[00:00:05] Speaker 02:
Okay.

[00:00:08] Speaker 02:
Our next case is 24-4057 R.C.

[00:00:10] Speaker 02:
Smithfield v. United States.

[00:00:14] Speaker 02:
Mr. Black for the appellant.

[00:00:24] Speaker 00:
Good morning, Your Honors.

[00:00:25] Speaker 00:
May it please the Court, my name is Mike Black and I represent the appellant R.C.

[00:00:29] Speaker 00:
Smithfield in this case.

[00:00:31] Speaker 00:
The most important aspect of this case, in my view, is defending the distinction between what a member of a business entity or a shareholder of a business entity owns, which is their membership interest or their shares, if it's a corporation, and what the business itself owns, which is its operating property and the things that belong to it.

[00:00:55] Speaker 00:
That distinction is key in the law for how business entities function as distinct legal entities.

[00:01:03] Speaker 00:
And it's that distinction that the IRS action and the court's decision below have blurred in this case.

[00:01:11] Speaker 00:
And that requires correction by this court.

[00:01:13] Speaker 01:
Did you make the argument, I assume what you're saying is if the IRS wanted to attach something or put a lien on something, it was not the physical property itself.

[00:01:24] Speaker 01:
that they shouldn't have been able to do that.

[00:01:27] Speaker 00:
What they were entitled to do, Your Honor, in this case, they have made out a perfectly valid claim against Mr. Crookston's membership interest.

[00:01:37] Speaker 00:
And had they pursued that and tried to collect that membership interest, that would have been fine.

[00:01:43] Speaker 00:
I would have had no complaint, especially as the company's lawyer, I would have no complaint at all because he is not my client.

[00:01:49] Speaker 00:
But that's not what they did.

[00:01:51] Speaker 00:
What they did is they said,

[00:01:52] Speaker 00:
By virtue of his membership interest, we can reach through the LLC and lean the LLC's property directly.

[00:02:00] Speaker 00:
And that's where they went through this wall that exists between what the entity owns and what the member owns.

[00:02:07] Speaker 01:
I mean, at some point in these kind of cases, the corporate form can be

[00:02:15] Speaker 01:
can be pierced, you can reach through it as either being of sham or something like that.

[00:02:22] Speaker 00:
Certainly.

[00:02:22] Speaker 00:
There are lots of arguments that can be made to invalidate an entity, to call it a sham, to disregard it, to say that there was a fraudulent transfer in this case would also invalidate the particular transfer.

[00:02:37] Speaker 00:
To call it an alter ego would be another option, none of which were done by the government in this case.

[00:02:45] Speaker 00:
Instead, what they chose is they chose to assert a nominee lien, which did not require them to take any other action other than file the lien.

[00:02:55] Speaker 00:
That's why they did so, because it's a very convenient way to attach property and to keep it from being sold.

[00:03:01] Speaker 02:
So that's they had lots of other options They just chose the one they couldn't take and so if I can walk through this here the the LLC as you do that as I understand the district courts order it concluded that the construct the Sid Crookson construction did not

[00:03:29] Speaker 02:
gift its interest to the LLC.

[00:03:33] Speaker 02:
It kept a residual interest, and that's the property right that the RRS is going after.

[00:03:40] Speaker 02:
Is it a fact question whether or not it was a gift, and did the district court determine that it was not a gift?

[00:03:48] Speaker 02:
Therefore, there's a resulting trust with an equitable interest that can be identified and attacked.

[00:03:59] Speaker 00:
The ruling by the court is perhaps a little confusing in this respect, but what I did in my papers is try to chart out and put together a little bit of a flow chart of those funds.

[00:04:11] Speaker 00:
Whether or not

[00:04:13] Speaker 00:
Sid Crookston construction, the company made a gift or not to Alden Crookston, which is how the money flowed, is again not my issue.

[00:04:22] Speaker 00:
If it was not a gift, that's fine.

[00:04:25] Speaker 00:
They've made a claim against Alden.

