Smart Tech Development v. Pink Water Harvesting

2025 UT App 18

THE UTAH COURT OF APPEALS

SMART TECH DEVELOPMENT LLC,
Appellant,
v.
PINK WATER HARVESTING LLC AND MATTHEW ANDERSON,
Appellees.

Opinion
No. 20230622-CA
Filed February 13, 2025

First District Court, Brigham City Department
The Honorable Brandon J. Maynard
No. 220100081

Sean N. Egan, Attorney for Appellant
Jared Berg, Attorney for Appellees

JUDGE DAVID N. MORTENSEN authored this Opinion, in which
JUDGES RYAN D. TENNEY and JOHN D. LUTHY concurred.

MORTENSEN, Judge:

¶1 This dispute arose after Pink Water Harvesting LLC (Pink
Water) sold a portion of its membership interest in Smart Tech
Development LLC (Smart Tech), a Wyoming limited liability
company. Pink Water received an offer from a third party to
purchase all its interest in Smart Tech. Per Smart Tech’s operating
agreement, Pink Water offered the other two members of Smart
Tech the opportunity to exercise their contractual rights of first
refusal. Both members exercised their rights and offered to
purchase the interest. Pink Water moved forward with the sale of
two-thirds of its interest to one of the members, Afsanteen LLC
(Afsanteen). Smart Tech and the other member, Joseph Monson,
filed a complaint against Pink Water and Matthew Anderson,
Smart Tech Development v. Pink Water

Pink Water’s manager, 1 arguing that the sale violated the
operating agreement for a number of reasons. Monson and Pink
Water eventually reached a settlement agreement and filed a
stipulated motion to dismiss the action with prejudice. Smart Tech
was not a party to the stipulation or the motion to dismiss. Despite
Smart Tech notifying the district court that it was not a party to
the settlement or stipulation and that it planned to file an
opposition, the court granted the motion the day after the
stipulation and motion were filed and dismissed the case in its
entirety. Smart Tech filed a motion to alter, amend, or vacate the
judgment under rules 59(e) and 60(b) of the Utah Rules of Civil
Procedure. The district court denied the motion, and Smart Tech
appealed. We reverse and remand the matter.

BACKGROUND

¶2 Smart Tech is a Wyoming limited liability company that is
in the business of “refining magnesium chloride from the Great
Salt Lake with trace minerals” found in “brine water.” The
original members of Smart Tech were Monson (holding 25%
interest), Pink Water (holding 25% interest), and Afsanteen
(holding 50% interest). The members elected two managers,
David Salo (also a manager of Afsanteen) and Monson.

¶3 The members of Smart Tech are bound by an operating
agreement, which includes a choice of law provision setting forth
Wyoming law as the operating agreement’s governing law and
“the appropriate court in Utah County, Utah having competent
jurisdiction” as the “sole jurisdiction and venue” for actions to
enforce the operating agreement’s terms and conditions.

1. For simplicity, when discussing the parties to this lawsuit we
will refer to the appellees collectively as Pink Water.

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Smart Tech Development v. Pink Water

¶4 The operating agreement also includes a provision
granting members a right of first refusal to purchase the interest
of another member if the member receives “a bona fide offer to
purchase made by a third party.” The member who receives a
third-party offer and intends to accept it must provide the other
members with written notice and a copy of the offer not less than
forty-five days before the interest transfer date—this constitutes
an offer of sale to the other members. The other members have
thirty days after the receipt of notice to purchase the interest—in
other words, a right of first refusal. The Smart Tech board
(consisting of the elected managers) has “sole and absolute
discretion” to grant or deny the sale of any part of a member’s
interest.

¶5 In a February 2022 agreement signed by all the members
and managers of Smart Tech, Afsanteen was disassociated from
Smart Tech—this included an end to any “right or claim to an
interest of any form” that Afsanteen had in Smart Tech.

