the limited
3205liability company of the applicant member must file notice of their intention to join in the
3206purchase by electing members no later than 30 days after the effective date of the limited
3207liability company's notice of their right to join in the election to purchase.
3208 (5) All members who have filed with the [district] court an election or notice of their
3209intention to participate in the election to purchase the interest in the limited liability company
3210of the applicant member thereby become irrevocably obligated to participate in the purchase of
3211the interest from the applicant member upon the terms and conditions of this section, unless the
3212[district] court otherwise directs.
3213 (6) After an election has been filed by the limited liability company or one or more
3214members, the proceedings under Subsection 48-3a-701(5) may not be discontinued or settled, H.B. 251
Enrolled Copy
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3215nor may the applicant member sell or otherwise dispose of the applicant member's interest in
3216the limited liability company, unless the [district] court determines that it would be equitable to
3217the limited liability company and the members, other than the applicant member, to permit any
3218discontinuance, settlement, sale, or other disposition.
3219 (7) If, within 60 days after the earlier of the limited liability company filing of an
3220election to purchase the interest in the limited liability company of the applicant member or the
3221limited liability company's mailing of a notice to its members of the filing of an election by the
3222members to purchase the interest in the limited liability company of the applicant member, the
3223applicant member and electing limited liability company or members reach agreement as to the
3224fair market value and terms of the purchase of the applicant member's interest, the [district]
3225court shall enter an order directing the purchase of the applicant member's interest, upon the
3226terms and conditions agreed to by the parties.
3227 (8) If the parties are unable to reach an agreement as provided for in Subsection (7),
3228upon application of any party, the [district] court shall stay the proceedings under Subsection
322948-3a-701(5) and determine the fair market value of the applicant member's interest in the
3230limited liability company as of the day before the date on which the petition under Subsection
323148-3a-701(5) was filed or as of any other date the [district] court determines to be appropriate
3232under the circumstances and based on the factors the [district] court determines to be
3233appropriate.
3234 (9) (a) Upon determining the fair market value of the interest in the limited liability
3235company of the applicant member, the [district] court shall enter an order directing the
3236purchase of the interest in the limited liability company upon terms and conditions the [district]
3237court determines to be appropriate.
3238 (b) The terms and conditions may include payment of the purchase price in
3239installments, where necessary in the interest of equity, provision for security to assure payment
3240of the purchase price and any additional costs, fees, and expenses awarded by the [district]
3241court, and an allocation of the interest in the limited liability company among members if the Enrolled Copy H.B. 251
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3242interest in the limited liability company is to be purchased by members.
3243 (10) (a) In allocating the applicant member's interest in the limited liability company
3244among holders of different classes of members, the [district] court shall attempt to preserve the
3245existing distribution of voting rights among member classes to the extent practicable.
3246 (b) The [district] court may direct that holders of a specific class or classes may not
3247participate in the purchase.
3248 (c) The [district] court may not require any electing member to purchase more of the
3249interest in the limited liability company owned by the applicant member than the percentage
3250interest that the purchasing member may have set forth in the purchasing member's election or
3251notice of intent to participate filed with the [district] court.
3252 (11) (a) Interest may be allowed at the rate and from the date determined by the
3253[district] court to be equitable.
3254 (b) However, if the [district] court finds that the refusal of the applicant member to
3255accept an offer of payment was arbitrary or otherwise not in good faith, interest may not be
3256allowed.
3257 (12) If the [district] court finds that the applicant member had probable ground for
3258relief under Subsection 48-3a-701(5), the [district] court may award to the applicant member
3259reasonable fees and expenses of counsel and experts employed by the applicant member.
3260 (13) (a) Upon entry of an order under Subsection (7) or (9), the [district] court shall
3261dismiss the petition to dissolve the limited liability company under Subsection 48-3a-701(5)
3262and the applicant member shall no longer have any rights or status as a member of the limited
3263liability company, except the right to receive the amounts awarded to the applicant member by
3264the [district] court.
3265 (b) The award is enforceable in the same manner as any other judgment.
3266 (14) (a) The purchase ordered pursuant to Subsection (9) shall be made within 10 days
3267after the date the order becomes final, unless before that time the limited liability company files
3268with the [district] court a notice of [its] the limited liability company's intention to file a H.B. 251
Enrolled Copy
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3269statement of dissolution.
3270 (b) The statement of dissolution must then be adopted and filed within 60 days after
3271notice.
3272 (15) (a) Upon filing of a statement of dissolution, the limited liability company is
3273dissolved and shall be wound up pursuant to Section 48-3a-703, and the order entered pursuant
3274to Subsection (9) is no longer of any force or effect.
3275 (b) However, the [district] court may award the applicant member reasonable fees and
3276expenses in accordance with Subsection (12).
3277 (c) The applicant member may continue to pursue any claims previously asserted on
3278behalf of the limited liability company.
3279 (16) Any payment by the limited liability company pursuant to an order under
3280Subsection (7) or (9), other than an award of fees and expenses pursuant to Subsection (12), is
3281subject to the provisions of Sections 48-3a-405 and 48-3a-406.
3282 Section 75. Section 48-3a-703 is amended to read:
3283 48-3a-703. Winding up.
3284 (1) (a) A dissolved limited liability company shall wind up [its] the limited liability
3285company's activities and affairs [and, except].
3286 (b) Except as otherwise provided in Section 48-3a-704, the limited liability company
3287only continues after dissolution [only] for the purpose of winding up.
3288 (2) In winding up [its] the limited liability company's activities and affairs, a limited
3289liability company:
3290 (a) shall discharge the limited liability company's debts, obligations, and other
3291liabilities, settle and close the limited liability company's activities and affairs, and marshal and
3292distribute the assets of the limited liability company; and
3293 (b) may:
3294 (i) deliver to the division for filing a statement of dissolution stating the name of the
3295limited liability company and that the limited liability company is dissolved; Enrolled Copy H.B. 251
- 123 -
3296 (ii) preserve the limited liability company activities, affairs, and property as a going
3297concern for a reasonable time;
3298 (iii) prosecute and defend actions and proceedings, whether civil, criminal, or
3299administrative;
3300 (iv) transfer the limited liability company's property;
3301 (v) settle disputes by mediation or arbitration;
3302 (vi) deliver to the division for filing a statement of termination stating the name of the
3303limited liability company and that the limited liability company is terminated; and
3304 (vii) perform other acts necessary or appropriate to the winding up.
3305 (3) (a) If a dissolved limited liability company has no members, the legal representative
3306of the last person to have been a member may wind up the activities and affairs of the limited
3307liability company.
3308 (b) If the person does so, the person has the powers of a sole manager under Subsection
330948-3a-407(3) and is deemed to be a manager for the purposes of Subsection 48-3a-304(1).
3310 (4) If the legal representative under Subsection (3) declines or fails to wind up the
3311limited liability company's activities and affairs, a person may be appointed to do so by the
3312consent of transferees owning a majority of the rights to receive distributions as transferees at
3313the time the consent is to be effective. A person appointed under this Subsection (4):
3314 (a) has the powers of a sole manager under Subsection 48-3a-407(3) and is deemed to
3315be a manager for the purposes of Subsection 48-3a-304(1); and
3316 (b) shall promptly deliver to the division for filing an amendment to the limited
3317liability company's certificate of organization stating:
3318 (i) that the limited liability company has no members;
3319 (ii) the name and street and mailing addresses of the person; and
3320 (iii) that the person has been appointed pursuant to this subsection to wind up the
3321limited liability company.
3322 (5) A [district] court may order judicial supervision of the winding up of a dissolved H.B. 251
Enrolled Copy
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3323limited liability company, including the appointment of a person to wind up the limited liability
3324company's activities and affairs:
3325 (a) [on application of a member, if the applicant] upon a petition by a member if the
3326member establishes good cause;
3327 (b) [on the application of a transferee,] upon a petition by a transferee if:
3328 (i) the company does not have any members;
3329 (ii) the legal representative of the last person to have been a member declines or fails to
3330wind up the limited liability company's activities; and
3331 (iii) within a reasonable time following the dissolution a person has not been appointed
3332pursuant to Subsection (4); or
3333 (c) in connection with a proceeding under Subsection 48-3a-701(4) or (5).
3334 Section 76. Section 48-3a-704 is amended to read:
3335 48-3a-704. Rescinding dissolution.
3336 (1) A limited liability company may rescind [its] the limited liability company's
3337dissolution, unless a statement of termination applicable to the limited liability company is
3338effective, [the district court] a court has entered an order under Subsection 48-3a-701(4) or (5)
3339dissolving the limited liability company, or the division has dissolved the limited liability
3340company under Section 48-3a-708.
3341 (2) Rescinding dissolution under this section requires:
3342 (a) the consent of each member;
3343 (b) if a statement of dissolution applicable to the limited liability company has been
3344filed by the division but has not become effective, the delivery to the division for filing of a
3345statement of withdrawal under Section 48-3a-207 applicable to the statement of dissolution;
3346and
3347 (c) if a statement of dissolution applicable to the limited liability company is effective,
3348the delivery to the division for filing of a statement of correction under Section 48-3a-208
3349stating that dissolution has been rescinded under this section. Enrolled Copy H.B. 251
- 125 -
3350 (3) If a limited liability company rescinds its dissolution:
3351 (a) the limited liability company resumes carrying on its activities and affairs as if
3352dissolution had never occurred;
3353 (b) subject to Subsection (3)(c), any liability incurred by the limited liability company
3354after the dissolution and before the rescission is effective is determined as if dissolution had
3355never occurred; and
3356 (c) the rights of a third party arising out of conduct in reliance on the dissolution before
3357the third party knew or had notice of the rescission may not be adversely affected.
3358 Section 77. Section 48-3a-707 is amended to read:
3359 48-3a-707. Court proceedings.
3360 (1) (a) A dissolved limited liability company that has published a notice under Section
336148-3a-706 may [file an application with district court in the county where the dissolved limited
3362liability company's principal office is located, or, if the principal office is not located in this
3363state, where the office of its registered agent is located,] petition a court with jurisdiction under
3364Title 78A, Judiciary and Judicial Administration, for a determination of the amount and form
3365of security to be provided for payment of claims that are contingent, have not been made
3366known to the limited liability company, or are based on an event occurring after the effective
3367date of dissolution but which, based on the facts known to the dissolved limited liability
3368company, are reasonably expected to arise after the effective date of dissolution.
3369 (b) Security is not required for any claim that is or is reasonably anticipated to be
3370barred under Subsection 48-3a-706(3).
3371 (2) [Not] No later than 10 days after the filing of an application under Subsection (1),
3372the dissolved limited liability company shall give notice of the proceeding to each claimant
3373holding a contingent claim known to the limited liability company.
3374 (3) (a) In any proceeding under this section, the court may appoint a guardian ad litem
3375to represent all claimants whose identities are unknown.
3376 (b) The reasonable fees and expenses of the guardian, including all reasonable expert H.B. 251
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3377witness fees, must be paid by the dissolved limited liability company.
3378 (4) A dissolved limited liability company that provides security in the amount and form
3379ordered by the court under Subsection (1) satisfies the limited liability company's obligations
3380with respect to claims that are contingent, have not been made known to the limited liability
3381company, or are based on an event occurring after the effective date of dissolution, and such
3382claims may not be enforced against a member or transferee that received assets in liquidation.
3383 Section 78. Section 48-3a-1003 is amended to read:
3384 48-3a-1003. Required notice or approval.
3385 (1) A domestic or foreign entity that is required to give notice to, or obtain the approval
3386of, a governmental agency or officer of this state to be a party to a merger must give the notice
3387or obtain the approval to be a party to an interest exchange, conversion, or domestication.
3388 (2) Property held for a charitable purpose under the law of this state by a domestic or
3389foreign entity immediately before a transaction under this part becomes effective may not, as a
3390result of the transaction, be diverted from the objects for which it was donated, granted,
3391devised, or otherwise transferred unless, to the extent required by or pursuant to the law of this
3392state concerning cy pres or other law dealing with nondiversion of charitable assets, the entity
3393obtains [an appropriate order of the district court] a court order specifying the disposition of the
3394property.
3395 (3) A bequest, devise, gift, grant, or promise contained in a will or other instrument of
3396donation, subscription, or conveyance that is made to a merging entity that is not the surviving
3397entity and that takes effect or remains payable after the merger inures to the surviving entity. A
3398trust obligation that would govern property if transferred to the nonsurviving entity applies to
3399property that is transferred to the surviving entity under this section.
3400 Section 79. Section 48-3a-1111 is amended to read:
3401 48-3a-1111. Purchase of interest upon death, incapacity, or disqualification of
3402member.
3403 (1) Subject to this part, one or more of the following may provide for the purchase of a Enrolled Copy H.B. 251
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3404member's interest in a professional services company upon the death, incapacity, or
3405disqualification of the member:
3406 (a) the certificate of organization;
3407 (b) the operating agreement; or
3408 (c) a private agreement.
3409 (2) In the absence of a provision described in Subsection (1), a professional services
3410company shall purchase the interest of a member who is deceased, incapacitated, or no longer
3411qualified to own an interest in the professional services company within 90 days after the day
3412on which the professional services company is notified of the death, incapacity, or
3413disqualification.
3414 (3) If a professional services company purchases a member's interest under Subsection
3415(2), the professional services company shall purchase the interest at a price that is the
3416reasonable fair market value as of the date of death, incapacity, or disqualification.
3417 (4) If a professional services company fails to purchase a member's interest as required
3418by Subsection (2) at the end of the 90-day period described in Subsection (2), [one of the
3419following may bring an action in the district court of the county in which the principal office or
3420place of practice of the professional services company is located] the following persons may
3421bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
3422Administration, to enforce Subsection (2):
3423 (a) the personal representative of a deceased member;
3424 (b) the guardian or conservator of an incapacitated member; or
3425 (c) the disqualified member.
3426 (5) A court in which an action is brought under Subsection (4) may:
3427 (a) award the person bringing the action the reasonable fair market value of the
3428interest; or
3429 (b) within [its] the court's jurisdiction, order the liquidation of the professional services
3430company. H.B. 251
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3431 (6) If a person described in Subsections (4)(a) through (c) is successful in an action
3432under Subsection (4), the court shall award the person reasonable attorney's fees and costs.
3433 Section 80. Section 57-8-44 is amended to read:
3434 57-8-44. Lien in favor of association of unit owners for assessments and costs of
3435collection.
3436 (1) (a) Except as provided in Section 57-8-13.1, an association of unit owners has a
3437lien on a unit for:
3438 (i) an assessment;
3439 (ii) except as provided in the declaration, fees, charges, and costs associated with
3440collecting an unpaid assessment, including:
3441 (A) court costs and reasonable attorney fees;
3442 (B) late charges;
3443 (C) interest; and
3444 (D) any other amount that the association of unit owners is entitled to recover under the
3445declaration, this chapter, or an administrative or judicial decision; and
3446 (iii) a fine that the association of unit owners imposes against a unit owner in
3447accordance with Section 57-8-37, if:
3448 (A) the time for appeal described in Subsection 57-8-37(5) has expired and the unit
3449owner did not file an appeal; or
3450 (B) the unit owner timely filed an appeal under Subsection 57-8-37(5) and [the district]
3451a court issued a final order upholding a fine imposed under Subsection 57-8-37(1).