[00:04:28] Speaker 00:
I don't dispute any of those factual findings.

[00:04:31] Speaker 00:
Those are perfectly valid for purposes of this here today.

[00:04:36] Speaker 00:
The issue

[00:04:36] Speaker 00:
is not whether Sid Crookston construction gave money to Alden and intended it to be a gift or intended it not to be a gift to Alden Crookston.

[00:04:46] Speaker 00:
The question is whether or not the IRS's lien rights and ability to attach the property stopped at Alden or whether they could then continue to reach through the LLC, which is what they've done.

[00:04:59] Speaker 00:
The court did not rule that the LLC was a sham, that it was to be disregarded.

[00:05:06] Speaker 00:
or that it was an alter ego in any way, shape, or form.

[00:05:12] Speaker 00:
In fact, the court's ultimate ruling was that the lien was limited to Alden Crookston's interest in R.C.

[00:05:21] Speaker 00:
Smithfield, which presupposes that R.C.

[00:05:24] Speaker 00:
Smithfield is an existing entity and that he has that lien or that he has that membership interest.

[00:05:32] Speaker 00:
That is distinct from the other member who, for all purposes that are relevant here, is pure as the driven snow.

[00:05:40] Speaker 00:
The IRS admits it has no lien rights against his membership interest or to the company with respect to his membership interest, which makes it so crystal clear that this is reaching through the entity on behalf of Alden and his membership interest, which is what is not permitted by statute.

[00:06:01] Speaker 01:
So it seems like the district court thought that the LLC, while holding legal title, did not own the equitable title to half of that property, that half the equitable title belonged to Mr. Crookston.

[00:06:28] Speaker 00:
Right?

[00:06:30] Speaker 00:
I'm not sure that it's half of the equitable title, Your Honor, because that's not what the court ultimately held, and that's not what the lien said.

[00:06:38] Speaker 00:
The lien is with respect to Alden's membership interest, which, as to that property, is nothing.

[00:06:45] Speaker 00:
Because as I've cited, the member has no claim to the property of an LLC in the state of Utah.

[00:06:53] Speaker 01:
Yeah, I mean, fair enough in a perfect world, but there are other facts here other than we, if the corporate form had been followed perfectly, all the financial transactions had been in the name of the LLC, all the money had gone directly from Alden to, or there were other documentation making it all really clean,

[00:07:17] Speaker 01:
Fair enough.

[00:07:19] Speaker 01:
But there are also facts in this case that suggest that Mr. Crookston was not intending to give up his interest in the property.

[00:07:30] Speaker 01:
in the way this transaction was structured, that he was intending, he kept using it, he was dumping things out there, there was the lock with his combination on it, all these good things.

[00:07:41] Speaker 01:
There were things that indicated that he intended to continue to personally exercise control over it.

[00:07:49] Speaker 01:
So, I mean, that changes it a little bit, doesn't it?

[00:07:54] Speaker 00:
If I understand, let me see if I can rephrase this, Your Honor, because an LLC can certainly be a nominee for a third party, right?

[00:08:04] Speaker 00:
It's a legal entity just like everybody else.

[00:08:07] Speaker 00:
And to the extent that anybody else could have that relationship, so can an LLC.

[00:08:12] Speaker 00:
But it has to be between the LLC and that third party in that context.

[00:08:19] Speaker 00:
What it can't be is between the LLC and its member in their membership context.

[00:08:24] Speaker 00:
Well, he wasn't a member.

[00:08:26] Speaker 00:
And he was not.

[00:08:27] Speaker 00:
And so had the lien, had the court said that the LLC is in its relation directly with Sid Crookston Construction has that relationship of being a nominee, that would be a different thing than what actually happened, which was that the lien is only as to Alden's membership interest.

[00:08:50] Speaker 00:
It is specifically in that context.

[00:08:53] Speaker 00:
And that is the error.

[00:08:54] Speaker 00:
It has to be outside of that context for any of these theories to have any room.