¶6 In March 2022, Creative Investment Group offered to
purchase all of Pink Water’s membership interest. Pink Water
accepted the offer “subject to compliance with the right of first
refusal provisions” in the operating agreement, and shortly
thereafter, as required, Pink Water offered the purchase of its
interest to the other members of Smart Tech. Monson exercised
his right of first refusal to purchase the interest, after which
Afsanteen also exercised its alleged right “to purchase Pink
Water’s membership interest in a pro rata share with Monson.”
There is some discrepancy in the record on what happened next.
Some parts of the record state that “Pink Water refused to accept
Monson’s tender” and “attempted” to move forward with selling
its interest to Creative Investment Group “despite failure to
obtain [b]oard approval,” while another part of the record says
Pink Water attempted to move forward with selling its interest to

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Smart Tech Development v. Pink Water

Afsanteen pursuant to Afsanteen’s exercise of its alleged right of
first refusal. 2

¶7 Smart Tech’s “Board of Managers” 3 did not recognize
Afsanteen’s offer or follow the steps required to handle more than
one member exercising the right of first refusal. Nonetheless,
Afsanteen deposited funds into a trust account held by Pink
Water’s attorney. And in June 2022, Pink Water signed an
agreement to sell Afsanteen two-thirds of its total interest in Smart
Tech. Afsanteen authorized Pink Water’s attorney to release the
necessary funds from the trust account to complete the purchase. 4

2. It is unclear to us from the record whether the version of events
that referenced Creative Investment Group, as articulated in the
district court’s later statement of the facts, was a typo and instead
should have read that Pink Water attempted to move forward
with the sale to Afsanteen. Ultimately, the parties agree that at
some point Pink Water moved forward with an offer from
Afsanteen to purchase two-thirds of its interest in Smart Tech.
Thus, it is unnecessary to resolve this discrepancy in the record
for purposes of this appeal.

3 . The record is unclear about who made up the “Board of
Managers” at this point. It appears that Afsanteen was
disassociated from Smart Tech, but the record does not indicate if
Salo remained a manager of Smart Tech apart from his
involvement in Afsanteen or whether another individual (or no
one) replaced him as a manager.

4. Salo contends that at no time did he, acting as Afsanteen’s
manager, authorize the offer for and eventual purchase of Pink
Water’s membership interest. He instead alleges that Tim Gibson,
“the real party-in-interest” in Creative Investment Group,
purported to act on behalf of Afsanteen without authorization.
(continued…)

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Smart Tech Development v. Pink Water

¶8 In June 2022, Smart Tech and Monson filed a complaint
against Pink Water, and they amended that complaint in March
2023. In the amended complaint, they sought (1) a declaratory
judgment that “Afsanteen’s purported exercise of a right of first
refusal [was] without legal force and effect and that Pink Water’s
purported acceptance of such a right [was] likewise without legal
force and effect and that it [was] not binding upon Smart Tech”
and (2) a permanent injunction preventing the sale of Pink Water’s
interest to Afsanteen. Smart Tech and Monson also brought
claims against Pink Water for breach of contract, breach of the
implied covenant of good faith and fair dealing, and promissory
estoppel. Smart Tech alone filed a motion for partial summary
judgment, arguing that because Afsanteen had been
disassociated, Afsanteen did not have a right of first refusal and,
even if it did, Salo, as manager of Afsanteen, did not approve the
purchase, making it invalid.

¶9 Before Pink Water filed its memorandum opposing the
motion for partial summary judgment, Monson and Pink Water
entered into a settlement agreement and filed a stipulated motion
to dismiss the entire action with prejudice. Smart Tech was not
part of that settlement agreement and did not join the stipulation.
The next day, Smart Tech notified the court that it planned “to file
a limited objection” to the motion to dismiss “within the time
allowed.” 5

Because this factual discrepancy is not determinative in this
appeal, our recitation of the facts assumes, without deciding, that
Afsanteen’s offer and purchase were made by someone acting
with authority to do so.

5. Under rule 7 of the Utah Rules of Civil Procedure, a
“nonmoving party may file a memorandum opposing [a] motion
within 14 days after the motion is filed.” Utah R. Civ. P. 7(d)(1).
(continued…)

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Smart Tech Development v. Pink Water

¶10 Rather than waiting for Smart Tech’s memorandum in
opposition to the motion to dismiss the action and without the
required request to submit for decision, the court granted Monson
and Pink Water’s motion the day after it was filed and dismissed
the case with prejudice, including Smart Tech’s claims. The court
then signed the order prepared by Monson and Pink Water,
which recited that “all claims asserted by Smart Tech” and “all
claims Smart Tech could assert” in the action were “derivative
claims which [were] extinguished” by the settlement agreement.
The court did not indicate the procedural mechanism through
which it reached this conclusion.