3452 (b) The recording of a declaration constitutes record notice and perfection of a lien
3453described in Subsection (1)(a).
3454 (2) If an assessment is payable in installments, a lien described in Subsection (1)(a)(i)
3455is for the full amount of the assessment from the time the first installment is due, unless the
3456association of unit owners otherwise provides in a notice of assessment.
3457 (3) An unpaid assessment or fine accrues interest at the rate provided: Enrolled Copy H.B. 251
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3458 (a) in Subsection 15-1-1(2); or
3459 (b) in the governing documents, if the governing documents provide for a different
3460interest rate.
3461 (4) A lien under this section has priority over each other lien and encumbrance on a
3462unit except:
3463 (a) a lien or encumbrance recorded before the declaration is recorded;
3464 (b) a first or second security interest on the unit secured by a mortgage or deed of trust
3465that is recorded before a recorded notice of lien by or on behalf of the association of unit
3466owners; or
3467 (c) a lien for real estate taxes or other governmental assessments or charges against the
3468unit.
3469 (5) A lien under this section is not subject to Title 78B, Chapter 5, Part 5, Utah
3470Exemptions Act.
3471 (6) Unless the declaration provides otherwise, if two or more associations of unit
3472owners have liens for assessments on the same unit, the liens have equal priority, regardless of
3473when the liens are created.
3474 Section 81. Section 57-8a-301 is amended to read:
3475 57-8a-301. Lien in favor of association for assessments and costs of collection.
3476 (1) (a) Except as provided in Section 57-8a-105, an association has a lien on a lot for:
3477 (i) an assessment;
3478 (ii) except as provided in the declaration, fees, charges, and costs associated with
3479collecting an unpaid assessment, including:
3480 (A) court costs and reasonable attorney fees;
3481 (B) late charges;
3482 (C) interest; and
3483 (D) any other amount that the association is entitled to recover under the declaration,
3484this chapter, or an administrative or judicial decision; and H.B. 251
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3485 (iii) a fine that the association imposes against a lot owner in accordance with Section
348657-8a-208, if:
3487 (A) the time for appeal described in Subsection 57-8a-208(5) has expired and the lot
3488owner did not file an appeal; or
3489 (B) the lot owner timely filed an appeal under Subsection 57-8a-208(5) and [the
3490district] a court issued a final order upholding a fine imposed under Subsection 57-8a-208(1).
3491 (b) The recording of a declaration constitutes record notice and perfection of a lien
3492described in Subsection (1)(a).
3493 (2) If an assessment is payable in installments, a lien described in Subsection (1)(a)(i)
3494is for the full amount of the assessment from the time the first installment is due, unless the
3495association otherwise provides in a notice of assessment.
3496 (3) An unpaid assessment or fine accrues interest at the rate provided:
3497 (a) in Subsection 15-1-1(2); or
3498 (b) in the declaration, if the declaration provides for a different interest rate.
3499 (4) A lien under this section has priority over each other lien and encumbrance on a lot
3500except:
3501 (a) a lien or encumbrance recorded before the declaration is recorded;
3502 (b) a first or second security interest on the lot secured by a mortgage or trust deed that
3503is recorded before a recorded notice of lien by or on behalf of the association; or
3504 (c) a lien for real estate taxes or other governmental assessments or charges against the
3505lot.
3506 (5) A lien under this section is not subject to Title 78B, Chapter 5, Part 5, Utah
3507Exemptions Act.
3508 (6) Unless the declaration provides otherwise, if two or more associations have liens
3509for assessments on the same lot, the liens have equal priority, regardless of when the liens are
3510created.
3511 Section 82. Section 57-17-5 is amended to read: Enrolled Copy H.B. 251
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3512 57-17-5. Failure to return deposit or prepaid rent or to give required notice --
3513Recovery of deposit, penalty, costs, and attorney fees.
3514 (1) If an owner or the owner's agent fails to comply with the requirements described in
3515Subsection 57-17-3(5), the renter may:
3516 (a) recover from the owner:
3517 (i) if the owner or the owner's agent failed to timely return the balance of the renter's
3518deposit, the full deposit;
3519 (ii) if the owner or the owner's agent failed to timely return the balance of the renter's
3520prepaid rent, the full amount of the prepaid rent; and
3521 (iii) a civil penalty of $100; and
3522 (b) file an action [in district court] to enforce compliance with the provisions of this
3523section.
3524 (2) In an action under Subsection (1)(b), the court shall award costs and attorney fees
3525to the prevailing party if the court determines that the opposing party acted in bad faith.
3526 (3) A renter is not entitled to relief under this section if the renter fails to serve a notice
3527in accordance with Subsection 57-17-3(3).
3528 (4) This section does not preclude an owner or a renter from recovering other damages
3529to which the owner or the renter is entitled.
3530 Section 83. Section 57-19-20 is amended to read:
3531 57-19-20. Injunctive relief -- Cease and desist order.
3532 (1) Whenever it appears to the director that any person has engaged or is about to
3533engage in any act or practice constituting a violation of any provision of this chapter, and that it
3534would be in the public interest to stop those acts or practices, the director may either:
3535 (a) seek injunctive relief as provided in Rule 65A, Utah Rules of Civil Procedure; or
3536 (b) issue an administrative cease and desist order.
3537 (2) If an administrative cease and desist order is issued pursuant to Subsection (1), the
3538person upon whom the order is served may, within 10 days after receiving the order, request H.B. 251
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3539that a hearing be held before an administrative law judge. If a request for a hearing is made,
3540the division shall follow the procedures and requirements of Title 63G, Chapter 4,
3541Administrative Procedures Act. Pending the hearing, the order remains in effect.
3542 (3) (a) If, at the hearing, a finding is made that there has been a violation of this
3543chapter, the director, with the concurrence of the executive director, may issue an order making
3544the cease and desist order permanent.
3545 (b) If no hearing is requested, and if the person fails to cease the act or practice, or after
3546discontinuing the act or practice again commences [it] the act or practice, the director shall [file
3547suit in the district court of the county in which the act or practice occurred, or where the person
3548resides or carries on business,] bring an action in a court with jurisdiction under Title 78A,
3549Judiciary and Judicial Administration, to enjoin and restrain the person from violating this
3550chapter.
3551 (4) (a) Whether or not the director has issued a cease and desist order, the attorney
3552general, in the name of the state or of the director, may bring an action [in any court of
3553competent jurisdiction] in a court with jurisdiction under Title 78A, Judiciary and Judicial
3554Administration, to enjoin any act or practice constituting a violation of any provision of this
3555chapter, and to enforce compliance with this chapter or any rule or order under this chapter.
3556 (b) Upon a proper showing, a permanent or temporary injunction, restraining order, or
3557writ of mandamus shall be granted.
3558 Section 84. Section 57-21-11 is amended to read:
3559 57-21-11. Relief granted -- Civil penalties -- Enforcement of final order.
3560 (1) Under Sections 57-21-9 and 57-21-10, if the director, presiding officer,
3561commissioner, Appeals Board, or court finds reasonable cause to believe that a discriminatory
3562housing practice has occurred or is about to occur, the director, presiding officer,
3563commissioner, Appeals Board, or court may order, as considered appropriate:
3564 (a) the respondent to cease any discriminatory housing practice;
3565 (b) actual damages, reasonable attorneys' fees and costs to the aggrieved person; and Enrolled Copy H.B. 251
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3566 (c) any permanent or temporary injunction, temporary restraining order, or other
3567appropriate order.
3568 (2) In addition to the relief granted to an aggrieved person under Subsection (1), in
3569order to vindicate the public interest, the director, presiding officer, or court may also assess
3570civil penalties against the respondent in an amount not exceeding:
3571 (a) $10,000 if the respondent has not been adjudged to have committed any prior
3572discriminatory housing practice;
3573 (b) $25,000 if the respondent has been adjudged to have committed one other
3574discriminatory housing practice during the five-year period ending on the date of the filing of
3575the complaint; or
3576 (c) $50,000 if the respondent has been adjudged to have committed two or more
3577discriminatory housing practices during the seven-year period ending on the date of the filing
3578of this complaint.
3579 (3) The time periods in Subsections (2)(b) and (c) may be disregarded if the acts
3580constituting the discriminatory housing practice are committed by the same natural person who
3581has previously been adjudged to have committed a discriminatory housing practice.
3582 (4) The division may [file a petition in a district court of competent jurisdiction]
3583petition a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, for:
3584 (a) the enforcement of a final department order; and
3585 (b) for any appropriate temporary relief or restraining order necessary for the
3586enforcement of a final commission order.
3587 Section 85. Section 57-22-6 is amended to read:
3588 57-22-6. Renter remedies for deficient condition of residential rental unit.
3589 (1) As used in this section:
3590 (a) "Corrective period" means:
3591 (i) for a standard of habitability, three calendar days; and
3592 (ii) for a requirement imposed by a rental agreement, 10 calendar days. H.B. 251
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3593 (b) "Deficient condition" means a condition of a residential rental unit that:
3594 (i) violates a standard of habitability or a requirement of the rental agreement; and
3595 (ii) is not caused by:
3596 (A) the renter, the renter's family, or the renter's guest or invitee; and
3597 (B) a use that would violate:
3598 (I) the rental agreement; or
3599 (II) a law applicable to the renter's use of the residential rental unit.
3600 (c) "Notice of deficient condition" means the notice described in Subsection (2).
3601 (d) "Rent abatement remedy" means the remedy described in Subsection (4)(a)(i).
3602 (e) "Renter remedy" means:
3603 (i) a rent abatement remedy; or
3604 (ii) a repair and deduct remedy.
3605 (f) "Repair and deduct remedy" means the remedy described in Subsection (4)(a)(ii).
3606 (g) "Standard of habitability" means a standard:
3607 (i) relating to the condition of a residential rental unit; and
3608 (ii) that an owner is required to ensure that the residential rental unit meets as required
3609under Subsection 57-22-3(1) or Subsection 57-22-4(1)(a) or (b)(i), (ii), or (iii).
3610 (2) (a) If a renter believes that the renter's residential rental unit has a deficient
3611condition, the renter may give the owner written notice as provided in Subsection (2)(b).
3612 (b) A notice under Subsection (2)(a) shall:
3613 (i) describe each deficient condition;
3614 (ii) state that the owner has the corrective period, stated in terms of the applicable
3615number of days, to correct each deficient condition;
3616 (iii) state the renter remedy that the renter has chosen if the owner does not, within the
3617corrective period, take substantial action toward correcting each deficient condition;
3618 (iv) provide the owner permission to enter the residential rental unit to make corrective
3619action; and Enrolled Copy H.B. 251
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3620 (v) be served on the owner as provided in:
3621 (A) Section 78B-6-805; or
3622 (B) the rental agreement.
3623 (3) (a) As used in this Subsection (3), "dangerous condition" means a deficient
3624condition that poses a substantial risk of:
3625 (i) imminent loss of life; or
3626 (ii) significant physical harm.
3627 (b) If a renter believes that the renter's residential rental unit has a dangerous condition,
3628the renter may notify the owner of the dangerous condition by any means that is reasonable
3629under the circumstances.
3630 (c) An owner shall:
3631 (i) within 24 hours after receiving notice under Subsection (3)(b) of a dangerous
3632condition, commence remedial action to correct the dangerous condition; and
3633 (ii) diligently pursue remedial action to completion.
3634 (d) Notice under Subsection (3)(b) of a dangerous condition does not constitute a
3635notice of deficient condition, unless the notice also meets the requirements of Subsection (2).
3636 (4) (a) Subject to Subsection (4)(b), if an owner fails to take substantial action, before
3637the end of the corrective period, toward correcting a deficient condition described in a notice of
3638deficient condition:
3639 (i) if the renter chose the rent abatement remedy in the notice of deficient condition:
3640 (A) the renter's rent is abated as of the date of the notice of deficient condition to the
3641owner;
3642 (B) the rental agreement is terminated;
3643 (C) the owner shall immediately pay to the renter:
3644 (I) the entire security deposit that the renter paid under the rental agreement; and
3645 (II) a prorated refund for any prepaid rent, including any rent the renter paid for the
3646period after the date on which the renter gave the owner the notice of deficient condition; and H.B. 251
Enrolled Copy
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3647 (D) the renter shall vacate the residential rental unit within 10 calendar days after the
3648expiration of the corrective period; or
3649 (ii) if the renter chose the repair and deduct remedy in the notice of deficient condition,
3650and subject to Subsection (4)(c), the renter:
3651 (A) may:
3652 (I) correct the deficient condition described in the notice of deficient condition; and
3653 (II) deduct from future rent the amount the renter paid to correct the deficient
3654condition, not to exceed an amount equal to two months' rent; and
3655 (B) shall:
3656 (I) maintain all receipts documenting the amount the renter paid to correct the deficient
3657condition; and
3658 (II) provide a copy of those receipts to the owner within five calendar days after the
3659beginning of the next rental period.
3660 (b) A renter is not entitled to a renter remedy if the renter is not in compliance with all
3661requirements under Section 57-22-5.
3662 (c) (i) If a residential rental unit is not fit for occupancy, an owner may:
3663 (A) determine not to correct a deficient condition described in a notice of deficient
3664condition; and
3665 (B) terminate the rental agreement.
3666 (ii) If an owner determines not to correct a deficient condition and terminates the rental
3667agreement under Subsection (4)(c)(i):
3668 (A) the owner shall:
3669 (I) notify the renter in writing no later than the end of the corrective period; and
3670 (II) within 10 calendar days after the owner terminates the rental agreement, pay to the
3671renter:
3672 (Aa) any prepaid rent, prorated as provided in Subsection (4)(c)(ii)(B); and
3673 (Bb) any deposit due the renter; Enrolled Copy H.B. 251
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3674 (B) the rent shall be prorated to the date the owner terminates the rental agreement
3675under Subsection (4)(c)(i); and
3676 (C) the renter may not be required to vacate the residential rental unit sooner than 10
3677calendar days after the owner notifies the renter under Subsection (4)(c)(ii)(A)(I).
3678 (5) (a) After the corrective period expires, a renter may bring [an action in district
3679court] an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
3680Administration, to enforce the renter remedy that the renter chose in the notice of deficient
3681condition.
3682 (b) In an action under Subsection (5)(a), the court shall endorse on the summons that
3683the owner is required to appear and defend the action within three business days.
3684 (c) If, in an action under Subsection (5)(a), the court finds that the owner unjustifiably
3685refused to correct a deficient condition or failed to use due diligence to correct a deficient
3686condition, the renter is entitled to any damages, in addition to the applicable renter remedy.
3687 (d) An owner who disputes that a condition of the residential rental unit violates a
3688requirement of the rental agreement may file a counterclaim in an action brought against the
3689owner under Subsection (5)(a).
3690 (6) An owner may not be held liable under this chapter for a claim for mental suffering
3691or anguish.
3692 (7) In an action under this chapter, the court may award costs and reasonable attorney
3693fees to the prevailing party.
3694 Section 86. Section 57-23-7 is amended to read:
3695 57-23-7. Investigatory powers and proceedings of division.
3696 (1) The division may:
3697 (a) make necessary public or private investigations within or outside of this state to
3698determine whether any person has violated or is about to violate this chapter or any rule or
3699order made by the division under this chapter; and
3700 (b) require or permit any person to file a statement in writing, under oath or otherwise H.B. 251
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3701as the division determines, as to all the facts and circumstances concerning the matter to be
3702investigated.