[00:09:00] Speaker 00:
Because the statute details how members and these companies relate to each other vis-a-vis that membership interest.

[00:09:12] Speaker 00:
And there's no room for these other theories to intrude on that.

[00:09:16] Speaker 01:
You will probably want to joust with me on this, but it seems like sometimes in these proceedings there's things that are said loosely, like the lien only goes as to Alden's membership interest.

[00:09:35] Speaker 01:
Is it a fair reading of the record that when the district court made that pronouncement that it was more aimed at the

[00:09:46] Speaker 01:
you know, amount of interest in the property that would be covered by Alden's interest.

[00:09:53] Speaker 01:
Does that make sense?

[00:09:54] Speaker 01:
So Alden owns 50%.

[00:09:56] Speaker 01:
Ergo, IRS can attach 50% because Alden really didn't own any of that property.

[00:10:06] Speaker 01:
That part of the property was equitably owned by CID.

[00:10:11] Speaker 00:
If that statement had been a one-off, Your Honor, I might agree with you.

[00:10:15] Speaker 00:
But that statement was exactly how the IRS phrased it in their lean, is that it was to the extent of his membership interest in R.C.

[00:10:25] Speaker 00:
Smithfield.

[00:10:27] Speaker 00:
That's what was admitted in their answer.

[00:10:31] Speaker 00:
It's what was admitted in their discovery responses.

[00:10:34] Speaker 00:
It's the exact language that was used at the trial, and it's the exact language that shows up everywhere in that ruling.

[00:10:42] Speaker 00:
And so this is actually honestly one of the problems with this lien is that there is no way to resolve it because it doesn't have a number.

[00:10:54] Speaker 00:
Instead what it has is it's keyed to something else that is in dispute.

[00:11:00] Speaker 00:
So it's not that

[00:11:02] Speaker 00:
If the IRS had been tracing funds, they could have said the lien is for the $50,000 that was paid into escrow.

[00:11:11] Speaker 00:
That would have been helpful because then you know how you resolve the lien.

[00:11:15] Speaker 00:
You pay the $50,000 and the lien goes away.

[00:11:17] Speaker 00:
Instead, what we have here is a lien that's keyed to a membership interest that may or may not have any value because, in fact, he has no claim to that underlying property.

[00:11:30] Speaker 00:
It may have less value

[00:11:32] Speaker 00:
based upon the interactions between the partners.

[00:11:35] Speaker 00:
If the other partner had paid more, what would his membership interest be?

[00:11:39] Speaker 00:
Would it be 50%?

[00:11:40] Speaker 00:
Maybe it's only 40%.

[00:11:42] Speaker 00:
There is absolutely no way for RC Smithfield to resolve this lien at all.

[00:11:50] Speaker 00:
There's nothing that can be done because of the way that it was phrased and because it intrudes on that relationship between the member, the membership interest, and the company.

[00:12:02] Speaker 00:
If I may, I'll reserve the remaining time for everybody.

[00:12:09] Speaker 02:
Let's hear from the United States, Ms.

[00:12:12] Speaker 02:
Wicks.

[00:12:27] Speaker 04:
Good morning.

[00:12:27] Speaker 04:
May it please the court?

[00:12:28] Speaker 04:
I'm Marie Wicks on behalf of the United States.

[00:12:32] Speaker 04:
I'd like to begin by emphasizing the substance and the realities of the facts here.

[00:12:38] Speaker 04:
Sid Crookston Construction paid for the parcels and received nothing in return.

[00:12:44] Speaker 04:
R.C.

[00:12:44] Speaker 04:
Smithfield paid nothing and received title to the parcels, and Alden Crookston paid nothing and received a membership interest in R.C.

[00:12:53] Speaker 04:
Smithfield.

[00:12:54] Speaker 04:
Under those circumstances, Utah, like any other state, recognizes that the person who pays for the property has an interest in it.

[00:13:04] Speaker 01:
So that's, I mean, part of that is not uncommon.

