Can ambiguous LLC operating agreements create jury questions in theft cases? State v. Bruun and Diderickson Explained

In State v. Bruun and Diderickson, the Utah Court of Appeals addressed when authorization under an LLC operating agreement becomes a question for the jury rather than a matter of law in theft prosecutions.

Background and facts: Allan Bruun and James Diderickson formed Tivoli Properties LLC with property owners to develop a 29-acre parcel in Saratoga Springs. The operating agreement gave the defendants managerial authority over the LLC. However, defendants used approximately $190,000 of LLC funds for other development projects, including the Hidden Acres development, without the property owners’ knowledge or consent. When discovered, this led to criminal charges for multiple counts of theft and pattern of unlawful activity.

Key legal issues: The central question was whether the operating agreement unambiguously authorized defendants’ expenditures as a matter of law, which would have required dismissal of the theft charges. Defendants also argued that the Utah Revised Limited Liability Company Act provided statutory authorization for their actions as majority owners.

Court’s analysis and holding: The court found the operating agreement contained provisions supporting both interpretations—some language suggested broad authority for real estate development activities, while other provisions specifically limited the LLC’s purpose to the particular property and required unanimous consent for significant expenditures. Because the agreement was ambiguous regarding authorization, the issue properly went to the jury. The court also rejected defendants’ argument that the LLC Act provided blanket authorization, noting the Act’s policy of giving “maximum effect” to operating agreement provisions over default statutory rules.

Practice implications: This decision demonstrates that contract interpretation in criminal cases follows the same principles as civil cases—unambiguous contracts are construed as a matter of law, but ambiguous provisions create fact questions for the jury. Practitioners should carefully analyze whether contractual language provides clear authorization that could warrant dismissal, or whether ambiguity requires presenting the interpretation question to the jury with supporting evidence of the parties’ intent.