¶11 Smart Tech quickly filed a motion to alter, amend, or vacate
the judgment under rules 59(e) and 60(b) of the Utah Rules of Civil
Procedure. Smart Tech argued that its claims were independent
of Monson’s claims and that it was entitled to the opportunity to
file an objection to the motion to dismiss. Pink Water opposed the
motion, arguing that because the operating agreement establishes
the right of first refusal specifically for Smart Tech’s members and
this case stems entirely from an alleged breach of Monson’s right
of first refusal, Smart Tech lacked standing to bring the claim for
itself. The court denied Smart Tech’s motion, explaining that
while “Utah has not decided the issue of an LLC bringing suit for
damages stemming from a legal claim specific to one of its
members,” other jurisdictions have decided that an LLC lacks
standing in those circumstances. The court reasoned that because
the sections of the operating agreement that Pink Water allegedly
violated “were designed to protect the members,” Smart Tech
lacked standing to bring its claim. The court also rejected Smart
Tech’s argument that Pink Water violated the operating

Once briefing is completed, or the time to do so has expired,
“either party may file a ‘Request to Submit for Decision,’ but, if no
party files a request, the motion will not be submitted for
decision.” Id. R. 7(g).

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Smart Tech Development v. Pink Water

agreement provision requiring board approval of interest
transfers because Smart Tech did not assert “damages associated
with such violation.” Smart Tech appeals.

ISSUE AND STANDARDS OF REVIEW

¶12 Smart Tech argues that the district court erred (and thus
exceeded its discretion) when it denied Smart Tech’s motion to
alter, amend, or vacate the judgment based on the determination
that Smart Tech lacked standing to pursue claims against Pink
Water for declaratory judgment and damages. We generally
consider standing a “mixed question because it involves the
application of a legal standard to a particularized set of facts,” but
“the question of whether a given individual or association has
standing to request a particular relief is primarily a question of
law.” Alpine Homes, Inc. v. City of West Jordan, 2017 UT 45, ¶ 10, 424
P.3d 95 (cleaned up). “We review the factual determinations made
by a trial court with deference. However, we afford minimal
discretion to the trial court on a determination of whether a given
set of facts fits the legal requirements for standing.” Id. (cleaned
up). We review a district court’s denial of motions to alter, amend,
or vacate a judgment for abuse of discretion. See USA Power, LLC
v. PacifiCorp, 2016 UT 20, ¶ 31, 372 P.3d 629 (concerning a rule 59
motion); Goodrich Mud Co. v. Tops Well Services, LLC, 2023 UT App
118, ¶ 11, 537 P.3d 649 (concerning a rule 60(b) motion), cert.
denied, 544 P.3d 456 (Utah 2024).

ANALYSIS

¶13 This dispute centers around a motion to dismiss followed
by a procedurally questionable decision made by the district
court. Without the participation of Smart Tech, Monson and Pink
Water entered into a settlement agreement and filed a stipulated
motion to dismiss the whole action with prejudice. Under rule 7

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Smart Tech Development v. Pink Water

of the Utah Rules of Civil Procedure, Smart Tech, as the
nonmoving party, had fourteen days to file a memorandum
opposing the motion to dismiss. Utah R. Civ. P. 7(d)(1). In fact—
only one day after Monson and Pink Water filed the motion—
Smart Tech notified the court that it intended to do just that,
namely, file a memorandum in opposition. But that very same
day, rather than waiting for Smart Tech’s memorandum as our
rules of civil procedure require, the court granted the motion to
dismiss, entirely disposing of the case. Compounding this
procedural misstep is the fact that the court granted the motion
without receiving a request to submit from any party, as required
by rule 7. Id. R. 7(g) (“[E]ither party may file a ‘Request to Submit
for Decision,’ but, if no party files a request, the motion will not
be submitted for decision.”). Without providing any explanation
of its reasoning or the procedural mechanism employed, the
court’s order simply stated that “all claims asserted by Smart
Tech” and “all claims Smart Tech could assert” in the action were
“derivative claims which [were] extinguished” by the settlement
agreement. As we will explain, the court erred and exceeded its
discretion in denying the post-judgment motion because the court
either wrongly assumed or wrongly concluded on the record
before it that all of Smart Tech’s claims were derivative of
Monson’s and that Smart Tech thereby did not have standing to
bring any of its claims.