[00:13:09] Speaker 01:
Is it people paying for, let's take Alden out of the mix and let's say that the membership interest, that the construction company paid for half the membership or half the property and got a membership interest.

[00:13:27] Speaker 01:
That wouldn't be unusual.

[00:13:28] Speaker 01:
There's nothing untoward about that, right?

[00:13:32] Speaker 04:
Right.

[00:13:34] Speaker 04:
What's unusual is the continued beneficial ownership of Sid Crickston construction.

[00:13:44] Speaker 01:
So tell me about that.

[00:13:45] Speaker 01:
I mean, what's the indicia of his beneficial ownership?

[00:13:49] Speaker 01:
Because the properties, I mean, wouldn't we start with maybe a presumption that the title holder owns the property?

[00:14:02] Speaker 04:
Legally, that is a presumption.

[00:14:04] Speaker 01:
Okay, and so then it's your job to come in and sort of show facts indicating that while that may be what the record shows down at the county courthouse, somebody else has an interest that nobody knows about.

[00:14:17] Speaker 04:
Right, right, exactly.

[00:14:20] Speaker 01:
And in this case, your position is it's Mr. Crookston that he caused his construction company to make these payments

[00:14:31] Speaker 01:
basically tried to hide it by putting the membership interest in his son's name, but he kept using it as it was his own.

[00:14:40] Speaker 04:
Right.

[00:14:41] Speaker 04:
So the taxpayer is Sid Crookston Construction and its successor in interest, ACI.

[00:14:47] Speaker 04:
And Sid, Mr. Crookston, is the owner or was the owner and manager of Sid Crookston Construction.

[00:14:55] Speaker 04:
And that's right.

[00:14:57] Speaker 04:
So the district court found three different bases for

[00:15:01] Speaker 04:
defining an interest in the property that belongs to Sid Crookston construction beneficially.

[00:15:09] Speaker 04:
Any one of those is sufficient for the federal tax liens to attach under the dry Kraft Supreme Court analysis.

[00:15:19] Speaker 04:
And also, the fact that the tax liens do attach to a state law of property interest is not being challenged on appeal.

[00:15:31] Speaker 04:
Once the state law interest is defined, the federal tax liens attach under section 6321, property and all rights to property.

[00:15:42] Speaker 04:
So it's typically a two-part test.

[00:15:45] Speaker 04:
The ultimate question is one of federal law, and that's not being challenged here.

[00:15:51] Speaker 01:
Okay, let me ask you this.

[00:15:53] Speaker 01:
So you, the best you can do, you can attach,

[00:15:59] Speaker 01:
the construction company's SCC and ACI's interest in the property, right?

[00:16:07] Speaker 01:
That's what you get.

[00:16:09] Speaker 01:
Right.

[00:16:10] Speaker 01:
Which is not a record title interest.

[00:16:12] Speaker 01:
It's a beneficial interest of some sort.

[00:16:14] Speaker 04:
Right, in the property itself.

[00:16:16] Speaker 01:
OK.

[00:16:17] Speaker 01:
And so if you, for example, wanted to force a sale,

[00:16:25] Speaker 01:
If you were the defendant in a quiet title suit, you would then have to prove up their interest, their beneficial interest in trial.

[00:16:37] Speaker 04:
Right.

[00:16:37] Speaker 04:
And here the district court found sufficient evidence under the clear and convincing standards for constructive and resulting trusts and preponderance of the evidence for the nominee theory.

[00:16:50] Speaker 04:
And none of the findings of fact are being contested on appeal as well.

[00:16:55] Speaker 01:
And so... Let me ask you about the nominee theory.

[00:16:59] Speaker 01:
So the district court has, as I understand it in another case, disavowed

[00:17:06] Speaker 01:
her decision based on the nominee theory and said that she got it wrong.

[00:17:12] Speaker 01:
Are you still pursuing affirmance on the nominee theory in this case?

[00:17:18] Speaker 04:
Absolutely.