3703 (2) For the purpose of any investigation or proceeding under this chapter:
3704 (a) the division may administer oaths or affirmations; and
3705 (b) upon its own motion or upon the request of any party, the division may:
3706 (i) subpoena witnesses;
3707 (ii) compel their attendance;
3708 (iii) take evidence; and
3709 (iv) require the production of any matter which is relevant to the investigation,
3710including:
3711 (A) the existence, description, nature, custody, condition and location of any books,
3712documents, or other tangible records;
3713 (B) the identity and location of persons having knowledge of relevant facts; or
3714 (C) any other matter reasonably calculated to lead to the discovery of material
3715evidence.
3716 (3) Upon failure of any person to obey a subpoena or to answer questions propounded
3717by the investigating officer and upon reasonable notice to all persons affected by the subpoena
3718or information sought to be discovered under the subpoena, the division may [apply to the
3719district court] petition a court with jurisdiction under Title 78A, Judiciary and Judicial
3720Administration, for an order compelling compliance.
3721 Section 87. Section 57-23-8 is amended to read:
3722 57-23-8. Enforcement powers of division -- Cease and desist orders.
3723 (1) (a) If the director has reason to believe that any person has been or is engaging in
3724conduct violating this chapter, or has violated any lawful order or rule of the division, the
3725director shall issue and serve upon the person a cease and desist order. The director may also
3726order the person to take whatever affirmative actions the director determines to be necessary to
3727carry out the purposes of this chapter. Enrolled Copy H.B. 251
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3728 (b) The person served with an order under Subsection (1)(a) may request an
3729adjudicative proceeding within 10 days after receiving the order. The cease and desist order
3730remains in effect pending the hearing.
3731 (c) The division shall follow the procedures and requirements of Title 63G, Chapter 4,
3732Administrative Procedures Act, if the person served requests a hearing.
3733 (2) (a) After the hearing the director may issue a final order making the cease and
3734desist order permanent if the director finds there has been a violation of this chapter.
3735 (b) If no hearing is requested and the person served does not obey the director's order,
3736the director may [file suit] bring an action in a court with jurisdiction under Title 78A,
3737Judiciary and Judicial Administration, in the name of the Department of Commerce and the
3738Division of Real Estate to enjoin the person from violating this chapter. [The action shall be
3739filed in the district court in the county in which the conduct occurred, where the person served
3740with the cease and desist order either resides or carries on business.]
3741 (3) The remedies and action provided in this section are not exclusive but are in
3742addition to any other remedies or actions available under Section 57-23-10.
3743 Section 88. Section 57-29-303 is amended to read:
3744 57-29-303. Investigatory powers and proceedings of division.
3745 (1) The division may:
3746 (a) conduct a public or private investigation to determine whether a person has violated
3747or is about to violate a provision of this chapter; and
3748 (b) require or allow a person to file a written statement with the division that relates to
3749the facts and circumstances concerning a matter to be investigated.
3750 (2) For the purpose of an investigation or proceeding under this chapter, the division
3751may:
3752 (a) administer oaths or affirmations; and
3753 (b) upon the division's own initiative or upon the request of any party:
3754 (i) subpoena a witness; H.B. 251
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3755 (ii) compel a witness's attendance;
3756 (iii) take evidence; or
3757 (iv) require the production, within 10 business days, of any information or item that is
3758relevant to the investigation, including:
3759 (A) the existence, description, nature, custody, condition, and location of any books,
3760electronic records, documents, or other tangible records;
3761 (B) the identity and location of any person who has knowledge of relevant facts; or
3762 (C) any other information or item that is reasonably calculated to lead to the discovery
3763of material evidence.
3764 (3) If a person fails to obey a subpoena or other request made in accordance with this
3765section, the division may [file an action in district court] petition a court with jurisdiction under
3766Title 78A, Judiciary and Judicial Administration, for an order compelling compliance.
3767 Section 89. Section 57-29-304 is amended to read:
3768 57-29-304. Enforcement.
3769 (1) (a) If the director believes that a person has been or is engaging in conduct that
3770violates this chapter, the director:
3771 (i) shall issue and serve upon the person a cease and desist order; and
3772 (ii) may order the person to take any action necessary to carry out the purposes of this
3773chapter.
3774 (b) (i) A person served with an order under Subsection (1)(a) may request a hearing
3775within 10 days after the day on which the person is served.
3776 (ii) (A) If a person requests a hearing in accordance with Subsection (1)(b)(i), the
3777director shall schedule a hearing to take place no more than 30 days after the day on which the
3778director receives the request.
3779 (B) The cease and desist order remains in effect pending the hearing.
3780 (iii) If the director fails to schedule a hearing in accordance with Subsection
3781(1)(b)(ii)(A), the cease and desist order is vacated. Enrolled Copy H.B. 251
- 141 -
3782 (c) The division shall conduct a hearing described in Subsection (1)(b) in accordance
3783with Title 63G, Chapter 4, Administrative Procedures Act.
3784 (2) After a hearing described in Subsection (1)(b):
3785 (a) if the director finds that the person violated this chapter, the director may issue a
3786final order making the cease and desist order permanent; or
3787 (b) if the director finds that the person did not violate this chapter, the director shall
3788vacate the cease and desist order.
3789 (3) If a person served with an order under Subsection (1)(a) does not request a hearing
3790and the person fails to comply with the director's order, the director may [file suit in district
3791court] bring an action in a court with jurisdiction under Title 78A, Judiciary and Judicial
3792Administration, in the name of the Department of Commerce and the Division of Real Estate to
3793enjoin the person from violating this chapter.
3794 (4) The remedies and action provided in this section are not exclusive but are in
3795addition to any other remedies or actions available under Section 57-29-305.
3796 Section 90. Section 61-1-20 is amended to read:
3797 61-1-20. Enforcement.
3798 (1) Whenever it appears to the director that a person has engaged, is engaging, or is
3799about to engage in an act or practice constituting a violation of this chapter or a rule or order
3800under this chapter, in addition to specific powers granted in this chapter:
3801 (a) the director may issue an order directing the person to appear before the
3802commission and show cause why an order should not be issued directing the person to cease
3803and desist from engaging in the act or practice, or doing an act in furtherance of the activity;
3804 (b) the order to show cause shall state the reasons for the order and the date of the
3805hearing;
3806 (c) the director shall promptly serve a copy of the order to show cause upon a person
3807named in the order;
3808 (d) the commission shall hold a hearing on the order to show cause no sooner than 10 H.B. 251
Enrolled Copy
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3809business days after the order is issued;
3810 (e) after a hearing, the commission may:
3811 (i) issue an order to cease and desist from engaging in an act or practice constituting a
3812violation of this chapter or a rule or order under this chapter;
3813 (ii) impose a fine in an amount determined after considering the factors set forth in
3814Section 61-1-31;
3815 (iii) order disgorgement;
3816 (iv) order restitution;
3817 (v) order rescission;
3818 (vi) bar or suspend that person from associating with a licensed broker-dealer or
3819investment adviser in this state; and
3820 (vii) impose a combination of sanctions in this Subsection (1)(e).
3821 (2) (a) The director may bring an action in the appropriate [district] court of this state
3822or the appropriate court of another state to enjoin an act or practice and to enforce compliance
3823with this chapter or a rule or order under this chapter.
3824 (b) Upon a proper showing in an action brought under this section, the court may:
3825 (i) issue a permanent or temporary, prohibitory or mandatory injunction;
3826 (ii) issue a restraining order or writ of mandamus;
3827 (iii) enter a declaratory judgment;
3828 (iv) appoint a receiver or conservator for the defendant or the defendant's assets;
3829 (v) order disgorgement;
3830 (vi) order rescission;
3831 (vii) order restitution;
3832 (viii) impose a fine in an amount determined after considering the factors set forth in
3833Section 61-1-31; and
3834 (ix) enter any other relief the court considers just.
3835 (c) The court may not require the division to post a bond in an action brought under Enrolled Copy H.B. 251
- 143 -
3836this Subsection (2).
3837 (3) An order issued under Subsection (1) shall be accompanied by written findings of
3838fact and conclusions of law.
3839 (4) When determining the severity of a sanction to be imposed under this section, the
3840commission or court shall consider whether:
3841 (a) the person against whom the sanction is to be imposed exercised undue influence;
3842or
3843 (b) the person against whom the sanction is imposed under this section knows or
3844should know that an investor in the investment that is the grounds for the sanction is a
3845vulnerable adult.
3846 Section 91. Section 61-1-105 is amended to read:
3847 61-1-105. Remedies for employee bringing action.
3848 (1) As used in this section, "actual damages" means damages for injury or loss caused
3849by a violation of Section 61-1-104.
3850 (2) (a) An employee who alleges a violation of Section 61-1-104 may bring [a civil] an
3851action for injunctive relief, actual damages, or both, in a court with jurisdiction under Title
385278A, Judiciary and Judicial Administration.
3853 (b) An employee may not bring [a civil] an action under this section more than:
3854 (i) four years after the day on which the violation of Section 61-1-104 occurs; or
3855 (ii) two years after the date when facts material to the right of action are known or
3856reasonably should be known by the employee alleging a violation of Section 61-1-104.
3857 [(3) An employee may bring an action under this section in the district court for the
3858county where:]
3859 [(a) the alleged violation occurs;]
3860 [(b) the employee resides; or]
3861 [(c) the person against whom the civil complaint is filed resides or has a principal place
3862of business.] H.B. 251
Enrolled Copy
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3863 [(4)] (3) To prevail in an action brought under this section, an employee shall establish,
3864by a preponderance of the evidence, that the employee has suffered an adverse action because
3865the employee, or a person acting on the employee's behalf, engaged or intended to engage in an
3866activity protected under Section 61-1-104.
3867 [(5)] (4) A court may award as relief for an employee prevailing in an action brought
3868under this section:
3869 (a) reinstatement with the same fringe benefits and seniority status that the individual
3870would have had, but for the adverse action;
3871 (b) two times the amount of back pay otherwise owed to the individual, with interest;
3872 (c) compensation for litigation costs, expert witness fees, and reasonable attorney fees;
3873 (d) actual damages; or
3874 (e) any combination of the remedies listed in this Subsection [(5)] (4).
3875 [(6)] (5) (a) An employer may file a counter claim against an employee who files a
3876civil action under this section seeking attorney fees and costs incurred by the employer related
3877to the action filed by the employee and the counter claim.
3878 (b) The court may award an employer who files a counter claim under this Subsection
3879[(6)] (5) attorney fees and costs if the court finds that:
3880 (i) there is no reasonable basis for the civil action filed by the employee; or
3881 (ii) the employee is not protected under Section 61-1-104 because:
3882 (A) the employee engaged in an act described in Subsections 61-1-104(2)(a) through
3883(c); or
3884 (B) Subsection 61-1-104(2)(d) applies.
3885 Section 92. Section 61-2-203 is amended to read:
3886 61-2-203. Adjudicative proceedings -- Citation authority.
3887 (1) The division shall comply with Title 63G, Chapter 4, Administrative Procedures
3888Act, in an adjudicative proceeding under a chapter the division administers.
3889 (2) The division may initiate an adjudicative proceeding through: Enrolled Copy H.B. 251
- 145 -
3890 (a) a notice of agency action; or
3891 (b) a notice of formal or informal proceeding.
3892 (3) The provisions of Title 63G, Chapter 4, Administrative Procedures Act, do not
3893apply to the issuance of a citation under Subsection (4), unless a licensee or another person
3894authorized by law to contest the validity or correctness of a citation commences an adjudicative
3895proceeding contesting the citation.
3896 (4) In addition to any other statutory penalty for a violation related to an occupation or
3897profession regulated under this title, the division may issue a citation to a person who, upon
3898inspection or investigation, the division concludes to have violated:
3899 (a) Subsection 61-2c-201(1), which requires licensure;
3900 (b) Subsection 61-2c-201(4), which requires licensure;
3901 (c) Subsection 61-2c-205(3), which requires notification of a change in specified
3902information regarding a licensee;
3903 (d) Subsection 61-2c-205(4), which requires notification of a specified legal action;
3904 (e) Subsection 61-2c-301(1)(g), which prohibits failing to respond to the division
3905within the required time period;
3906 (f) Subsection 61-2c-301(1)(h), which prohibits making a false representation to the
3907division;
3908 (g) Subsection 61-2c-301(1)(i), which prohibits taking a dual role in a transaction;
3909 (h) Subsection 61-2c-301(1)(l), which prohibits engaging in false or misleading
3910advertising;
3911 (i) Subsection 61-2c-301(1)(t), which prohibits advertising the ability to do licensed
3912work if unlicensed;
3913 (j) Subsection 61-2c-302(5), which requires a mortgage entity to create and file a
3914quarterly report of condition;
3915 (k) Subsection 61-2e-201(1), which requires registration;
3916 (l) Subsection 61-2e-203(4), which requires a notification of a change in ownership; H.B. 251
Enrolled Copy
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3917 (m) Subsection 61-2e-307(1)(c), which prohibits use of an unregistered fictitious name;
3918 (n) Subsection 61-2e-401(1)(c), which prohibits failure to respond to a division
3919request;
3920 (o) Subsection 61-2f-201(1), which requires licensure;
3921 (p) Subsection 61-2f-206(1), which requires registration;
3922 (q) Subsection 61-2f-301(1), which requires notification of a specified legal action;
3923 (r) Subsection 61-2f-401(1)(a), which prohibits making a substantial misrepresentation;
3924 (s) Subsection 61-2f-401(3), which prohibits undertaking real estate while not affiliated
3925with a principal broker;
3926 (t) Subsection 61-2f-401(9), which prohibits failing to keep specified records and
3927prohibits failing to make the specified records available for division inspection;
3928 (u) Subsection 61-2f-401(12), which prohibits false, misleading, or deceptive
3929advertising;
3930 (v) Subsection 61-2f-401(18), which prohibits failing to respond to a division request;
3931 (w) Subsection 61-2g-301(1), which requires licensure;
3932 (x) Subsection 61-2g-405(3), which requires making records required to be maintained
3933available to the division;
3934 (y) Subsection 61-2g-501(2)(c), which requires a person to respond to a division
3935request in an investigation within 10 days after the day on which the request is served;
3936 (z) Subsection 61-2g-502(2)(f), which prohibits using a nonregistered fictitious name;
3937 (aa) a rule made pursuant to any Subsection listed in this Subsection (4);
3938 (bb) an order of the division; or
3939 (cc) an order of the commission or board that oversees the person's profession.
3940 (5) (a) In accordance with Subsection (10), the division may assess a fine against a
3941person for a violation of a provision listed in Subsection (4), as evidenced by:
3942 (i) an uncontested citation;
3943 (ii) a stipulated settlement; or Enrolled Copy H.B. 251
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3944 (iii) a finding of a violation in an adjudicative proceeding.
3945 (b) The division may, in addition to or in lieu of a fine under Subsection (5)(a), order
3946the person to cease and desist from an activity that violates a provision listed in Subsection (4).
3947 (6) Except as provided in Subsection (8)(d), the division may not use a citation to
3948effect a license:
3949 (a) denial;
3950 (b) probation;
3951 (c) suspension; or
3952 (d) revocation.
