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Burr v. Koosharem Irrigation Co.

Court of Appeals of Utah

July 28, 2017

Michael Burr, Appellant,
v.
Koosharem Irrigation Company, LaDon Torgersen, and Clayton Bagley, Appellees.

         Sixth District Court, Richfield Department The Honorable Wallace A. Lee No. 140600023

          Lloyd D. Rickenbach, Attorney for Appellant

          Edwin C. Barnes, Steven E. Clyde, and Timothy R. Pack, Attorneys for Appellee Koosharem Irrigation Company

          Marcus Taylor, Attorney for Appellee LaDon Torgersen

          David A. Van Dyke, Attorney for Appellee Clayton Bagley

          Judge Michele M. Christiansen authored this Opinion, in which Judges J. Frederic Voros Jr. and David N. Mortensen concurred.

          OPINION

          CHRISTIANSEN, Judge.

         ¶1 Appellant Michael Burr appeals from the district court's denial of his motion to intervene as of right. We reverse the denial and remand the case for further proceedings.

         BACKGROUND

         ¶2 Burr is a shareholder of Koosharem Irrigation Company (Koosharem), a mutual water company organized under the Utah Revised Nonprofit Corporation Act (the Act).

         ¶3 In March 2014, plaintiff Greg Torgerson filed a complaint against Koosharem, and plaintiffs Chad Torgerson and Bret Kouns joined the case in August 2014.[1] All three plaintiffs were shareholders of Koosharem. In early 2015, the plaintiffs filed an amended complaint, which included a shareholder derivative action against Koosharem and two of its individual directors- LaDon Torgersen and Clayton Bagley (the Directors). The plaintiffs alleged that Koosharem's Board of Directors, and the Directors specifically, had "breached their fiduciary duties to [Koosharem] by, among other things, engaging in self-dealing, failing to act with due care, . . . and failing to act in good faith with total loyalty and impartiality."

         ¶4 The plaintiffs also sought declaratory relief in the form of "a judgment and Order from [the district court] ordering the removal of [the Directors] from the Board of Directors" and ordering that they be "prohibited from holding office [within the company] or voting for at least three calendar years." The plaintiffs alleged that the Directors had "rigged" the "elections for the two director positions that were voted on at the March 2013 annual shareholder meeting." Under the Act,

[t]he applicable court may remove a director in a proceeding commenced either by the nonprofit corporation or by voting members holding at least 10% of the votes entitled to be cast in the election of the director's successor if the court finds that: (i) the director engaged in: (A) fraudulent or dishonest conduct; or (B) gross abuse of authority or discretion with respect to the nonprofit corporation[.]

Utah Code Ann. ยง 16-6a-809(1)(a) (LexisNexis 2013) (emphasis added). The three plaintiffs owned a combined 11.9% of ...


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