¶14 The operating agreement’s choice of law provision, by
which the members of Smart Tech are bound, sets forth Wyoming
law as the operating agreement’s governing law and Utah County
courts “having competent jurisdiction” as the “sole jurisdiction
and venue” for actions to enforce the operating agreement’s terms
and conditions. “Matters of procedure in a contract action are
governed by the law of the forum,” which in this case is Utah. See
Federated Cap. Corp. v. Libby, 2016 UT 41, ¶ 13, 384 P.3d 221
(cleaned up). “A choice of law provision, in contrast, selects the
substantive law that will govern a contract dispute,” which in this

20230622-CA 8 2025 UT App 18
Smart Tech Development v. Pink Water

case is Wyoming law. See id. Utah courts have not yet determined
whether standing is a substantive issue or a procedural issue in
the choice of law context. And we will not confront the matter
here because the differences in Utah and Wyoming standing laws
do not change the outcome of this case.

¶15 “Utah standing law operates as gatekeeper to the
courthouse, allowing in only those cases that are fit for judicial
resolution. By doing so, it ensures that courts confine
themselves to the resolution of those disputes most effectively
resolved through the judicial process.” Utah Chapter of the Sierra
Club v. Utah Air Quality Board, 2006 UT 74, ¶ 17, 148 P.3d 960
(cleaned up). A party has standing under Utah’s traditional
standing test if

(1) it has a legally cognizable interest that has been
or will be adversely affected by the challenged
actions, (2) there is a causal relationship between the
injury to the party, the challenged actions and the
relief requested, and (3) the relief requested is
substantially likely to redress the injury claimed.

Living Rivers v. Executive Dir. of the Utah Dep’t of Env’t Quality, 2017
UT 64, ¶ 28, 417 P.3d 57 (cleaned up).

¶16 Under Wyoming law, prudential standing, the equivalent
to Utah’s traditional standing, requires (1) “a justiciable
controversy,” with “parties having existing and genuine, as
distinguished from theoretical, rights or interests”; (2) a
“controversy . . . upon which the judgment of the court may
effectively operate, as distinguished from a debate or argument
evoking a purely political, administrative, philosophical or
academic conclusion”; (3) “a controversy the judicial
determination of which will have the force and effect of a final
judgment in law or decree in equity upon the rights, status or
other legal relationships of one or more of the real parties in

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Smart Tech Development v. Pink Water

interest, or, wanting these qualities be of such great and
overriding public moment as to constitute the legal equivalent of
all of them”; and (4) “the proceedings must be genuinely
adversary in character and not a mere disputation, but
advanced with sufficient militancy to engender a thorough
research and analysis of the major issues.” HB Family LP v. Teton
County Board of County Comm’rs, 2020 WY 98, ¶ 18, 468 P.3d 1081
(cleaned up).

¶17 As we will show below, whether under Utah or Wyoming
standards, Smart Tech has standing to bring its case.

A. Smart Tech’s Claims for Declaratory Relief Are Not
Derivative

¶18 Under Wyoming law, a “limited liability company is
bound by and may enforce the operating agreement, whether or
not the company has itself manifested assent to the operating
agreement.” Wyo. Stat. § 17-29-111(a). This language matches the
corresponding Utah law nearly exactly. See Utah Code § 48-3a-
113(1) (“A limited liability company is bound by and may enforce
the operating agreement, whether or not the limited liability
company has itself manifested assent to the operating
agreement.”). These respective statutes make clear that an LLC
holds the right to enforce its operating agreement. And the
statutes have no language limiting the LLC to bringing only
claims that are independent of any claims an individual LLC
member may also have, nor do they have language requiring the
LLC to show damages in order to enforce the operating
agreement. Pink Water argues that because neither Utah nor
Wyoming case law addresses the question of whether an LLC can
enforce its operating agreement, persuasive authority from other
jurisdictions is helpful. We do not agree, because such an
argument does not confront the plain language of Utah’s and

20230622-CA 10 2025 UT App 18
Smart Tech Development v. Pink Water

Wyoming’s nearly identical statutes. 6 We also do not agree,
because, as Smart Tech points out, none of the cases Pink Water