3953 (7) (a) A citation issued by the division shall:
3954 (i) be in writing;
3955 (ii) describe with particularity the nature of the violation, including a reference to the
3956provision of the statute, rule, or order alleged to have been violated;
3957 (iii) clearly state that the recipient must notify the division in writing within 20
3958calendar days after the day on which the citation is served if the recipient wishes to contest the
3959citation at a hearing conducted under Title 63G, Chapter 4, Administrative Procedures Act; and
3960 (iv) clearly explain the consequences of failure to timely contest the citation or to make
3961payment of a fine assessed by the citation within the time period specified in the citation.
3962 (b) The division may issue a notice in lieu of a citation.
3963 (8) (a) A citation becomes final:
3964 (i) if within 20 calendar days after the day on which the citation is served, the person to
3965whom the citation was issued fails to request a hearing to contest the citation; or
3966 (ii) if the director or the director's designee conducts a hearing pursuant to a timely
3967request for a hearing and issues an order finding that a violation has occurred.
3968 (b) The division may extend, for cause, the 20-day period to contest a citation.
3969 (c) A citation that becomes the final order of the division due to a person's failure to
3970timely request a hearing is not subject to further agency review. H.B. 251
Enrolled Copy
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3971 (d) (i) The division may refuse to issue, refuse to renew, suspend, revoke, or place on
3972probation the license of a licensee who fails to comply with a citation after the citation
3973becomes final.
3974 (ii) The failure of a license applicant to comply with a citation after the citation
3975becomes final is a ground for denial of the license application.
3976 (9) (a) The division may not issue a citation under this section after the expiration of
3977one year after the day on which the violation occurs.
3978 (b) The division may issue a notice to address a violation that is outside of the one-year
3979citation period.
3980 (10) The director or the director's designee shall assess a fine with a citation in an
3981amount that is no more than:
3982 (a) for a first offense, $1,000;
3983 (b) for a second offense, $2,000; and
3984 (c) for each offense subsequent to a second offense, $2,000 for each day of continued
3985offense.
3986 (11) (a) An action for a first or second offense for which the division has not issued a
3987final order does not preclude the division from initiating a subsequent action for a second or
3988subsequent offense while the preceding action is pending.
3989 (b) The final order on a subsequent action is considered a second or subsequent
3990offense, respectively, provided the preceding action resulted in a first or second offense,
3991respectively.
3992 (12) (a) If a person does not pay a penalty, the director may collect the unpaid penalty
3993by:
3994 (i) referring the matter to a collection agency; or
3995 (ii) bringing [an action in the district court of the county: (A) where the person resides;
3996or (B) where the office of the director is located] an action in a court with jurisdiction under
3997Title 78A, Judiciary and Judicial Administration. Enrolled Copy H.B. 251
- 149 -
3998 (b) A county attorney or the attorney general of the state shall provide legal services to
3999the director in an action to collect the penalty.
4000 (c) A court may award reasonable attorney fees and costs to the division in an action
4001the division brings to enforce the provisions of this section.
4002 Section 93. Section 61-2c-403 is amended to read:
4003 61-2c-403. Cease and desist orders.
4004 (1) (a) The director may issue and serve by certified mail, or by personal service, on a
4005person an order to cease and desist from an act if:
4006 (i) the director has reason to believe that the person has been engaged, is engaging in,
4007or is about to engage in the act constituting a violation of this chapter; and
4008 (ii) it appears to the director that it would be in the public interest to stop the act.
4009 (b) Within 10 days after service of the order, the party named in the order may request
4010a hearing to be held in accordance with Title 63G, Chapter 4, Administrative Procedures Act.
4011 (c) Pending a hearing requested under Subsection (1)(b), a cease and desist order shall
4012remain in effect.
4013 (2) (a) After the hearing described in Subsection (1), if the director finds that an act of
4014the person violates this chapter, the director:
4015 (i) shall issue an order making the cease and desist order permanent; and
4016 (ii) may impose another disciplinary action under Section 61-2c-402.
4017 (b) [(i)] The director may [file suit] bring an action in a court with jurisdiction under
4018Title 78A, Judiciary and Judicial Administration, in the name of the division to enjoin and
4019restrain a person on whom an order is served under this section from violating this chapter if:
4020 [(A)] (i) [(I)] (A) the person does not request a hearing under Subsection (1); or
4021 [(II)] (B) a permanent cease and desist order is issued against the person following a
4022hearing or stipulation; and
4023 [(B)] (ii) [(I)] (A) the person fails to cease the act; or
4024 [(II)] (B) after discontinuing the act, the person again commences the act. H.B. 251
Enrolled Copy
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4025 [(ii) The suit described in Subsection (2)(b)(i) shall be filed in the district court in the
4026county:]
4027 [(A) in which the act occurs;]
4028 [(B) where the individual resides; or]
4029 [(C) where the individual or entity carries on business.]
4030 (3) The cease and desist order issued under this section may not interfere with or
4031prevent the prosecution of a remedy or action enforcement under this chapter.
4032 (4) An individual who violates a cease and desist order issued under this section is
4033guilty of a class A misdemeanor.
4034 Section 94. Section 61-2f-403 is amended to read:
4035 61-2f-403. Mishandling of trust money.
4036 (1) The division may audit principal brokers' trust accounts or other accounts in which
4037a licensee maintains trust money under this chapter. If the division's audit shows, in the
4038opinion of the division, gross mismanagement, commingling, or misuse of money, the division,
4039with the concurrence of the commission, may order at the division's expense a complete audit
4040of the account by a certified public accountant, or take other action in accordance with Section
404161-2f-404.
4042 (2) If the commission finds under Subsection (1) that gross mismanagement,
4043comingling, or misuse of money occurred, the commission, with concurrence of the division,
4044may then order the licensee to reimburse the division for the cost of the audit described in
4045Subsection (1).
4046 (3) The licensee may obtain agency review by the executive director or judicial review
4047of any division order.
4048 (4) (a) If it appears that a person has grossly mismanaged, commingled, or otherwise
4049misused trust money, the division, with or without prior administrative proceedings, may bring
4050an action[: (i) in the district court of the district where: (A) the person resides; (B) the person
4051maintains a place of business; or (C) the act or practice occurred or is about to occur; and (ii)] Enrolled Copy H.B. 251
- 151 -
4052in a court with jurisdiction under Title 78A, Judiciary and Judicial Administration, to enjoin
4053the act or practice and to enforce compliance with this chapter or any rule or order under this
4054chapter.
4055 (b) Upon a proper showing, a court shall grant injunctive relief or a temporary
4056restraining order, and may appoint a receiver or conservator. The division is not required to
4057post a bond in any court proceeding.
4058 Section 95. Section 61-2f-407 is amended to read:
4059 61-2f-407. Remedies and action for violations.
4060 (1) (a) The director shall issue and serve upon a person an order directing that person to
4061cease and desist from an act if:
4062 (i) the director has reason to believe that the person has been engaging, is about to
4063engage, or is engaging in the act constituting a violation of this chapter; and
4064 (ii) it appears to the director that it would be in the public interest to stop the act.
4065 (b) Within 10 days after the day on which the order is served, the person upon whom
4066the order is served may request a hearing.
4067 (c) Pending a hearing requested under Subsection (1)(b), a cease and desist order shall
4068remain in effect.
4069 (d) If a request for a hearing is made, the division shall follow the procedures and
4070requirements of Title 63G, Chapter 4, Administrative Procedures Act.
4071 (2) (a) After a hearing requested under Subsection (1), if the commission and the
4072director agree that an act of the person violates this chapter, the director:
4073 (i) shall issue an order making the order issued under Subsection (1) permanent; and
4074 (ii) may impose another disciplinary action under Section 61-2f-404.
4075 (b) The director shall [file suit] bring an action in a court with jurisdiction under Title
407678A, Judiciary and Judicial Administration, in the name of the Department of Commerce and
4077the Division of Real Estate[, in the district court in the county in which an act described in
4078Subsection (1) occurs or where the person resides or carries on business,] to enjoin and restrain H.B. 251
Enrolled Copy
- 152 -
4079the person from violating this chapter if:
4080 (i) (A) a hearing is not requested under Subsection (1); and
4081 (B) the person fails to cease the act described in Subsection (1); or
4082 (ii) after discontinuing the act described in Subsection (1), the person again
4083commences the act.
4084 [(c) A district court of this state has jurisdiction of an action brought under this
4085section.]
4086 [(d)] (c) Upon a proper showing in an action brought under this section or upon a
4087conviction under Section 76-6-1203, the court may:
4088 (i) issue a permanent or temporary, prohibitory or mandatory injunction;
4089 (ii) issue a restraining order or writ of mandamus;
4090 (iii) enter a declaratory judgment;
4091 (iv) appoint a receiver or conservator for the defendant or the defendant's assets;
4092 (v) order disgorgement;
4093 (vi) order rescission;
4094 (vii) impose a civil penalty not to exceed the greater of:
4095 (A) $5,000 for each violation; or
4096 (B) the amount of any gain or economic benefit derived from a violation; and
4097 (viii) enter any other relief the court considers just.
4098 [(e)] (d) The court may not require the division to post a bond in an action brought
4099under this Subsection (2).
4100 (3) A license, certificate, or registration issued by the division to any person convicted
4101of a violation of Section 76-6-1203 is automatically revoked.
4102 (4) A remedy or action provided in this section does not limit, interfere with, or prevent
4103the prosecution of another remedy or action, including a criminal proceeding.
4104 Section 96. Section 61-2g-501 is amended to read:
4105 61-2g-501. Enforcement -- Investigation -- Orders -- Hearings. Enrolled Copy H.B. 251
- 153 -
4106 (1) (a) The division may conduct a public or private investigation of the actions of:
4107 (i) a person registered, licensed, or certified under this chapter;
4108 (ii) an applicant for registration, licensure, or certification;
4109 (iii) an applicant for renewal of registration, licensure, or certification; or
4110 (iv) a person required to be registered, licensed, or certified under this chapter.
4111 (b) The division may initiate an agency action against a person described in Subsection
4112(1)(a) in accordance with Title 63G, Chapter 4, Administrative Procedures Act, to:
4113 (i) impose disciplinary action;
4114 (ii) deny issuance to an applicant of:
4115 (A) an original registration, license, or certification; or
4116 (B) a renewal of a registration, license, or certification; or
4117 (iii) issue a cease and desist order as provided in Subsection (3).
4118 (2) (a) The division may:
4119 (i) administer an oath or affirmation;
4120 (ii) issue a subpoena that requires:
4121 (A) the attendance and testimony of a witness; or
4122 (B) the production of evidence;
4123 (iii) take evidence; and
4124 (iv) require the production of a book, paper, contract, record, document, information,
4125or evidence relevant to the investigation described in Subsection (1).
4126 (b) The division may serve a subpoena by certified mail.
4127 (c) A failure to respond to a request by the division in an investigation authorized
4128under this chapter within 10 days after the day on which the request is served is considered to
4129be a separate violation of this chapter, including:
4130 (i) failing to respond to a subpoena as a witness;
4131 (ii) withholding evidence; or
4132 (iii) failing to produce a book, paper, contract, document, information, or record. H.B. 251
Enrolled Copy
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4133 (d) (i) A court of competent jurisdiction shall enforce, according to the practice and
4134procedure of the court, a subpoena issued by the division.
4135 (ii) The division shall pay any witness fee, travel expense, mileage, or any other fee
4136required by the service statutes of the state where the witness or evidence is located.
4137 (e) (i) If a person is found to have violated this chapter or a rule made under this
4138chapter, the person shall pay the costs incurred by the division to copy a book, paper, contract,
4139document, information, or record required under this chapter, including the costs incurred to
4140copy an electronic book, paper, contract, document, information, or record in a universally
4141readable format.
4142 (ii) If a person fails to pay the costs described in Subsection (2)(e)(i) when due, the
4143person's license, certification, or registration is automatically suspended:
4144 (A) beginning the day on which the payment of costs is due; and
4145 (B) ending the day on which the costs are paid.
4146 (3) (a) The director shall issue and serve upon a person an order directing that person to
4147cease and desist from an act if:
4148 (i) the director has reason to believe that the person has been engaging, is about to
4149engage, or is engaging in the act constituting a violation of this chapter; and
4150 (ii) it appears to the director that it would be in the public interest to stop the act.
4151 (b) Within 10 days after the day on which the order is served, the person upon whom
4152the order is served may request a hearing.
4153 (c) Pending a hearing requested under Subsection (3)(b), a cease and desist order shall
4154remain in effect.
4155 (d) If a request for hearing is made, the division shall follow the procedures and
4156requirements of Title 63G, Chapter 4, Administrative Procedures Act.
4157 (4) (a) After a hearing requested under Subsection (3), if the board and division concur
4158that an act of the person violates this chapter, the board, with the concurrence of the division:
4159 (i) shall issue an order making the cease and desist order permanent; and Enrolled Copy H.B. 251
- 155 -
4160 (ii) may impose another disciplinary action under Section 61-2g-502.
4161 (b) The director shall [commence an action] bring an action in a court with jurisdiction
4162under Title 78A, Judiciary and Judicial Administration, in the name of the Department of
4163Commerce and Division of Real Estate[, in the district court in the county in which an act
4164described in Subsection (3) occurs or where the individual resides or carries on business,] to
4165enjoin and restrain the individual from violating this chapter if:
4166 (i) (A) a hearing is not requested under Subsection (3); and
4167 (B) the individual fails to cease the act described in Subsection (3); or
4168 (ii) after discontinuing the act described in Subsection (3), the individual again
4169commences the act.
4170 (5) A remedy or action provided in this section does not limit, interfere with, or prevent
4171the prosecution of another remedy or action, including a criminal proceeding.
4172 (6) (a) Except as provided in Subsection (6)(b), the division shall commence a
4173disciplinary action under this chapter no later than the earlier of the following:
4174 (i) four years after the day on which the violation is reported to the division; or
4175 (ii) 10 years after the day on which the violation occurred.
4176 (b) The division may commence a disciplinary action under this chapter after the time
4177period described in Subsection (6)(a) expires if:
4178 (i) (A) the disciplinary action is in response to a civil or criminal judgment or
4179settlement; and
4180 (B) the division initiates the disciplinary action no later than one year after the day on
4181which the judgment is issued or the settlement is final; or
4182 (ii) the division and the individual subject to a disciplinary action enter into a written
4183stipulation to extend the time period described in Subsection (6)(a).
4184 Section 97. Section 70-3a-309 is amended to read:
4185 70-3a-309. Cybersquatting.
4186 (1) (a) A person is liable in a civil action by the owner of a mark, including a personal H.B. 251
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4187name, which is a mark for purposes of this section, if, without regard to the goods or services
4188of the person or the mark's owner, the person:
4189 (i) has a bad faith intent to profit from the mark, including a personal name; and
4190 (ii) for any length of time registers, acquires, traffics in, or uses a domain name in, or
4191belonging to any person in, this state that:
4192 (A) in the case of a mark that is distinctive at the time of registration of the domain
4193name, is identical or confusingly similar to the mark;
4194 (B) in the case of a famous mark that is famous at the time of registration of the
4195domain name, is identical or confusingly similar to or dilutive of the mark; or
4196 (C) is a trademark, word, or name protected by reason of 18 U.S.C. Sec. 706 or 36
4197U.S.C. Sec. 220506.
