District Court, Salt Lake Department The Honorable Mark S.
Kouris No. 120901496
J. Porter, Kristen C. Kiburtz, and James C. Lewis, Attorneys
Jeffrey L. Silvestrini, Stephen T. Hester, and Bradley M.
Strassberg, Attorneys for Appellee
DIANA HAGEN authored this Opinion, in which JUDGES MICHELE M.
CHRISTIANSEN FORSTER and DAVID N. MORTENSEN concurred.
A jury found that First Interstate Financial LLC, First
Interstate Financial Utah LLC, First Interstate Financial
LLC, and Paul Thurston (Thurston),  defrauded Bodell
Construction Company (Bodell) by misrepresenting a real
estate investment. Bodell discovered the misrepresentations
after learning that McGillis Investment Company (McGillis)
had sued Thurston over the same investment (the McGillis
Litigation). The McGillis Litigation is central to each claim
of error presented on appeal. First, Thurston challenges the
admission of evidence relating to the McGillis Litigation,
claiming that any probative value was substantially
outweighed by the risk of unfair prejudice. Second, Thurston
contends that he was entitled to a directed verdict because
the undisputed facts established that the statute of
limitations on Bodell's fraud claims began to run as a
matter of law before Bodell discovered the McGillis
Litigation. Third, Thurston challenges the jury's
punitive damages award on due process grounds, claiming that
the award was intended to punish him for conduct that formed
the basis of the McGillis Litigation. We affirm.
In 2006, Thurston persuaded Bodell to invest $1.2 million in
the development of condominiums in San Francisco, known as
310 Townsend (the 310 Townsend Project). Thurston represented
to Bodell that the 310 Townsend Project did not have any
current or foreseeable problems. Thurston also told Bodell
that he had personally invested over $4 million of his own
"cash equity" in the project. Bodell considered it
significant that Thurston had "skin in the game" by
placing his own money at risk and relied upon that
representation in deciding to invest.
In truth, Thurston had bought his interest in the 310
Townsend Project by borrowing over $4 million from McGillis.
To obtain the loan, Thurston misrepresented to McGillis that
he was acting on behalf of a group of developers from
southern California. McGillis believed that Thurston had
vetted the borrowers and paid him a fee for finding and
underwriting the loan.
Before approaching Bodell, Thurston had told McGillis that
the southern California developers needed more time to repay
the loan because the project was experiencing permit delays
and cost overruns. McGillis agreed to extend the loan for a
$1.2 million payment. Thurston then asked Bodell to
contribute the $1.2 million without disclosing the current
problems with the 310 Townsend Project, the existence of the
McGillis loan, or the fact that Bodell's investment was
needed to extend the McGillis loan.
After Bodell invested, Thurston provided Bodell's
representative with a letter explaining that the 310 Townsend
Project was experiencing delays, permit problems, and cost
overruns. When Bodell's representative questioned why the
project was not as Thurston had represented, Thurston claimed
that he was as surprised as Bodell and "had no idea that
there were issues like this" when he encouraged Bodell
to invest. Thurston told Bodell that they had both been
misled. Believing that they were "teammates" and
"on the same side," Bodell's representative
continued to work with Thurston for several months in an
attempt to salvage the investment. But, in 2007, Bodell asked
Thurston for its money back. Thurston apologized for not
realizing the problems with the 310 Townsend Project and
returned a $50, 000 premium that Bodell had paid for the
opportunity to invest.
Several years later, Bodell filed this action against
Thurston for an accounting and breach of the covenant of good
faith and fair dealing. As part of his initial disclosures,
Thurston produced documents that referenced the McGillis
Litigation. Bodell obtained transcripts from the McGillis
Litigation and discovered the existence of the McGillis loan,
Thurston's representations to McGillis that the 310
Townsend Project was experiencing delays and cost overruns
before Bodell invested, and that Thurston needed $1.2 million
to extend the McGillis loan. Upon learning these additional
facts, Bodell amended its complaint to allege fraud and
fraudulent concealment. Specifically, Bodell alleged that it
had been fraudulently induced into investing in the 310
Townsend Project and would not have invested if Thurston had
disclosed all material aspects of the deal.
Before trial, Thurston filed a motion in limine seeking to
exclude "any reference" to the McGillis Litigation.