[00:17:19] Speaker 04:
We believe the district court got it right in this case in deciding that Utah does recognize the principle of nominee.

[00:17:29] Speaker 04:
And as our brief mentioned,

[00:17:31] Speaker 04:
Other courts have looked to fraudulent conveyance, the factors considered in fraudulent conveyance cases to determine whether nominee is recognized in the state.

[00:17:44] Speaker 04:
So Scoville in the Eighth Circuit, Dalton discussed that in the First Circuit.

[00:17:50] Speaker 04:
And another case, we mentioned Fourth Investment out of the Ninth Circuit.

[00:17:55] Speaker 04:
is an excellent example.

[00:17:57] Speaker 04:
They looked at California cases regarding nominee and so the framework of considering how the highest state court would decide an issue is excellently presented in the fourth investment case as well.

[00:18:16] Speaker 04:
So right, here we cited

[00:18:20] Speaker 04:
Three different cases, which I'll note, were not before the district court in the estate of Crookston case where the court said that Utah does not recognize nominees.

[00:18:32] Speaker 04:
The court did not have before it these cases we cited in our brief, Butler, Gevon, Duncan.

[00:18:39] Speaker 04:
And so it all stems from

[00:18:45] Speaker 04:
early understandings of the ancient law of equitable ownership and going back to Twine's case at England.

[00:19:00] Speaker 04:
So looking to those cases, other cases in Utah, Free v. Farnworth and

[00:19:13] Speaker 04:
Another case, capital assets, financial services versus Maxwell.

[00:19:17] Speaker 04:
It's a 2000 Supreme Court of Utah case.

[00:19:21] Speaker 04:
Utah recognizes beneficial ownership in property.

[00:19:26] Speaker 03:
Well, Counsel, can I just stop you there?

[00:19:28] Speaker 03:
Does your case, though, depend on the nominee theory?

[00:19:31] Speaker 03:
I guess I'm curious, you're defending it here, but does your case depend on its existence or do you prevail under either of the other two?

[00:19:44] Speaker 04:
We prevail on any of the three, including nominee.

[00:19:48] Speaker 04:
So no, we are not hanging our hat solely on the nominee theory.

[00:19:54] Speaker 04:
Constructive trust and resulting trust.

[00:19:57] Speaker 03:
Of those two, which one do you think is the strongest?

[00:20:02] Speaker 03:
Resulting trust or constructive trust?

[00:20:08] Speaker 04:
equally strong in my view.

[00:20:10] Speaker 04:
The resulting trust, a good example out of the 10th Circuit is the Tinggi case.

[00:20:21] Speaker 04:
And here, the elements of resulting trust are met, as the district court found.

[00:20:30] Speaker 04:
The court found on Appendix 67, U.S.

[00:20:32] Speaker 04:
has proven by clear and convincing evidence that Sid Crookston construction did not intend that R.C.

[00:20:39] Speaker 04:
Smithfield have a beneficial interest in the property.

[00:20:44] Speaker 04:
So that's one of the considerations under a resulting trust analysis.

[00:20:50] Speaker 04:
And here the transfer of the property was made by

[00:20:53] Speaker 04:
made to one person, purchase price paid by another, and the trust arises in favor of the one who paid the purchase price.

[00:21:03] Speaker 04:
And likewise, under the constructive trust theory,

[00:21:09] Speaker 04:
It's an inherently broad scope under Utah law.

[00:21:16] Speaker 04:
In the Rawlings versus Rawlings case, the forms and varieties of constructive trust are practically without limit.

[00:21:23] Speaker 04:
So here the district court found

[00:21:26] Speaker 04:
that there was unjust enrichment.

[00:21:29] Speaker 04:
Sid Crookston's construction was unjustly enriched by allowing its successor to exercise control over the parcels through the contributions of funds that belonged to the United States and Sid Crookston's construction's other creditors.

[00:21:46] Speaker 04:
and that the wrongful behavior can be directly traced to the parcels because Sid Crookston, construction, and ACI funneled the money that should have been used to satisfy the federal tax liabilities into purchasing these pieces of land.