4198 (b) (i) In determining whether a person has a bad faith intent described in Subsection
4199(1)(a), a court may consider all relevant factors, including:
4200 (A) the trademark or other intellectual property rights of the person, if any, in the
4201domain name;
4202 (B) the extent to which the domain name consists of the legal name of the person or a
4203name that is otherwise commonly used to identify that person;
4204 (C) the person's prior use, if any, of the domain name in connection with the bona fide
4205offering of any goods or services;
4206 (D) the person's bona fide noncommercial or fair use of the mark in a site accessible
4207under the domain name;
4208 (E) the person's intent to divert consumers from the mark owner's online location to a
4209site accessible under the domain name that could harm the goodwill represented by the mark,
4210either for commercial gain or with the intent to tarnish or disparage the mark, by creating a
4211likelihood of confusion as to the source, sponsorship, affiliation, or endorsement of the site;
4212 (F) the person's offer to transfer, sell, or otherwise assign, or solicitation of the
4213purchase, transfer, or assignment of the domain name to the mark owner or any third party for Enrolled Copy H.B. 251
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4214financial gain without having used, or having an intent to use, the domain name in the bona
4215fide offering of any goods or services, or the person's prior conduct indicating a pattern of such
4216conduct;
4217 (G) the person's provision of material and misleading false contact information when
4218applying for the registration of the domain name, the person's intentional failure to maintain
4219accurate contact information, or the person's prior conduct indicating a pattern of such conduct;
4220 (H) the person's registration or acquisition of multiple domain names that the person
4221knows are identical or confusingly similar to another's mark that is distinctive at the time of
4222registration of the domain names, or is dilutive of another's famous mark that is famous at the
4223time of registration of the domain names, without regard to the goods or services of the person
4224or the mark owner; and
4225 (I) the extent to which the mark incorporated in the person's domain name registration
4226is or is not distinctive and famous.
4227 (ii) Bad faith intent described in Subsection (1)(a) may not be found in any case in
4228which the court determines that the person believed and had reasonable grounds to believe that
4229the use of the domain name was a fair use or otherwise lawful.
4230 (c) In a civil action involving the registration, trafficking, or use of a domain name
4231under this section, a court may order the forfeiture or cancellation of the domain name or the
4232transfer of the domain name to the owner of the mark.
4233 (d) (i) A person is liable for using a domain name under Subsection (1)(a) only if that
4234person is the domain name registrant or that registrant's authorized licensee, affiliate, domain
4235name registrar, domain name registry, or other domain name registration authority that
4236knowingly assists a violation of this chapter by the registrant.
4237 (ii) A person may not be held liable under this section absent a showing of bad faith
4238intent to profit from the registration or maintenance of the domain name.
4239 (iii) For purposes of this section, a "showing of bad faith intent to profit" shall be
4240interpreted in the same manner as under 15 U.S.C. Sec. 1114(2)(D)(iii). H.B. 251
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4241 (e) As used in this section, the term "traffics in" refers to transactions that include
4242sales, purchases, loans, pledges, licenses, exchanges of currency, and any other transfer for
4243consideration or receipt in exchange for consideration.
4244 (2) (a) The owner of a mark registered with the U.S. Patent and Trademark Office or
4245under this chapter may [file an in rem civil action] bring an in rem civil action in a court with
4246jurisdiction under Title 78A, Judiciary and Judicial Administration, against a domain name [in
4247the district court] if the owner is located in the state and if:
4248 (i) the domain name violates any right of the owner of a mark registered in the Patent
4249and Trademark Office or registered under this chapter; and
4250 (ii) the court finds that the owner:
4251 (A) is not able to obtain personal jurisdiction over a person who would be a defendant
4252in a civil action under Subsection (1); or
4253 (B) through due diligence was not able to find a person who would be a defendant in a
4254civil action under Subsection (1) by:
4255 (I) sending a notice of the alleged violation and intent to proceed under this Subsection
4256(2)(a) to the registrant of the domain name at the postal and e-mail address provided by the
4257registrant to the registrar; and
4258 (II) publishing notice of the action as the court may direct promptly after filing the
4259action.
4260 (b) Completion of the actions required by Subsection (2)(a)(ii) constitutes service of
4261process.
4262 (c) In an in rem action under this Subsection (2), a domain name is considered to be
4263located in the judicial district in which:
4264 (i) the domain name registrar, registry, or other domain name authority that registered
4265or assigned the domain name is located; or
4266 (ii) documents sufficient to establish control and authority regarding the disposition of
4267the registration and use of the domain name are deposited with the court. Enrolled Copy H.B. 251
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4268 (d) (i) The remedies in an in rem action under this Subsection (2) are limited to a court
4269order for the forfeiture or cancellation of the domain name or the transfer of the domain name
4270to the owner of the mark.
4271 (ii) Upon receipt of written notification of a filed, stamped copy of a complaint filed by
4272the owner of a mark in the [district] court under this Subsection (2), the domain name registrar,
4273domain name registry, or other domain name authority shall:
4274 (A) expeditiously deposit with the court documents sufficient to establish the court's
4275control and authority regarding the disposition of the registration and use of the domain name
4276to the court; and
4277 (B) not transfer, suspend, or otherwise modify the domain name during the pendency
4278of the action, except upon order of the court.
4279 (iii) The domain name registrar or registry or other domain name authority is not liable
4280for injunctive or monetary relief under this section, except in the case of bad faith or reckless
4281disregard, which includes a willful failure to comply with a court order.
4282 (3) The civil actions and remedies established by Subsection (1) and the in rem action
4283established in Subsection (2) do not preclude any other applicable civil action or remedy.
4284 (4) The in rem jurisdiction established under Subsection (2) does not preclude any
4285other jurisdiction, whether in rem or personal.
4286 Section 98. Section 70-3a-402 is amended to read:
4287 70-3a-402. Infringement.
4288 (1) Subject to Section 70-3a-104 and Subsection (2), any person is liable in a civil
4289action brought by the registrant for any and all of the remedies provided in Section 70-3a-404,
4290if that person:
4291 (a) uses a reproduction, counterfeit, copy, or colorable imitation of a mark registered
4292under this chapter:
4293 (i) without the consent of the registrant; and
4294 (ii) in connection with the sale, distribution, offering for sale, or advertising of any H.B. 251
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4295goods or services on or in connection with which that use is likely to cause confusion, mistake,
4296or to deceive as to the source of origin, nature, or quality of those goods or services; or
4297 (b) reproduces, counterfeits, copies, or colorably imitates any mark and applies the
4298reproduction, counterfeit, copy, or colorable imitation to labels, signs, prints, packages,
4299wrappers, receptacles, or advertisements intended to be used upon or in connection with the
4300sale or other distribution in this state of goods or services.
4301 (2) Under Subsection (1)(b), the registrant is not entitled to recover profits or damages
4302unless the act described in Subsection (1)(b) has been committed with the intent:
4303 (a) to cause confusion or mistake; or
4304 (b) to deceive.
4305 (3) In a civil action for a violation of Section 70-3a-309:
4306 (a) the plaintiff may recover court costs and reasonable attorney fees; and
4307 (b) the plaintiff may elect, at any time before final judgment is entered by the [district]
4308court, to recover, instead of actual damages and profits, an award of statutory damages in the
4309amount of not less than $1,000 and not more than $100,000 per domain name, as the court
4310considers just.
4311 (4) Statutory damages awarded under Subsection (3)(b) are presumed to be $100,000
4312per domain name if there is a pattern and practice of infringements committed willfully for
4313commercial gain.
4314 Section 99. Section 70-3a-405 is amended to read:
4315 70-3a-405. Forum for actions regarding registration -- Service on out-of-state
4316registrants.
4317 (1) (a) [An action to require the cancellation of a mark registered under this chapter
4318shall be brought in a district court of this state.] A person may bring an action in a court with
4319jurisdiction under Title 78A, Judiciary and Judicial Administration, to require the cancellation
4320of a mark registered under this chapter.
4321 (b) The division may not be made a party to an action filed under Subsection (1)(a), Enrolled Copy H.B. 251
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4322except that the division may intervene in an action filed under Subsection (1)(a).
4323 (2) In any action brought against a nonresident registrant, service may be effected upon
4324the nonresident registrant in accordance with the procedures established for service upon
4325nonresident corporations and business entities under Section 16-10a-1511.
4326 Section 100. Section 70A-8-409.1 is amended to read:
4327 70A-8-409.1. Replacement of lost, destroyed, or wrongfully taken share
4328certificate of a land company or a water company.
4329 (1) [For purposes of] As used in this section:
4330 (a) "Affected share" means the share represented by a share certificate that is lost,
4331destroyed, or wrongfully taken.
4332 (b) "Company" means a land company or a water company.
4333 (c) "Distribution area" means:
4334 (i) for a water company, the geographic area where the water company distributes
4335water; or
4336 (ii) for a land company, the geographic area owned by the land company.
4337 (d) "Original share certificate" means a share certificate that is alleged to be lost,
4338destroyed, or wrongfully taken.
4339 (e) "Person" means:
4340 (i) an individual;
4341 (ii) a corporation;
4342 (iii) a business entity;
4343 (iv) a political subdivision of the state, including a municipality;
4344 (v) an agency of the state; or
4345 (vi) an agency of the federal government.
4346 (f) "Replacement share certificate" means a share certificate issued to replace a share
4347certificate that is lost, destroyed, or wrongfully taken.
4348 (g) "Share certificate" means a certificated share of stock in a company. H.B. 251
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4349 (2) (a) This section applies to the replacement of a lost, destroyed, or wrongfully taken
4350share certificate.
4351 (b) Unless the articles of incorporation or bylaws of a company address the
4352replacement of a lost, destroyed, or wrongfully taken share certificate, this section governs the
4353replacement of a lost, destroyed, or wrongfully taken share certificate.
4354 (3) A company shall issue a replacement share certificate to a person claiming to be the
4355owner of a share certificate that is lost, destroyed, or wrongfully taken, and cancel the original
4356share certificate on the records of the company, if:
4357 (a) the person represents to the company that the original share certificate is lost,
4358destroyed, or wrongfully taken;
4359 (b) (i) (A) the person is the registered owner of the affected share; and
4360 (B) before the company receives notice that the share certificate has been acquired by a
4361protected purchaser, the person requests that a replacement share certificate be issued; or
4362 (ii) (A) the person is not the registered owner of the affected share; and
4363 (B) the person establishes ownership of the affected share, including by presenting to
4364the company written documentation that demonstrates to the reasonable satisfaction of the
4365company that the person is the rightful owner of the affected share through purchase, gift,
4366inheritance, foreclosure, bankruptcy, or reorganization;
4367 (c) the assessments to which the affected share is subject are paid current;
4368 (d) except as provided in Subsection (5), the person files with the company a sufficient
4369indemnity bond or other security acceptable to the company; and
4370 (e) the person satisfies any other reasonable requirement imposed by the company,
4371including the payment of a reasonable transfer fee.
4372 (4) (a) If after a replacement share certificate is issued a protected purchaser of the
4373original share certificate presents the original share certificate for registration of transfer, the
4374company shall register the transfer unless an overissue would result.
4375 (b) If an overissue would result when there is a registration of transfer of an original Enrolled Copy H.B. 251
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4376share certificate, a company may recover the replacement share certificate from the person to
4377whom it is issued, or any person taking under that person, except a protected purchaser.
4378 (c) If a company elects to follow the procedures of Subsection (5), to assert an
4379ownership interest in the affected share, a protected purchaser shall file a written notice of
4380objection within the 60-day period described in Subsection (5)(d). A protected purchaser's
4381failure to file a written notice of objection within the 60-day period eliminates any claim of the
4382protected purchaser.
4383 (5) As an alternative to requiring an indemnity bond or other acceptable security under
4384Subsection (3)(d), a company is considered to have followed a fair and reasonable procedure
4385without the necessity of a written policy or bylaw otherwise required by Section 16-6a-609, if
4386the company follows the following procedure:
4387 (a) The company shall publish written notice at least once a week for three consecutive
4388weeks:
4389 (i) (A) in a newspaper of general circulation in the area that reasonably includes the
4390distribution area of the company; and
4391 (B) as required in Section 45-1-101;
4392 (ii) with at least seven days between each publication date under Subsection
4393(5)(a)(i)(A); and
4394 (iii) beginning no later than 20 days after submission of the request to issue the
4395replacement share certificate.
4396 (b) The company shall post written notice in at least three conspicuous places within
4397the distribution area of the company.
4398 (c) No later than 20 days after the day on which the company receives a request to issue
4399a replacement share certificate, the company shall mail written notice:
4400 (i) to the last known address of the owner of the affected share shown on the records of
4401the company;
4402 (ii) if a company maintains a record of who pays annual assessments, to any person H.B. 251
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4403who, within the five-year period immediately preceding the day the written notice is mailed,
4404pays an assessment levied against the affected share; and
4405 (iii) to any person that has notified the company in writing of an interest in the affected
4406share, including a financial institution.
4407 (d) A notice required under Subsections (5)(a) through (c) shall:
4408 (i) identify the person who is requesting that a replacement share certificate be issued;
4409 (ii) state that an interested person may file a written notice of objection with the
4410company; and
4411 (iii) state that unless a written notice of objection to the issuance of a replacement share
4412certificate is filed within 60 days after the last day of publication under Subsection (5)(a)(i)(A),
4413including a written notice of objection from a protected purchaser:
4414 (A) a replacement share certificate will be issued to the person requesting that the
4415replacement share certificate be issued; and
4416 (B) the original share certificate will be permanently canceled on the records of the
4417company.
4418 (e) A notice of objection under Subsection (5)(d) shall:
4419 (i) state the basis for objecting to the claim of ownership of the affected share;
4420 (ii) identify a person that the objecting person believes has a stronger claim of
4421ownership to the affected share; and
4422 (iii) be accompanied by written evidence that reasonably documents the basis of the
4423objection to the claim of ownership.
4424 (f) If the company receives a notice of objection within the 60-day period described in
4425Subsection (5)(d), the company may review the disputed claim and:
4426 (i) deny in writing the objection to the claim of ownership and issue a replacement
4427share certificate to the person requesting the replacement share certificate;
4428 (ii) accept in writing a claim of ownership asserted by a notice of objection and issue a
4429replacement share certificate to the person the objecting person asserts owns the affected share; Enrolled Copy H.B. 251
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4430 (iii) file an interpleader action in accordance with Utah Rules of Civil Procedure, Rule
443122, joining the persons claiming an interest in the affected share and depositing a replacement
4432share certificate with the court; or
4433 (iv) require the persons claiming an interest in the affected share to resolve the
4434ownership dispute.
4435 (g) Upon receipt, the company shall act in accordance with:
4436 (i) a written agreement acceptable to the company among the persons who claim
4437interest in the affected share; or
4438 (ii) a court order declaring ownership in the affected share.
4439 (h) The following are entitled to receive from a nonprevailing person the costs for
4440resolution of a dispute under this Subsection (5), including reasonable attorney fees when
4441attorney fees are necessary:
4442 (i) a prevailing person; and
4443 (ii) the company, if the company acts in good faith.