Bodell opposed the motion, arguing that the McGillis
Litigation was relevant to its fraud and fraudulent
concealment claims. Specifically, in reviewing the McGillis
Litigation transcripts, Bodell had learned that Thurston knew
of the problems with the 310 Townsend Project at the time he
asked Bodell to invest and that Thurston had not invested his
own cash equity but instead needed Bodell's investment to
secure an extension on the McGillis loan. Bodell argued that
this evidence was also relevant to refute Thurston's
statute-of-limitations defense because it would show it could
not have reasonably discovered the fraud before obtaining the
McGillis Litigation transcripts.
At the pretrial motion hearing, Thurston conceded that
evidence of the McGillis Litigation, as it pertained to the
310 Townsend Project and the McGillis loan, was relevant to
Bodell's fraud claims and statute-of-limitations
argument. Accordingly, Thurston narrowed his motion in limine
and sought to exclude only two categories of evidence
relating to the McGillis Litigation: (1) the "dozens and
dozens" of other transactions at issue in the McGillis
Litigation that were unrelated to the 310 Townsend Project
and (2) "information concerning the outcome of that
case, the verdict, [and] the findings of fact." Bodell
indicated that the parties were "largely in agreement on
the scope of an order in limine if there's going to be
one" but argued that it was unnecessary at this point.
The court agreed, indicating that it would rule on objections
to the evidence at trial.
Thurston expressed concern that, without an order in limine,
some of Bodell's witnesses, who harbored animus against
him, might intentionally blurt out prejudicial information.
The court indicated that Thurston's concern could be
addressed by having Bodell instruct its witnesses about
"staying on track" and answering only the question
posed. Bodell indicated it had already talked to its
witnesses and they understood that. Based on those
representations, the court denied the motion.
Bodell's representative was the first witness at trial.
When he was asked about the McGillis Litigation, Thurston
objected, claiming the evidence was irrelevant and
prejudicial. In response, Bodell argued that the testimony
was relevant because "[i]t goes to how he discovered the
fraud." The court overruled Thurston's objections
and allowed the representative to testify as to what "he
learned about through the lawsuit," but it directed
Bodell's counsel to "be very shallow" in
discussing the lawsuit itself.
Bodell's representative went on to testify that he
learned from the McGillis Litigation that Thurston had not
invested his own money in the 310 Townsend Project as he
represented, that the McGillis loan was the source of the
funds, and that Bodell's investment was used to get an
extension on that loan. The representative further testified
that he learned Thurston had told McGillis that there were
problems with the 310 Townsend Project that required an
extension of the loan even though Thurston had represented to
Bodell that there were no such problems. Thurston objected to
this testimony on hearsay grounds, but the court overruled
On cross-examination, Thurston questioned the representative
about Bodell's responses to certain interrogatories.
Specifically, he asked what information Bodell had to support
the claim that Thurston had defaulted on the McGillis loan.
The representative answered:
That he was perhaps going to default. I don't know
exactly, but yes. I learned through that trial, learned
that-that's where I learned about-one of the sources of
learning about the big default, I mean the cheating McGillis
out of $2 million that he was successful in winning, a fraud
against Mr. Thurston.
did not object or move to strike the answer as nonresponsive
but instead asked the witness to "limit [his] answer to
Bodell requested a sidebar at which it suggested that
Thurston "opened the door with that question. He has
asked him about the result of the trial however you look at
it." The court agreed, stating, "That's
precisely what you're doing . . . . You're opening
the door to let them bring the trial in." Thurston
conceded, "It's in." Thurston explained that
this line of questioning was designed to show that there was
no support for some of the claims made in Bodell's
answers to interrogatories. The court surmised that
"this area that [Thurston was] getting into now probably
doesn't require [further discussion of] the [McGillis]
trial" and allowed Thurston to finish his
cross-examination. The court indicated that it would address
the matter the following morning outside of the jury's
When testimony resumed, Thurston again asked about the basis
for Bodell's assertion that Thurston was in default on
the McGillis loan, specifically asking whether Bodell had any
documentation to that effect. Bodell's representative
answered, "Well, I'm not aware of anything directly,
just what I understood occurred in the McGillis case where
they won the fraud judgment against [Thurston] related to
this and other investments." Thurston did not object or
move to strike this testimony.
The following morning, Thurston argued that the testimony
regarding the outcome of the McGillis Litigation was not only
prejudicial but false. He explained that the verdict in the
McGillis Litigation was for breach of fiduciary duty, not
fraud, and that it was impossible to determine whether the
jury's verdict even related to the 310 Townsend Project
given the number of transactions at issue in that case.
Thurston explained that he did not move to strike the
testimony because he did not want to draw attention to it,
but that he did ...