[00:22:07] Speaker 02:
You sat there and listened to Mr. Black's presentation.

[00:22:10] Speaker 02:
What would you say the principal flaw in it is from your perspective?

[00:22:16] Speaker 04:
the principle?

[00:22:19] Speaker 02:
Flaw.

[00:22:19] Speaker 04:
Oh, flaw.

[00:22:21] Speaker 02:
Although he's going to stand up and defend himself.

[00:22:24] Speaker 04:
Right, right.

[00:22:24] Speaker 04:
So I would say three different points responding to my friend on the other side.

[00:22:37] Speaker 04:
First, as Judge Timkovich, you mentioned in your questioning, Sid Crookston construction did

[00:22:46] Speaker 04:
hold on to a residual interest in the property despite paying for the transfer of title to R.C.

[00:22:55] Speaker 04:
Smithfield.

[00:22:56] Speaker 04:
And the district court did find on appendix page 50 that it was not a gift.

[00:23:03] Speaker 04:
And also the distinctions

[00:23:08] Speaker 04:
collapse between the membership interests and the property itself here where the facts, the realities, the substance shows that Sid Crookston Construction was the beneficial owner of the property.

[00:23:23] Speaker 04:
They continued to, Sid Crookston continued to participate in meetings related to the property.

[00:23:31] Speaker 04:
He controlled the combination lock and they continued following the transaction

[00:23:38] Speaker 04:
SEC's successor in interest continued to use the property to deposit its construction materials without the permission of Mr. Richens, in fact.

[00:23:51] Speaker 04:
So the reality here is that any, by the book, legal distinctions have collapsed here.

[00:24:01] Speaker 04:
Also, the language of the notice of federal tax lien itself

[00:24:08] Speaker 04:
does not bind the government.

[00:24:11] Speaker 04:
The filing of the notice of federal tax lien is just that.

[00:24:15] Speaker 04:
It's a notice.

[00:24:17] Speaker 04:
So it does not represent the actual lien.

[00:24:20] Speaker 04:
When a taxpayer fails to pay after notice and demand, a lien arises in favor of the government.

[00:24:29] Speaker 04:
So it arises automatically.

[00:24:30] Speaker 04:
The Supreme Court in the Snyder case back in 1893, I believe, said that it does not need to be recorded to be valid.

[00:24:41] Speaker 04:
Also here in the ACI construction case, the district court did find that the liens were valid against SEC and ACI.

[00:24:51] Speaker 04:
So the lien here is valid.

[00:24:54] Speaker 04:
The language of the notice does not change the reality that

[00:25:01] Speaker 04:
Sid Crookston Construction has a beneficial ownership to the extent of Alden's membership interest in RC Smithfield.

[00:25:10] Speaker 04:
And that language there shows that Mr. Richens did purchase half of the property.

[00:25:16] Speaker 04:
So we're only going against the approximate half that Alden Crookston has by virtue of Sid Crookston.

[00:25:26] Speaker 01:
Do you claim an interest in Alden's membership interest?

[00:25:31] Speaker 04:
Yes, but here the property itself is really the object of the federal tax liens in this case.

[00:25:44] Speaker 04:
No, I understand.

[00:25:59] Speaker 04:
Yes, so because there were no other challenges to the fact that the tax liens do attach under dry and craft, the district court found three different very solid reasons for holding that there is a property interest of SEC in the parcels at issue.

[00:26:19] Speaker 04:
This court only needs to decide one in order to support and affirm the district court's holding here.

[00:26:27] Speaker 04:
And if the court has no other questions, we'll rest on our brief.

[00:26:32] Speaker 01:
Was there any evidence in the proceeding below that SEC, ACI, or Mr. Crookston ever disavowed an interest in the property?

[00:26:44] Speaker 01:
Was there testimony, anything like that?