4444 (i) The person requesting that a replacement share certificate be issued shall reimburse
4445the company for the costs reasonably incurred by the company under this Subsection (5) that
4446are not paid under this Subsection (5)(i) including:
4447 (i) legal and other professional fees; and
4448 (ii) costs incurred by the company in response to a notice of objection.
4449 (j) A company shall comply with this Subsection (5) before issuance of a replacement
4450share certificate:
4451 (i) upon request from the person requesting a replacement share certificate be issued;
4452and
4453 (ii) if the person requesting the replacement share certificate provides indemnification
4454satisfactory to the company against liability and costs of proceeding under this Subsection (5).
4455 (k) A determination made under this Subsection (5) is considered to be a final and
4456conclusive determination of ownership of a disputed replacement share certificate. H.B. 251
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4457 (6) (a) A company shall:
4458 (i) make a decision to approve or deny the issuance of a replacement share certificate in
4459writing; and
4460 (ii) deliver the written decision to:
4461 (A) the person requesting a replacement share certificate be issued;
4462 (B) a person who files a notice of objection under Subsection (5); and
4463 (C) any other person the company determines is involved in the request for a
4464replacement share certificate.
4465 (b) A person may bring an action in a court with jurisdiction under Title 78A, Judiciary
4466and Judicial Administration, against a company for judicial review of a decision by the
4467company under Subsection (6)(a).
4468 [(b) A decision of a company described in Subsection (6)(a) is subject to de novo
4469judicial review in the district court in which the company has its principal place of business.]
4470 (c) (i) A person may not seek judicial review under Subsection (6)(b) more than 30
4471days after the day on which the written decision is delivered under Subsection (6)(a).
4472 (ii) If no action for judicial review is filed within the 30-day period, absent fraud, the
4473issuance of a replacement share certificate or the decision to not issue a replacement share
4474certificate is final and conclusive evidence of ownership of the affected share.
4475 (d) (i) In a judicial action brought under this Subsection (6), the prevailing person as
4476determined by court order, is entitled to payment by a nonprevailing person of:
4477 (A) the costs of successfully defending its ownership claim; and
4478 (B) reasonable attorney fees.
4479 (ii) Notwithstanding Subsection (6)(d)(i), an award of costs or attorney fees may not be
4480granted against a company if the company acts in good faith.
4481 Section 101. Section 70A-9a-513.5 is amended to read:
4482 70A-9a-513.5. Termination of wrongfully filed financing statement --
4483Reinstatement. Enrolled Copy H.B. 251
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4484 (1) As used in this section:
4485 (a) "Established filer" means a person that:
4486 (i) regularly causes records to be communicated to the filing office for filing and has
4487provided the filing office with current contact information and information sufficient to
4488establish its identity; or
4489 (ii) satisfies either of the following conditions:
4490 (A) the filing office has issued the person credentials for access to online filing
4491services; or
4492 (B) the person has established an account for payment of filing fees, regardless of
4493whether the account is used in a particular transaction.
4494 (b) "Filing office" means the same as that term is defined in Section 70A-9a-102,
4495except that it does not include a county recorder office.
4496 (2) A person identified as debtor in a filed financing statement may deliver to the filing
4497office the debtor's notarized affidavit, signed under penalty of perjury, that identifies the
4498financing statement by file number, indicates the affiant's mailing address, and states that the
4499affiant believes that the filed record identifying the affiant as debtor was not authorized and
4500was caused to be communicated to the filing office with the intent to harass or defraud the
4501affiant. The filing office shall adopt a form of affidavit for use under this section. The filing
4502office may reject an affidavit described in this Subsection (2) if:
4503 (a) the affidavit is incomplete; or
4504 (b) the filing office reasonably believes that the affidavit was communicated to the
4505filing office with the intent to harass or defraud, or for any other unlawful purpose.
4506 (3) Subject to Subsection (10), if an affidavit is delivered to the filing office under
4507Subsection (2), the filing office shall promptly file a termination statement with respect to the
4508financing statement identified in the affidavit. The termination statement must identify by its
4509file number the initial financing statement to which it relates and must indicate that it was filed
4510pursuant to this section. A termination statement filed under this Subsection (3) is not effective H.B. 251
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4511until 14 days after it is filed.
4512 (4) The filing office may not charge a fee for the filing of an affidavit under Subsection
4513(2) or a termination statement under Subsection (3). The filing office may not return any fee
4514paid for filing the financing statement identified in the affidavit, whether or not the financing
4515statement is reinstated under Subsection (7).
4516 (5) On the same day that a filing office files a termination statement under Subsection
4517(3), it shall send to the secured party of record for the financing statement to which the
4518termination statement relates a notice stating that the termination statement has been filed and
4519will become effective 14 days after filing. The notice shall be sent by mail to the address
4520provided for the secured party of record in the financing statement or by electronic mail to the
4521electronic mail address provided by the secured party of record, if any.
4522 (6) (a) A secured party that believes in good faith that the filed record identified in an
4523affidavit delivered to the filing office under Subsection (2) was authorized and was not caused
4524to be communicated to the filing office with the intent to harass or defraud the affiant may:
4525 (i) before the termination statement takes effect under Subsection (3), request the filing
4526office to review the filed record concerning whether the filed record was filed with the intent to
4527harass or defraud; or
4528 (ii) regardless of whether the affiant seeks a review under Subsection (6)(a)(i), file an
4529action against the filing office seeking reinstatement of the financing statement to which the
4530filed record relates.
4531 (b) Within 10 days after being served with process in an action under this Subsection
4532(6), the filing office shall file a notice indicating that the action has been commenced. The
4533notice shall indicate the file number of the initial financing statement to which it relates.
4534 (c) If the affiant is not named as a defendant in the action described in Subsection
4535(6)(a)(ii), the secured party shall send a copy of the complaint to the affiant at the address
4536indicated in the affidavit. [The exclusive venue for the action shall be in the Third District
4537Court.] A party may petition the court to consider the matter on an expedited basis. Enrolled Copy H.B. 251
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4538 (d) An action under this Subsection (6) must be filed before the expiration of six
4539months after the date on which the termination statement filed under Subsection (3) becomes
4540effective.
4541 (7) If, in an action under Subsection (6), the court determines that the financing
4542statement should be reinstated, the filing office shall promptly file a record that identifies by its
4543file number the initial financing statement to which the record relates and indicates that the
4544financing statement has been reinstated.
4545 (8) Upon the filing of a record reinstating a financing statement under Subsection (7),
4546the effectiveness of the financing statement is reinstated and the financing statement shall be
4547considered never to have been terminated under this section. A continuation statement filed as
4548provided in Subsection 70A-9a-515(4) after the effective date of a termination statement filed
4549under Subsection (3) or (10) becomes effective if the financing statement is reinstated.
4550 (9) If, in an action under Subsection (6), the court determines that the filed record
4551identified in an affidavit delivered to the filing office under Subsection (2) was unauthorized
4552and was caused to be communicated to the filing office with the intent to harass or defraud the
4553affiant, the filing office and the affiant may recover from the secured party that filed the action
4554the costs and expenses, including reasonable attorney fees, that the filing office and the affiant
4555incurred in the action. This recovery is in addition to any recovery to which the affiant is
4556entitled under Section 70A-9a-625.
4557 (10) If an affidavit delivered to a filing office under Subsection (2) relates to a filed
4558record communicated to the filing office by an established filer, the filing office shall promptly
4559send to the secured party of record a notice stating that the affidavit has been delivered to the
4560filing office and that the filing office is conducting an administrative review to determine
4561whether the record was unauthorized and was caused to be communicated with the intent to
4562harass or defraud the affiant. The notice shall be sent by mail to the address provided for the
4563secured party in the financing statement or sent by electronic mail to the electronic mail address
4564provided by the secured party of record, if any, and a copy shall be sent in the same manner to H.B. 251
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4565the affiant. The administrative review shall be conducted on an expedited basis and the filing
4566office may require the affiant and the secured party of record to provide any additional
4567information that the filing office considers appropriate. If the filing office concludes that the
4568record was not authorized and was caused to be communicated with the intent to harass or
4569defraud the affiant, the filing office shall promptly file a termination statement under
4570Subsection (3) that will be effective immediately and send to the secured party of record the
4571notice required by Subsection (5). The secured party may thereafter file an action for
4572reinstatement under Subsection (6), and Subsections (7) through (9) are applicable.
4573 Section 102. Section 78A-6-350 is amended to read:
4574 78A-6-350. Venue -- Dismissal without adjudication on merits.
4575 (1) Notwithstanding [Title 78B, Chapter 3, Part 3, Place of Trial -- Venue] Title 78B,
4576Chapter 3a, Venue for Civil Actions, a proceeding for a minor's case in the juvenile court shall
4577be commenced in the court of the district in which:
4578 (a) for a proceeding under Title 80, Chapter 6, Juvenile Justice:
4579 (i) the minor is living or found; or
4580 (ii) the alleged offense occurred; or
4581 (b) for all other proceedings, the minor is living or found.
4582 (2) If a party seeks to transfer a case to another district after a petition has been filed in
4583the juvenile court, the juvenile court may transfer the case in accordance with the Utah Rules of
4584Juvenile Procedure.
4585 (3) The dismissal of a petition in one district where the dismissal is without prejudice
4586and where there has been no adjudication upon the merits may not preclude refiling within the
4587same district or another district where there is venue for the case.
4588 Section 103. Section 78B-1-132 is amended to read:
4589 78B-1-132. Employer not to discharge or threaten employee for responding to
4590subpoena -- Criminal penalty -- Civil action by employee.
4591 (1) An employer may not deprive an employee of employment or threaten or otherwise Enrolled Copy H.B. 251
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4592coerce the employee regarding employment because the employee attends a deposition or
4593hearing in response to a subpoena.
4594 (2) Any employer who violates this section is guilty of criminal contempt and upon
4595conviction may be fined not more than $500 or imprisoned not more than six months or both.
4596 (3) (a) If an employer violates this section, in addition to any other remedy, the
4597employee may bring [a civil action in district court] an action in a court with jurisdiction under
4598Title 78A, Judiciary and Judicial Administration, for recovery of wages lost as a result of the
4599violation and for an order requiring the reinstatement of the employee.
4600 (b) Damages recoverable may not exceed lost wages for six weeks.
4601 (c) If the employee prevails, the employee shall be allowed reasonable attorney fees.
4602 Section 104. Section 78B-3a-101 is enacted to read:
4603 CHAPTER 3a. VENUE FOR CIVIL ACTIONS
4604 Part 1. General Provisions
4605 78B-3a-101. Definitions.
4606 As used in this chapter:
4607 (1) (a) "Action" means a lawsuit or case that is commenced in a court.
4608 (b) "Action" does not include a criminal action as defined in Section 77-1-3.
4609 (2) "Business organization" means:
4610 (a) an association;
4611 (b) a corporation;
4612 (c) an institution, as that term is defined in Section 7-1-103;
4613 (d) a joint stock company;
4614 (e) a joint venture;
4615 (f) a limited liability company;
4616 (g) a mutual fund trust;
4617 (h) a partnership; or
4618 (i) any other similar form of organization described in Subsections (2)(a) through (h). H.B. 251
Enrolled Copy
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4619 (3) "Cause of action" means the act or omission giving rise to the action.
4620 (4) "Principal place of business" means the place where the business organization's
4621officers direct, control, and coordinate the business organization's activities regardless of
4622whether the place is located in this state.
4623 (5) "Registered office" means the place within this state that the business organization
4624designated as the business organization's registered office in the most recent document on file
4625with the Division of Corporations and Commercial Code.
4626 Section 105. Section 78B-3a-102 is enacted to read:
4627 78B-3a-102. Applicability of this chapter -- Venue for the Business and Chancery
4628Court.
4629 (1) Except as otherwise provided by another provision of the Utah Code, a plaintiff
4630shall bring an action in accordance with the requirements of this chapter.
4631 (2) The requirements of this chapter do not apply to an action brought in the Business
4632and Chancery Court.
4633 Section 106. Section 78B-3a-103 is enacted to read:
4634 78B-3a-103. Transfer of venue.
4635 (1) A court may transfer venue in accordance with Rule 42 of the Utah Rules of Civil
4636Procedure.
4637 (2) A court to which an action is transferred has the same jurisdiction as if the action
4638had been originally brought in that court.
4639 Section 107. Section 78B-3a-104 is enacted to read:
4640 78B-3a-104. Residence of a business organization.
4641 For purposes of this chapter, the residence of a business organization is:
4642 (1) the county where the business organization's principal place of business is located;
4643 (2) the county where the business organization's registered office is located if the
4644business organization does not have a principal place of business in the state; or
4645 (3) Salt Lake County if the business organization does not have a principal place of Enrolled Copy H.B. 251
- 173 -
4646business or a registered office in the state.
4647 Section 108. Section 78B-3a-201, which is renumbered from Section 78B-3-307 is
4648renumbered and amended to read:
4649 Part 2. Venue Requirements
4650 [78B-3-307]. 78B-3a-201. All actions -- Exceptions.
4651 (1) [In all other cases an action shall be tried] Except as otherwise provided by this
4652chapter or another provision of the Utah Code, a plaintiff shall bring an action in the county in
4653which:
4654 (a) the cause of action arises; or
4655 (b) any defendant resides at the commencement of the action.
4656 [(2) If the defendant is a corporation, any county in which the corporation has its
4657principal office or a place of business shall be considered the county in which the corporation
4658resides.]
4659 [(3)] (2) If none of the defendants [resides] reside in this state, [the action may be
4660commenced and tried] the plaintiff may bring the action in any county designated by the
4661plaintiff in the complaint.
4662 [(4)] (3) If the defendant is about to depart from the state, [the action may be tried] the
4663plaintiff may bring the action in any county where any of the parties resides or service is had.
4664 Section 109. Section 78B-3a-202, which is renumbered from Section 78B-3-301 is
4665renumbered and amended to read:
4666 [78B-3-301]. 78B-3a-202. Actions involving real property.
4667 (1) [Actions for the following causes involving real property shall be tried in the
4668county in which the subject of the action, or some part,] A plaintiff shall bring the following
4669actions involving real property in the county in which the real property, or some part of the real
4670property, is situated:
4671 (a) for the recovery of real property[,] or of an estate or interest in the property;
4672 (b) for the determination, in any form, of the right or interest in the real property; H.B. 251
Enrolled Copy
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4673 (c) for injuries to real property;
4674 (d) for the partition of real property; and
4675 (e) for the foreclosure of all liens and mortgages on real property.
4676 (2) If the real property is situated [partly in one county and partly in another, the
4677plaintiff may select either of the counties, and the county selected is the proper county for the
4678trial of the action] in more than one county, the plaintiff may bring the action in any county in
4679which the real property is situated.
4680 Section 110. Section 78B-3a-203, which is renumbered from Section 78B-3-302 is
4681renumbered and amended to read:
4682 [78B-3-302]. 78B-3a-203. Actions to recover fines or penalties -- Actions
4683against public officers.
4684 (1) [Actions to recover fines or penalties shall be tried] A plaintiff shall bring an action
4685to recover a fine or penalty in the county where [the cause, or some part of the cause, arose.]:
4686 (a) the cause of action arises; or
4687 (b) some part of the cause of action arises.