6. The cases cited by Pink Water do not explore, cite, or confront
any statutory language similar to the Wyoming and Utah law
applicable here. In fact, the only cited case that even considers any
statutory language concerning LLCs is In re Settoon Towing LLC,
No. 07-1263, 2009 WL 4730969 (E.D. La. Dec. 4, 2009), which
recites Louisiana statutes that make clear that an LLC “as a
separate legal entity” may not “bring an action for personal
injuries on behalf of its members.” Id. at *5. And, as we explain,
this issue is not comparable to the issue before us.
Pink Water asserts that Wyoming’s LLC statute “does not
contain any provision similar” to Utah Code section 48-3a-113(1).
This assertion is obviously wrong, since—as evidenced by our
discussion above—the two codes have nearly verbatim provisions
(Utah’s version repeats “limited liability” before “company” in
the second clause). Based on this lack of awareness, Pink Water
turns to section 17-29-110(a)(i) of the Wyoming Statutes, which
states, “Except as otherwise provided in [the following
subsections], the operating agreement governs . . . [r]elations
among the members as members and between the members and
the limited liability company . . . .” Notably, Utah law has an
identical statute. Compare Utah Code § 48-3a-112 (1)(a) (“Except as
otherwise provided in [the following subsections], the operating
agreement governs . . . relations among the members as members
and between the members and the limited liability company
. . . .”), with Wyo. Stat. § 17-29-110(a)(i). From this statute, Pink
Water asserts that Wyoming law “contemplates situations where
an operating agreement can be enforced by a member to protect a
member’s rights when the member’s personal rights are
impacted, or by the LLC to protect the LLC’s rights. However,
nothing within Wyoming’s LLC statute authorizes the LLC to
bring suit on a member’s behalf to enforce a member’s rights.” But
(continued…)

20230622-CA 11 2025 UT App 18
Smart Tech Development v. Pink Water

cites address the issue before us. Again, the issue here is whether
an LLC has standing to bring its own claim to enforce its operating
agreement, namely, by seeking declaratory judgment that
“Afsanteen’s purported exercise of a right of first refusal [was]
without legal force and effect and that Pink Water’s purported
acceptance of such a right [was] likewise without legal force and
effect and that it [was] not binding upon Smart Tech.” And unlike
the case before us, the cases cited by Pink Water, and relied on by
the district court, involve various claims brought by LLCs against
third parties entirely unrelated to the LLCs’ operating
agreements.

¶19 In Association of Merger Dealers, LLC v. Tosco Corp., 167 F.
Supp. 2d 65 (D.D.C. 2001), after the merger of Exxon and Mobil
was announced, a group of gas station dealers formed an LLC “to
promote their common business interests with respect to the
merger.” Id. at 67. As part of a consent agreement with the Federal
Trade Commission, approximately 1,740 gas stations were to be
divested during the merger and another oil company agreed to
acquire them. Id. The LLC negotiated with and sought assurances
from this oil company that members of the LLC would “receive
the right to purchase” these properties “under a current-use
valuation.” Id. at 68. However, after acquiring the properties, the
oil company instead offered them to members of the LLC at a
highly inflated rate. Id. The LLC filed suit against the oil company
for breach of contract and promissory estoppel. Id. at 68–69. The
court determined that the LLC lacked standing to bring its claim
against the third-party oil company on behalf of its members. Id.
at 70–75.

¶20 In All Comp Construction Co., LLC v. Ford, 2000 OK CIV APP
38, 999 P.2d 1122, an LLC was hired as a general contractor for a

in making this assertion, Pink Water ignores, apparently through
lack of awareness, section 17-29-111 of the Wyoming Statutes,
which we address in the present section.

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Smart Tech Development v. Pink Water

project. Id. ¶ 1. The LLC hired a subcontractor to install a septic
system. Id. The LLC brought a claim against the subcontractor,
alleging that it was negligent in the installation of the system,
which required repairs at the LLC’s expense. Id. The LLC also
sought damages for mental stress and anguish. Id. The court
determined that an LLC is a “fictional ‘person’ for legal purposes”
and thus cannot “be treated as a natural person that would be
capable of experiencing emotions such as mental stress and
anguish.” Id. ¶ 5. Accordingly, the court determined that the
action for damages was properly denied. Id.