[00:26:49] Speaker 04:
The Crookston's did testify in general

[00:27:01] Speaker 04:
I do know that the district court's findings as to the credibility of the Crookston's testimony was that it was self-serving and not credible.

[00:27:10] Speaker 04:
So I don't recall specifically any disavowals, but I would note that the district court did find that their testimony was not credible.

[00:27:20] Speaker 02:
Okay, thank you.

[00:27:22] Speaker 02:
Thank you, Councilor.

[00:27:22] Speaker 02:
The time's expired.

[00:27:23] Speaker 02:
Mr. Black, you have some rebuttal time.

[00:27:29] Speaker 02:
Now you can tell me what the flaw in her identifying the flaw in your... The metaflaw.

[00:27:38] Speaker 00:
I'm not quite sure what flaw there was that I would want to point out here, but what I do want to point out is this.

[00:27:46] Speaker 00:
State law determines property rights.

[00:27:48] Speaker 00:
Federal law only determines how they're taxed.

[00:27:51] Speaker 00:
And Utah state law does not permit alternative ways to get what is prohibited by statute.

[00:27:58] Speaker 00:
And by statute, an LLC is distinct from its members and its members have no claim to the LLC's assets.

[00:28:05] Speaker 00:
Those are distinct.

[00:28:07] Speaker 00:
And that is enshrined in both the case law that I cited as well as in the statutes.

[00:28:17] Speaker 00:
The IRS cannot look through an LLC without something else.

[00:28:22] Speaker 00:
I mean, there are obviously ways to pierce the veil, but without going through that particular type of claim, there is no way for the IRS to pierce.

[00:28:31] Speaker 00:
There's no way for another creditor to pierce through and say, oh, no, I actually do have that claim.

[00:28:36] Speaker 00:
There's also no way for the member to do so, which is what I care about deeply in this case because I represent the LLC.

[00:28:45] Speaker 00:
I care about maintaining this distinction between the property of the LLC and the property of the member, both for the IRS and for any other claimant who might try to assert that they have a way to do this.

[00:28:58] Speaker 00:
That distinction is clear.

[00:29:01] Speaker 00:
There's a wall there.

[00:29:03] Speaker 00:
And any of those people cannot say, oh no, I don't like that wall, and so I'm going to assert that they are a nominee for me instead.

[00:29:11] Speaker 00:
And then I do have a claim against those assets.

[00:29:14] Speaker 00:
They cannot say, ah, I'm going to instead assert that there is a constructive trust inside this LLC, that it's not really an LLC where I have to obey the statute.

[00:29:25] Speaker 00:
Instead, I'm going to try to call it a constructive trust or a resulting trust.

[00:29:31] Speaker 00:
None of those alternative theories are available in Utah to bypass what the statute makes very clear, and that is that a member does not have a claim to the assets of the company.

[00:29:47] Speaker 00:
And that cuts off this claim to lean R.C.

[00:29:51] Speaker 00:
Smithfield's real property directly through the membership interest of Alden Crooks.

[00:29:59] Speaker 01:
That just takes us back to what you and I were talking about originally.

[00:30:03] Speaker 01:
And that is where all the formalities are perfect and everybody's followed these things carefully.

[00:30:12] Speaker 01:
That can be so.

[00:30:13] Speaker 01:
But in situations where there's an indication that the LLC, through its management or through its members, agreed that someone was going to retain beneficial title

[00:30:30] Speaker 01:
then you would not have to go through that membership interest, would you?

[00:30:34] Speaker 01:
You would be able to pursue that interest directly as a beneficial owner.

[00:30:39] Speaker 00:
Yes, if you had a different avenue to do so, most certainly there would be an available method to make that claim against an LLC, but here we have it's clearly through the membership interest there's beyond any doubt that that is the mechanism that they are getting at the property.

[00:31:00] Speaker 00:
Thank you.

[00:31:00] Speaker 02:
Thank you, counsel.

[00:31:01] Speaker 02:
We appreciate your arguments, your excuse, and the case is submitted.