4688 (2) If a fine, penalty, or forfeiture imposed by statute is imposed for an offense
4689committed on a lake, river, or other stream of water situated in two or more counties, [the
4690action may be brought] the plaintiff may bring the action in any county bordering on the lake,
4691river, or stream opposite to the place where the offense was committed.
4692 (3) Except as otherwise provided by law, a plaintiff shall bring an action against a
4693public officer, or the public officer's designee, [shall be tried] in the county where the [cause
4694arose] cause of action arises.
4695 Section 111. Section 78B-3a-204, which is renumbered from Section 78B-3-303 is
4696renumbered and amended to read:
4697 [78B-3-303]. 78B-3a-204. Actions against a county.
4698 (1) [An action against a county may be commenced and tried] Except as otherwise
4699provided in Subsection (2), a plaintiff shall bring an action against a county in the county. Enrolled Copy H.B. 251
- 175 -
4700 (2) If the action is brought by another county, [the action may be commenced and tried
4701in] the county may bring the action in any county not a party to the action.
4702 Section 112. Section 78B-3a-205, which is renumbered from Section 78B-3-304 is
4703renumbered and amended to read:
4704 [78B-3-304]. 78B-3a-205. Actions on written contracts.
4705 [An action] A plaintiff shall bring an action on a contract signed in this state to perform
4706an obligation [may be commenced and tried in the following venues] in:
4707 (1) [If] if the action is to enforce an interest in real property securing a consumer's
4708obligation, [the action may be brought only in] the county where the real property is located or
4709where the defendant resides[.]; or
4710 (2) [An action] if the action is to enforce an interest other than under Subsection (1)
4711[may be brought in], the county where the obligation is to be performed, the contract was
4712signed, or in which the defendant resides.
4713 Section 113. Section 78B-3a-206 is enacted to read:
4714 78B-3a-206. Transitory actions.
4715 (1) Except for a transitory action under Subsection (2), a plaintiff shall bring a
4716transitory action arising outside the state in the county where the defendant resides if the action
4717is brought in this state.
4718 (2) A plaintiff shall bring a transitory action arising outside the state in favor of
4719residents of this state in the county where:
4720 (a) the plaintiff resides; or
4721 (b) the principal defendant resides.
4722 Section 114. Section 78B-5-201 is amended to read:
4723 78B-5-201. Definitions -- Judgment recorded in Registry of Judgments.
4724 (1) [For purposes of this part] As used in this part, "Registry of Judgments" means the
4725index where a judgment is filed and searchable by the name of the judgment debtor through
4726electronic means or by tangible document. H.B. 251
Enrolled Copy
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4727 (2) On or after July 1, 1997, a judgment entered [in a district court] by a court of this
4728state does not create a lien upon or affect the title to real property unless the judgment is filed
4729in the Registry of Judgments of the office of the clerk of the district court of the county in
4730which the property is located.
4731 (3) (a) On or after July 1, 2002, except as provided in Subsection (3)(b), a judgment
4732entered [in a district court] by a court of this state does not create a lien upon or affect the title
4733to real property unless the judgment or an abstract of judgment is recorded in the office of the
4734county recorder in which the real property of the judgment debtor is located.
4735 (b) State agencies are exempt from the recording requirement of Subsection (3)(a).
4736 (4) In addition to the requirements of Subsections (2) and (3)(a), any judgment that is
4737filed in the Registry of Judgments on or after September 1, 1998, or any judgment or abstract
4738of judgment that is recorded in the office of a county recorder after July 1, 2002, shall include:
4739 (a) the information identifying the judgment debtor as required under Subsection (4)(b)
4740on the judgment or abstract of judgment; or
4741 (b) a copy of the separate information statement of the judgment creditor that contains:
4742 (i) the correct name and last-known address of each judgment debtor and the address at
4743which each judgment debtor received service of process;
4744 (ii) the name and address of the judgment creditor;
4745 (iii) the amount of the judgment as filed in the Registry of Judgments;
4746 (iv) if known, the judgment debtor's Social Security number, date of birth, and driver's
4747license number if a natural person; and
4748 (v) whether or not a stay of enforcement has been ordered by the court and the date the
4749stay expires.
4750 (5) For the information required in Subsection (4), the judgment creditor shall:
4751 (a) provide the information on the separate information statement if known or available
4752to the judgment creditor from its records, its attorney's records, or the court records in the
4753action in which the judgment was entered; or Enrolled Copy H.B. 251
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4754 (b) state on the separate information statement that the information is unknown or
4755unavailable.
4756 (6) (a) Any judgment that requires payment of money and is entered [in a district court]
4757by a court of this state on or after September 1, 1998, or any judgment or abstract of judgment
4758recorded in the office of a county recorder after July 1, 2002, that does not include the debtor
4759identifying information as required in Subsection (4) is not a lien until a separate information
4760statement of the judgment creditor is recorded in the office of a county recorder in compliance
4761with Subsections (4) and (5).
4762 (b) The separate information statement of the judgment creditor referred to in
4763Subsection (6)(a) shall include:
4764 (i) the name of any judgment creditor, debtor, assignor, or assignee;
4765 (ii) the date on which the judgment was recorded in the office of the county recorder as
4766described in Subsection (4); and
4767 (iii) the county recorder's entry number and book and page of the recorded judgment.
4768 (7) A judgment that requires payment of money recorded on or after September 1,
47691998, but prior to July 1, 2002, has as its priority the date of entry, except as to parties with
4770actual or constructive knowledge of the judgment.
4771 (8) A judgment or notice of judgment wrongfully filed against real property is subject
4772to Title 38, Chapter 9, Wrongful Lien Act.
4773 (9) (a) To release, assign, renew, or extend a lien created by a judgment recorded in the
4774office of a county recorder, a person shall, in the office of the county recorder of each county in
4775which an instrument creating the lien is recorded, record a document releasing, assigning,
4776renewing, or extending the lien.
4777 (b) The document described in Subsection (9)(a) shall include:
4778 (i) the date of the release, assignment, renewal, or extension;
4779 (ii) the name of any judgment creditor, debtor, assignor, or assignee; and
4780 (iii) for the county in which the document is recorded in accordance with Subsection H.B. 251
Enrolled Copy
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4781(9)(a):
4782 (A) the date on which the instrument creating the lien was recorded in that county's
4783office of the county recorder; and
4784 (B) in accordance with Section 57-3-106, that county recorder's entry number and book
4785and page of the recorded instrument creating the judgment lien.
4786 Section 115. Section 78B-5-202 is amended to read:
4787 78B-5-202. Duration of judgment -- Judgment as a lien upon real property --
4788Abstract of judgment -- Small claims judgment not a lien -- Appeal of judgment -- Child
4789support orders.
4790 (1) Judgments shall continue for eight years from the date of entry in a court unless
4791previously satisfied or unless enforcement of the judgment is stayed in accordance with law.
4792 (2) Prior to July 1, 1997, except as limited by Subsections (4) and (5), the entry of
4793judgment by a district court creates a lien upon the real property of the judgment debtor, not
4794exempt from execution, owned or acquired during the existence of the judgment, located in the
4795county in which the judgment is entered.
4796 (3) An abstract of judgment issued by the court in which the judgment is entered may
4797be filed in any court of this state and shall have the same force and effect as a judgment entered
4798in that court.
4799 (4) Prior to July 1, 1997, and after May 15, 1998, a judgment entered in [the small
4800claims division of any court] a small claims action may not qualify as a lien upon real property
4801unless abstracted to [the civil division of] the district court and recorded in accordance with
4802Subsection (3).
4803 (5) (a) If any judgment is appealed, upon deposit with the court where the notice of
4804appeal is filed of cash or other security in a form and amount considered sufficient by the court
4805that rendered the judgment to secure the full amount of the judgment, together with ongoing
4806interest and any other anticipated damages or costs, including attorney fees and costs on appeal,
4807the lien created by the judgment shall be terminated as provided in Subsection (5)(b). Enrolled Copy H.B. 251
- 179 -
4808 (b) Upon the deposit of sufficient security as provided in Subsection (5)(a), the court
4809shall enter an order terminating the lien created by the judgment and granting the judgment
4810creditor a perfected lien in the deposited security as of the date of the original judgment.
4811 (6) (a) A child support order or a sum certain judgment for past due support may be
4812enforced:
4813 (i) within four years after the date the youngest child reaches majority; or
4814 (ii) eight years from the date of entry of the sum certain judgment entered by a tribunal.
4815 (b) The longer period of duration shall apply in every order.
4816 (c) A sum certain judgment may be renewed to extend the duration.
4817 (7) (a) After July 1, 2002, a judgment entered by [a district court or a justice court in
4818the state] a district court, a justice court, or the Business and Chancery Court, becomes a lien
4819upon real property if:
4820 (i) the judgment or an abstract of the judgment containing the information identifying
4821the judgment debtor as described in Subsection 78B-5-201(4)(b) is recorded in the office of the
4822county recorder; or
4823 (ii) the judgment or an abstract of the judgment and a separate information statement of
4824the judgment creditor as described in Subsection 78B-5-201(5) is recorded in the office of the
4825county recorder.
4826 (b) The judgment shall run from the date of entry by the [district court or justice] court.
4827 (c) The real property subject to the lien includes all the real property of the judgment
4828debtor:
4829 (i) in the county in which the recording under Subsection (7)(a)(i) or (ii) occurs; and
4830 (ii) owned or acquired at any time by the judgment debtor during the time the judgment
4831is effective.
4832 (d) State agencies are exempt from the recording requirement of Subsection (7)(a).
4833 (8) (a) A judgment referred to in Subsection (7) shall be entered under the name of the
4834judgment debtor in the judgment index in the office of the county recorder as required in H.B. 251
Enrolled Copy
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4835Section 17-21-6.
4836 (b) A judgment containing a legal description shall also be abstracted in the appropriate
4837tract index in the office of the county recorder.
4838 (9) (a) To release, assign, renew, or extend a lien created by a judgment recorded in the
4839office of a county recorder, a person shall, in the office of the county recorder of each county in
4840which an instrument creating the lien is recorded, record a document releasing, assigning,
4841renewing, or extending the lien.
4842 (b) The document described in Subsection (9)(a) shall include:
4843 (i) the date of the release, assignment, renewal, or extension;
4844 (ii) the name of any judgment creditor, debtor, assignor, or assignee; and
4845 (iii) for the county in which the document is recorded in accordance with Subsection
4846(9)(a):
4847 (A) the date on which the instrument creating the lien was recorded in that county's
4848office of the county recorder; and
4849 (B) in accordance with Section 57-3-106, that county recorder's entry number and book
4850and page of the recorded instrument creating the judgment lien.
4851 Section 116. Section 78B-5-206 is amended to read:
4852 78B-5-206. Mileage allowance for judgment debtor required to appear.
4853 (1) A judgment debtor legally required to appear before a district court [or a master] or
4854the Business and Chancery Court to answer concerning the debtor's property is entitled, on a
4855sufficient showing of need, to mileage of 15 cents per mile for each mile actually and
4856necessarily traveled in going only, to be paid by the judgment creditor at whose instance the
4857judgment debtor was required to appear.
4858 (2) The judgment creditor is not required to make any payment for such mileage until
4859the judgment debtor has actually appeared before the court [or master].
4860 Section 117. Section 78B-6-110 is amended to read:
4861 78B-6-110. Notice of adoption proceedings. Enrolled Copy H.B. 251
- 181 -
4862 (1) (a) An unmarried biological father, by virtue of the fact that he has engaged in a
4863sexual relationship with a woman:
4864 (i) is considered to be on notice that a pregnancy and an adoption proceeding regarding
4865the child may occur; and
4866 (ii) has a duty to protect his own rights and interests.
4867 (b) An unmarried biological father is entitled to actual notice of a birth or an adoption
4868proceeding with regard to his child only as provided in this section or Section 78B-6-110.5.
4869 (2) Notice of an adoption proceeding shall be served on each of the following persons:
4870 (a) any person or agency whose consent or relinquishment is required under Section
487178B-6-120 or 78B-6-121, unless that right has been terminated by:
4872 (i) waiver;
4873 (ii) relinquishment;
4874 (iii) actual or implied consent; or
4875 (iv) judicial action;
4876 (b) any person who has initiated a paternity proceeding and filed notice of that action
4877with the state registrar of vital statistics within the Department of Health and Human Services,
4878in accordance with Subsection (3);
4879 (c) any legally appointed custodian or guardian of the adoptee;
4880 (d) the petitioner's spouse, if any, only if the petitioner's spouse has not joined in the
4881petition;
4882 (e) the adoptee's spouse, if any;
4883 (f) any person who, prior to the time the mother executes her consent for adoption or
4884relinquishes the child for adoption, is recorded on the birth certificate as the child's father, with
4885the knowledge and consent of the mother;
4886 (g) a person who is:
4887 (i) openly living in the same household with the child at the time the consent is
4888executed or relinquishment made; and H.B. 251
Enrolled Copy
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4889 (ii) holding himself out to be the child's father; and
4890 (h) any person who is married to the child's mother at the time she executes her consent
4891to the adoption or relinquishes the child for adoption, unless the court finds that the mother's
4892spouse is not the child's father under Section 78B-15-607.
4893 (3) (a) In order to preserve any right to notice, an unmarried biological father shall,
4894consistent with Subsection (3)(d):
4895 (i) initiate proceedings in a district court of Utah to establish paternity under Title 78B,
4896Chapter 15, Utah Uniform Parentage Act; and
4897 (ii) file a notice of commencement of the proceedings described in Subsection (3)(a)(i)
4898with the office of vital statistics within the Department of Health and Human Services.
4899 (b) If the unmarried, biological father does not know the county in which the birth
4900mother resides, he may initiate his action in any county, subject to a change in trial pursuant to
4901Section [78B-3-307] 78B-3a-201.
4902 (c) The Department of Health and Human Services shall provide forms for the purpose
4903of filing the notice described in Subsection (3)(a)(ii), and make those forms available in the
4904office of the county health department in each county.
4905 (d) When the state registrar of vital statistics receives a completed form, the registrar
4906shall:
4907 (i) record the date and time the form was received; and
4908 (ii) immediately enter the information provided by the unmarried biological father in
4909the confidential registry established by Subsection 78B-6-121(3)(c).
4910 (e) The action and notice described in Subsection (3)(a):
4911 (i) may be filed before or after the child's birth; and
4912 (ii) shall be filed prior to the mother's:
4913 (A) execution of consent to adoption of the child; or
4914 (B) relinquishment of the child for adoption.
4915 (4) Notice provided in accordance with this section need not disclose the name of the Enrolled Copy H.B. 251
- 183 -
4916mother of the child who is the subject of an adoption proceeding.
4917 (5) The notice required by this section:
4918 (a) may be served at any time after the petition for adoption is filed, but may not be
4919served on a birth mother before she has given birth to the child who is the subject of the
4920petition for adoption;
4921 (b) shall be served at least 30 days prior to the final dispositional hearing;
4922 (c) shall specifically state that the person served shall fulfill the requirements of
4923Subsection (6)(a) within 30 days after the day on which the person receives service if the
4924person intends to intervene in or contest the adoption;
4925 (d) shall state the consequences, described in Subsection (6)(b), for failure of a person
4926to file a motion for relief within 30 days after the day on which the person is served with notice
4927of an adoption proceeding;
4928 (e) is not required to include, nor be accompanied by, a summons or a copy of the
4929petition for adoption;
4930 (f) shall state where the person may obtain a copy of the petition for adoption; and
4931 (g) shall indicate the right to the appointment of counsel for a party whom the court
4932determines is indigent and at risk of losing the party's parental rights.