¶21 Finally, in In re Settoon Towing LLC, No. 07-1263, 2009 WL
4730969 (E.D. La. Dec. 4, 2009), a barge-towing company struck a
well owned by an LLC, causing extensive damage and leading to
a “spray of crude oil into the bayou.” Id. at *1. The LLC sued,
bringing several claims against the towing company, including
one for individual damages suffered by its employees. Id. at *5.
The court determined that “a limited liability company, as a
separate legal entity, should not be permitted to bring an action
for personal injuries on behalf of its members” and dismissed the
claims. Id.

¶22 Unlike the situation before us, none of these cases had to
do with an LLC enforcing the terms of its operating agreement;
instead, each of them had to do with claims brought against a non-
member third party. Here, with its claims, Smart Tech seeks to
remedy Pink Water’s alleged violation of Smart Tech’s own
operating agreement for selling two-thirds of its total interest in
Smart Tech to Afsanteen, which was disassociated at the time and
thus did not have a right of first refusal. There is no third party
involved. The claim is between the LLC—Smart Tech—and its
member—Pink Water—to enforce the operating agreement. The
fact that Monson is no longer a party to this suit has no bearing
on Smart Tech’s ability to bring its claim. That is because under
Wyoming and Utah law, an LLC has its own right to enforce its
operating agreement, and Smart Tech’s claim stands apart from

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Smart Tech Development v. Pink Water

Monson’s right of first refusal because its claim centers on non-
compliance with the operating agreement by an alleged improper
exercise of the right of first refusal by a non-member.

¶23 In sum, both Utah and Wyoming statutory law grant LLCs
the right to bring their own claims to enforce their operating
agreements, and the cases cited by Smart Tech in support of a
contrary conclusion are inapposite. We therefore hold that Smart
Tech’s claims to enforce its operating agreement are not derivative
claims and that Smart Tech has independent standing to bring
those claims.

¶24 We now look at Utah’s standing law. Given its right to
enforce the operating agreement, Smart Tech has a “legally
cognizable interest” that was adversely affected by Pink Water’s
sale of its interest to Afsanteen without board approval. Living
Rivers, 2017 UT 64, ¶ 28. There is a “causal relationship” between
this injury—the violation of the operating agreement—and the
relief sought, such as the injunctive relief sought to preclude
Afsanteen from being treated as a member and to deny the
validity of the sale. See id. (cleaned up). Finally, such relief is
“substantially likely” to redress the injury as it will resolve any
violations of the operating agreement and allow Smart Tech to
proceed with an operating agreement that is followed by its
members. See id. (cleaned up).

¶25 Similarly, under Wyoming standing law, for the same
reasons addressed above, Smart Tech has brought a “justiciable
controversy” while holding an “existing and genuine . . . right[]
or interest[]” in enforcing the operating agreement due to Pink
Water’s alleged violations. HB Family LP, 2020 WY 98, ¶ 18
(cleaned up). This controversy is one upon which the court may
“effectively operate” as it does not involve a “purely political,
administrative, philosophical or academic conclusion.” Id.
(cleaned up). The redress sought by Smart Tech will result in a
“judicial determination” with the “force and effect of a final

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Smart Tech Development v. Pink Water

judgment,” and the proceedings are “genuinely adversary in
character” between Smart Tech and Pink Water. Id. (cleaned up).

¶26 Thus, given the right bestowed upon LLCs by Wyoming
and Utah statutory law to enforce their operating agreements and
principles of Utah and Wyoming standing law generally, the
district court erred in concluding that Smart Tech could not
pursue its claims. Under either Utah or Wyoming law, Smart Tech
has standing to bring its claims against its member Pink Water for
violating the operating agreement.

B. Smart Tech’s Claims Either Do Not Require Damages or
Damages Are Adequately Alleged

¶27 Pink Water argues that Smart Tech’s claims fail “for lack of
damages,” an argument that the district court adopted. In its
order of dismissal, the court determined that all of Smart Tech’s
claims were “derivative claims,” which were “extinguished” by
the settlement agreement. In its denial of Smart Tech’s motion to
alter, amend, or vacate the judgment, the court further reasoned
that “Smart Tech has not asserted damages associated with [a]
violation” of the operating agreement requirement to obtain
board approval prior to interest transfers. And the district court
determined that all other claims brought by Smart Tech stemmed
from Monson’s claims, which were resolved. Thus, the court
concluded that “Smart Tech could not have prevailed in its
pursuit for damages.”

¶28 In the amended complaint, Smart Tech and Monson
brought five claims against Pink Water. Not all of the claims were
asserted by Smart Tech and Monson jointly; several claims were
brought by Smart Tech individually. As we have already
explained above, even as to the claims brought jointly, Smart
Tech’s claims are not derivative of Monson’s because Smart Tech
has its own, independent right to enforce the operating
agreement. Again, Wyoming law and Utah law explicitly give an

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Smart Tech Development v. Pink Water

LLC the right to enforce its operating agreement and include no
requirement that the LLC allege that it suffered damages from
the violation of the operating agreement independent of any
damages suffered by its members. See Wyo. Stat. § 17-29-111(a);
Utah Code § 48-3a-113(1). Despite this lack of a requirement
that an LLC allege damages in order to pursue an action to
enforce its operating agreement, we will now address each of the
five counts below and explain why Smart Tech was either not
required to allege damages or made a sufficient claim of damages
to proceed with each of the claims. Because the court did not
follow the procedural requirements of rule 7 of the Utah Rules of
Civil Procedure and denied Smart Tech its opportunity to
respond to the motion to dismiss, we do not know what the
alleged damages are under each claim, only that damages have
been claimed.

¶29 Count one is a claim for declaratory judgment that
“Afsanteen’s purported exercise of a right of first refusal [was]
without legal force and effect and that Pink Water’s purported
acceptance of such a right [was] likewise without legal force and
effect and that it [was] not binding upon Smart Tech.” The
elements required to seek a declaratory judgment do not demand
an allegation of damages. See Williamson v. Farrell, 2019 UT App
123, ¶ 11, 447 P.3d 131 (explaining that to establish the threshold
elements for declaratory judgment actions “(1) there must be a
justiciable controversy presented for resolution; (2) the parties to
the action must have interests that are adverse; (3) the party
seeking relief must have a legally protectible interest; and (4) the
issues presented must be ripe for judicial determination” (cleaned
up)). Smart Tech, therefore, was not required to allege any
damages to proceed with this claim.

¶30 Count two is a claim for breach of contract, which states
that the “breach has damaged plaintiffs,” referring to both
Monson and Smart Tech “in an amount to be proven at trial.”

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¶31 Count three is a claim for breach of the implied covenant
of good faith and fair dealing, which—making no mention of
Monson—contends that “Smart Tech has been damaged in an
amount to be proven at trial.”

¶32 Count four is a promissory estoppel claim seeking
injunctive relief to preclude Pink Water from “recognizing
Afsanteen as a member and allowing Afsanteen to exercise rights”
under the operating agreement that “are reserved only for
members.” The claim also asks the court to estop “Pink Water
from treating Afsanteen as if Afsanteen were a member of Smart
Tech and from denying the superiority of Monson’s offer.” Since
this claim seeks only injunctive relief, no allegation of damages is
required.

¶33 And, finally, count five is a claim for a permanent
injunction individually sought by Smart Tech, not Monson,
stating that “Smart Tech respectfully request[s] that this Court
permanently enjoin Pink Water from selling its interest in Smart
Tech to Afsanteen pursuant to the terms and conditions” of the
operating agreement. As another claim seeking injunctive relief,
no allegation of damages is required.

¶34 Given this context, we cannot summarily reach the same
conclusion as the district court, which determined that Smart Tech
has not been damaged as an LLC irrespective of damages suffered
by Monson. For each of its claims, Smart Tech was either not
required to show damages or has a right to seek and has sought
its own damages (at least reading the complaint, which was all
that was before the district court, in the light most favorable to
Smart Tech) separate and apart from any sought by Monson.
Furthermore, several of the claims were individual to Smart Tech
as the LLC rather than to Monson. In short, none of Smart Tech’s
claims are derivative as a matter of law. Therefore, Smart Tech has
standing to bring its claims against Pink Water.

20230622-CA 17 2025 UT App 18
Smart Tech Development v. Pink Water

CONCLUSION

¶35 For the foregoing reasons, we conclude that the district
court abused its discretion in denying Smart Tech’s motion to
alter, amend, or vacate the judgment under rules 59(e) and 60(b)
of the Utah Rules of Civil Procedure. We accordingly reverse and
remand this matter for further proceedings consistent with this
opinion.

20230622-CA 18 2025 UT App 18