4933 (6) (a) A person who has been served with notice of an adoption proceeding and who
4934wishes to contest the adoption shall file a motion to intervene in the adoption proceeding:
4935 (i) within 30 days after the day on which the person was served with notice of the
4936adoption proceeding;
4937 (ii) setting forth specific relief sought; and
4938 (iii) accompanied by a memorandum specifying the factual and legal grounds upon
4939which the motion is based.
4940 (b) A person who fails to fully and strictly comply with all of the requirements
4941described in Subsection (6)(a) within 30 days after the day on which the person was served
4942with notice of the adoption proceeding: H.B. 251
Enrolled Copy
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4943 (i) waives any right to further notice in connection with the adoption;
4944 (ii) forfeits all rights in relation to the adoptee; and
4945 (iii) is barred from thereafter bringing or maintaining any action to assert any interest in
4946the adoptee.
4947 (7) Service of notice under this section shall be made as follows:
4948 (a) (i) Subject to Subsection (5)(e), service on a person whose consent is necessary
4949under Section 78B-6-120 or 78B-6-121 shall be in accordance with the provisions of the Utah
4950Rules of Civil Procedure.
4951 (ii) If service of a person described in Subsection (7)(a)(i) is by publication, the court
4952shall designate the content of the notice regarding the identity of the parties.
4953 (iii) The notice described in this Subsection (7)(a) may not include the name of a
4954person seeking to adopt the adoptee.
4955 (b) (i) Except as provided in Subsection (7)(b)(ii) to any other person for whom notice
4956is required under this section, service by certified mail, return receipt requested, is sufficient.
4957 (ii) If the service described in Subsection (7)(b)(i) cannot be completed after two
4958attempts, the court may issue an order providing for service by publication, posting, or by any
4959other manner of service.
4960 (c) Notice to a person who has initiated a paternity proceeding and filed notice of that
4961action with the state registrar of vital statistics in the Department of Health and Human
4962Services in accordance with the requirements of Subsection (3), shall be served by certified
4963mail, return receipt requested, at the last address filed with the registrar.
4964 (8) The notice required by this section may be waived in writing by the person entitled
4965to receive notice.
4966 (9) Proof of service of notice on all persons for whom notice is required by this section
4967shall be filed with the court before the final dispositional hearing on the adoption.
4968 (10) Notwithstanding any other provision of law, neither the notice of an adoption
4969proceeding nor any process in that proceeding is required to contain the name of the person or Enrolled Copy H.B. 251
- 185 -
4970persons seeking to adopt the adoptee.
4971 (11) Except as to those persons whose consent to an adoption is required under Section
497278B-6-120 or 78B-6-121, the sole purpose of notice under this section is to enable the person
4973served to:
4974 (a) intervene in the adoption; and
4975 (b) present evidence to the court relevant to the best interest of the child.
4976 Section 118. Section 78B-6-313 is amended to read:
4977 78B-6-313. Contempt of process of nonjudicial officer -- Procedure.
4978 (1) If a person, officer, referee, arbitrator, board, or committee with the authority to
4979compel the attendance of witnesses or the production of documents issues a subpoena and the
4980person to whom the subpoena is issued refuses to appear or produce the documents ordered, the
4981person shall be considered in contempt.
4982 (2) (a) The person, officer, referee, arbitrator, board, or committee may report the
4983person to whom the subpoena is issued to the [judge of the district] court.
4984 (b) The court may then issue a warrant of attachment or order to show cause to compel
4985the person's appearance.
4986 (3) When a person charged has been brought up or has appeared, the person's contempt
4987may be purged in the same manner as other contempts mentioned in this part.
4988 Section 119. Section 78B-6-1303 is amended to read:
4989 78B-6-1303. Lis pendens -- Notice.
4990 (1) (a) Any party to an action filed in the United States District Court for the District of
4991Utah, the United States Bankruptcy Court for the District of Utah, [or a Utah district court] a
4992district court of this state, or the Business and Chancery Court of this state, that affects the title
4993to, or the right of possession of, real property may file a notice of pendency of action.
4994 (b) A party that chooses to file a notice of pendency of action shall:
4995 (i) first, file the notice with the court that has jurisdiction of the action; and
4996 (ii) second, record a copy of the notice filed with the court with the county recorder in H.B. 251
Enrolled Copy
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4997the county where the property or any portion of the property is located.
4998 (c) A person may not file a notice of pendency of action unless a case has been filed
4999and is pending in [a United States or Utah district court] the United States District Court for the
5000District of Utah, the United States Bankruptcy Court for the District of Utah, a district court of
5001this state, or the Business and Chancery Court of this state.
5002 (2) The notice shall contain:
5003 (a) the caption of the case, with the names of the parties and the case number;
5004 (b) the object of the action or defense; and
5005 (c) the specific legal description of only the property affected.
5006 (3) From the time of filing the notice, a purchaser, an encumbrancer of the property, or
5007any other party in interest that may be affected by the action is considered to have constructive
5008notice of pendency of action.
5009 Section 120. Section 78B-6-1904 is amended to read:
5010 78B-6-1904. Action -- Enforcement -- Remedies -- Damages.
5011 (1) (a) A target who has received a demand letter asserting patent infringement in bad
5012faith, or a person aggrieved by a violation of this part, may bring an action [in district court] in
5013a court with jurisdiction under Title 78A, Judiciary and Judicial Administration.
5014 (b) The court may award the following remedies to a target who prevails in an action
5015brought pursuant to this part:
5016 [(a)] (i) equitable relief;
5017 [(b)] (ii) actual damages;
5018 [(c)] (iii) costs and fees, including reasonable attorney fees; and
5019 [(d)] (iv) punitive damages in an amount to be established by the court, of not more
5020than the greater of $50,000 or three times the total of damages, costs, and fees.
5021 (2) (a) The attorney general may conduct civil investigations and bring civil actions
5022pursuant to this part.
5023 (b) In an action brought by the attorney general under this part, the court may award or Enrolled Copy H.B. 251
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5024impose any relief [it] the court considers prudent, including the following:
5025 [(a)] (i) equitable relief;
5026 [(b)] (ii) statutory damages of not less than $750 per demand letter distributed in bad
5027faith; and
5028 [(c)] (iii) costs and fees, including reasonable attorney fees, to the attorney general.
5029 (3) This part may not be construed to limit other rights and remedies available to the
5030state or to any person under any other law.
5031 (4) A demand letter or assertion of a patent infringement that includes a claim for relief
5032arising under 35 U.S.C. Sec. 271(e)(2) is not subject to the provisions of this part.
5033 (5) The attorney general shall annually provide an electronic report to the Executive
5034Appropriations Committee regarding the number of investigations and actions brought under
5035this part. The report shall include:
5036 (a) the number of investigations commenced;
5037 (b) the number of actions brought under the provisions of this part;
5038 (c) the current status of actions brought under Subsection (5)(b); and
5039 (d) final resolution of actions brought under this part, including any recovery under
5040Subsection (2).
5041 Section 121. Section 78B-6-1905 is amended to read:
5042 78B-6-1905. Bond.
5043 (1) Upon motion by a target and a finding by the court that a target has established a
5044reasonable likelihood that a sponsor has made a bad faith assertion of patent infringement in a
5045demand letter in violation of this part, the court shall require the sponsor to post a bond in an
5046amount equal to a good faith estimate of the target's costs to litigate the claim under this part
5047and amounts reasonably likely to be recovered under Subsections [78B-6-1904(1)(b) and (c)]
504878B-6-1904(1)(b)(ii) and (iii), conditioned upon payment of any amounts finally determined to
5049be due to the target.
5050 (2) A hearing on the appropriateness and amount of a bond under this section shall be H.B. 251
Enrolled Copy
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5051held if either party requests it.
5052 (3) A bond ordered pursuant to this section may not exceed $250,000. The court may
5053waive the bond requirement if it finds the sponsor has available assets equal to the amount of
5054the proposed bond or for other good cause shown.
5055 Section 122. Section 78B-21-102 is amended to read:
5056 78B-21-102. Definitions.
5057 As used in this chapter:
5058 (1) "Affiliate" means:
5059 (a) with respect to an individual:
5060 (i) a companion of the individual;
5061 (ii) a lineal ancestor or descendant, whether by blood or adoption, of:
5062 (A) the individual; or
5063 (B) a companion of the individual;
5064 (iii) a companion of an ancestor or descendant described in Subsection (1)(a)(ii);
5065 (iv) a sibling, aunt, uncle, great aunt, great uncle, first cousin, niece, nephew,
5066grandniece, or grandnephew of the individual, whether related by the whole or the half blood or
5067adoption, or a companion of a sibling, aunt, uncle, great aunt, great uncle, first cousin, niece,
5068nephew, grandniece, or grandnephew of the individual; or
5069 (v) any other individual occupying the residence of the individual; and
5070 (b) with respect to a person other than an individual:
5071 (i) another person that directly or indirectly controls, is controlled by, or is under
5072common control with the person;
5073 (ii) an officer, director, manager, member, partner, employee, or trustee or other
5074fiduciary of the person; or
5075 (iii) a companion of, or an individual occupying the residence of, an individual
5076described in Subsection (1)(b)(i) or (ii).
5077 (2) "Companion" means: Enrolled Copy H.B. 251
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5078 (a) the spouse of an individual;
5079 (b) the domestic partner of an individual; or
5080 (c) another individual in a civil union with an individual.
5081 (3) "Court" means a [district court in the state] court of this state with jurisdiction over
5082the action under Title 78A, Judiciary and Judicial Administration.
5083 (4) "Executory contract" means a contract, including a lease, under which each party
5084has an unperformed obligation and the failure of a party to complete performance would
5085constitute a material breach.
5086 (5) "Governmental unit" means an office, department, division, bureau, board,
5087commission, or other agency of this state or a subdivision of this state.
5088 (6) "Lien" means an interest in property that secures payment or performance of an
5089obligation.
5090 (7) "Mortgage" means a record, however denominated, that creates or provides for a
5091consensual lien on real property or rents, even if the mortgage also creates or provides for a lien
5092on personal property.
5093 (8) "Mortgagee" means a person entitled to enforce an obligation secured by a
5094mortgage.
5095 (9) "Mortgagor" means a person that grants a mortgage or a successor in ownership of
5096the real property described in the mortgage.
5097 (10) "Owner" means the person for whose property a receiver is appointed.
5098 (11) "Person" means an individual, estate, business or nonprofit entity, public
5099corporation, government or governmental subdivision, agency, or instrumentality, or other
5100legal entity.
5101 (12) "Proceeds" means the following property:
5102 (a) whatever is acquired on the sale, lease, license, exchange, or other disposition of
5103receivership property;
5104 (b) whatever is collected on, or distributed on account of, receivership property; H.B. 251
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5105 (c) rights arising out of receivership property;
5106 (d) to the extent of the value of receivership property, claims arising out of the loss,
5107nonconformity, or interference with the use of, defects or infringement of rights in, or damage
5108to the property; or
5109 (e) to the extent of the value of receivership property and to the extent payable to the
5110owner or mortgagee, insurance payable by reason of the loss or nonconformity of, defects or
5111infringement of rights in, or damage to the property.
5112 (13) "Property" means all of a person's right, title, and interest, both legal and
5113equitable, in real and personal property, tangible and intangible, wherever located and however
5114acquired. The term includes proceeds, products, offspring, rents, or profits of or from the
5115property.
5116 (14) "Receiver" means a person appointed by the court as the court's agent, and subject
5117to the court's direction, to take possession of, manage, and, if authorized by this chapter or
5118court order, transfer, sell, lease, license, exchange, collect, or otherwise dispose of receivership
5119property.
5120 (15) "Receivership" means a proceeding in which a receiver is appointed.
5121 (16) "Receivership property" means the property of an owner that is described in the
5122order appointing a receiver or a subsequent order. The term includes any proceeds, products,
5123offspring, rents, or profits of or from the property.
5124 (17) "Record" means, when used as a noun, information that is inscribed on a tangible
5125medium or that is stored on an electronic or other medium and is retrievable in perceivable
5126form.
5127 (18) "Rents" means:
5128 (a) sums payable for the right to possess or occupy, or for the actual possession or
5129occupation of, real property of another person;
5130 (b) sums payable to a mortgagor under a policy of rental-interruption insurance
5131covering real property; Enrolled Copy H.B. 251
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5132 (c) claims arising out of a default in the payment of sums payable for the right to
5133possess or occupy real property of another person;
5134 (d) sums payable to terminate an agreement to possess or occupy real property of
5135another person;
5136 (e) sums payable to a mortgagor for payment or reimbursement of expenses incurred in
5137owning, operating, and maintaining real property or constructing or installing improvements on
5138real property; or
5139 (f) other sums payable under an agreement relating to the real property of another
5140person which constitute rents under law of the state other than this chapter.
5141 (19) "Secured obligation" means an obligation the payment or performance of which is
5142secured by a security agreement.
5143 (20) "Security agreement" means an agreement that creates or provides for a lien.
5144 (21) "Sign" means, with present intent to authenticate or adopt a record:
5145 (a) to execute or adopt a tangible symbol; or
5146 (b) to attach to or logically associate with the record an electronic sound, symbol, or
5147process.
5148 Section 123. Repealer.
5149 This bill repeals:
5150 Section 3-1-20.2, Procedure for judicial dissolution.
5151 Section 16-6a-1415, Procedure for judicial dissolution.
5152 Section 16-10a-1431, Procedure for judicial dissolution.
5153 Section 34-34-14, Jurisdiction.
5154 Section 78B-3-305, Transitory actions -- Residence of corporations.
5155 Section 78B-3-306, Arising without this state in favor of resident.
5156 Section 78B-3-308, Change of venue -- Conditions precedent.
5157 Section 78B-3-309, Grounds.
5158 Section 78B-3-310, Court to which transfer is to be made. H.B. 251
Enrolled Copy
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5159 Section 78B-3-311, Duty of clerk -- Fees and costs -- Effect on jurisdiction.
5160 Section 124. Effective date.
5161 This bill takes effect on July 1, 2024.
5162 Section 125. Coordinating H.B. 251 with S.B. 129 -- Superseding technical and
5163substantive amendments.
5164 If this H.B. 251 and S.B. 129, Judiciary Amendments, both pass and become law, the
5165Legislature intends that, on July 1, 2024, the Office of Legislative Research and General
5166Counsel prepare the Utah Code database for publication as follows:
5167 (1) the amendments to Section 31A-5-414 in H.B. 251 supersede the amendments to
5168Section 31A-5-414 in S.B. 129;
5169 (2) the amendments to Section 31A-5-415 in H.B. 251 supersede the amendments to
5170Section 31A-5-415 in S.B. 129; and
5171 (3) the amendments to Section 31A-16-111 in H.B. 251 supersede the amendments to
5172Section 31A-16-111 in S.B. 129.
5173 Section 126. Revisor instructions.
5174 The Legislature intends that the Office of Legislative Research and General Counsel, in
5175preparing the Utah Code database for publication, not enroll this bill if H.B. 216, Business and
5176Chancery Court Amendments, does not pass.