Case Title: Thurston and T3 v. Safeguard

Citation: 

Docket Number: 45092

State: idaho

Court: Idaho Supreme Court (civil)

Date: 2019-02-19T00:00:00Z

Document:
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IN THE SUPREME COURT OF THE STATE OF IDAHO 
Docket No. 45092 
 
 
THURSTON ENTERPRISES, INC., an 
Idaho corporation, 
  
            Plaintiff-Respondent, 
and 
 
T3 ENTERPRISES, INC., an Idaho 
corporation, 
 
            Plaintiff, 
v. 
 
SAFEGUARD BUSINESS SYSTEMS, 
INC., a Delaware corporation, 
 
            Defendant-Appellant, 
and 
 
SAFEGUARD ACQUISITIONS, INC., et 
al.,  
 
            Defendants. 
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Boise, November 2018 Term 
 
Filed: February 19, 2019 
 
Karel A. Lehrman, Clerk 
 
 
 
 
 
 
 
 
 
 
 
 
Appeal from the District Court of the Fourth Judicial District of the  
 
State of Idaho, Ada County. Hon. Steven Hippler, District Judge. 
 
The judgment of the district court is affirmed. Costs and attorney  
fees are awarded to Thurston.  
 
 
Hawley Troxell Ennis & Hawley LLP, Boise and Weil, Gotshal & 
Manges LLP, Dallas, Texas, attorneys for appellant. Paul R. Genender 
 argued. 
 
 
Givens Pursley LLP, Boise and Mulcahy LLP, Irvine, California, 
 
attorneys for respondent. James M. Mulcahy argued. 
________________________ 
 
BEVAN, Justice 
This appeal arises from Safeguard Business Systems, Inc.’s (“SBS”) alleged breach of its 
distributorship agreement with Thurston Enterprises, Inc. (“Thurston”). After a jury trial 
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Thurston was awarded approximately $6.8 million in damages. SBS filed a motion for post-
judgment relief, which the district court denied. We affirm.  
I. FACTUAL AND PROCEDURAL BACKGROUND 
A. FACTUAL BACKGROUND  
On June 1, 1987, Thurston and SBS entered into a distributor agreement (the 
“Agreement”), which granted Thurston the right to solicit orders of Safeguard products 
designated as “Safeguard Systems” from customers. The Agreement granted Thurston the 
exclusive right to commissions on the sale of Safeguard products to customers located within the 
territory defined in the Agreement (“account protection rights”). The Agreement expressly 
prohibited Thurston from soliciting orders of Safeguard Systems from customers with whom 
other Safeguard distributors held account protection rights, but allowed SBS to sell Safeguard 
Systems within Thurston’s territory through other “persons.” If a distributor made a sale to 
another distributor’s protected customer, it was SBS’s practice to issue a rotation notice. The 
rotation notice informed both the infringing and the receiving party that commissions were being 
rotated, i.e., the commission would go to the distributor who had account protection over that 
customer rather than to the infringing party who actually made the sale.  
Deluxe Corporation (“Deluxe”) is one of the two largest check printers in the United 
States and it manufactures and/or provides various personalized products and services to small 
businesses, financial institutions, and consumers. Deluxe purchased SBS and discontinued all 
SBS manufacturing operations so that Safeguard Systems products could be manufactured by 
Deluxe. In 2008, Deluxe and SBS launched a Business Acquisitions and Merger (“BAM”) 
program to acquire non-Safeguard affiliated distributorships. The BAM program had four 
objectives: (1) increase SBS’s revenue and profits by acquiring distributors; (2) increase the sales 
of Deluxe manufactured products to SBS distributors, thereby increasing Deluxe’s revenues and 
profits; (3) expand Deluxe’s manufacturing capabilities and increase its manufacturing capacity 
utilization by acquiring new product lines that could be marketed across Deluxe and SBS’s 
various sales channels; and (4) where Deluxe does not manufacture a product, maximize the 
amount of orders sent to preferred suppliers paying Deluxe rebates. 
In 2013, Deluxe and SBS acquired Form Systems Inc., d/b/a/ DocuSource 
(“DocuSource”) and Idaho Business Forms (“IBF”), two non-Safeguard distributors conducting 
business in the Pacific Northwest. DocuSource and IBF were in the same geographic market as 
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Thurston and sold a full line of non-Safeguard products that directly competed with those offered 
by SBS, and by Thurston as SBS’s distributor. As part of the BAM due diligence process, 
Deluxe and SBS reviewed all aspects of DocuSource and IBF’s businesses, including their 
customer lists. This was done through a “customer scrub,” intended to determine the extent of 
account overlap between DocuSource and IBF and any current Safeguard distributors. SBS’s in-
house counsel, Michael Dunlap, sought to resolve any potential account protection violations by 
getting the affected distributors to either share the account with the new distributor, or sell the 
commission rights to SBS, which would then sell the rights to the new distributor.  
In February 2014, Mr. Dunlap, who also served as corporate secretary, negotiated with 
Mr. Roger Thurston1 (“Mr. Thurston”), Thurston’s principal, to sell some of Thurston’s account 
protection rights to SBS. In March 2014, Mr. Thurston sold SBS the commission rights to nine 
customers for $32,600. Mr. Thurston reached this valuation by looking at Thurston’s own sales 
for the customers at issue. Mr. Dunlap did not disclose IBF’s sales figures to the same customers, 
or what products were sold to them. After the sale occurred Mr. Thurston learned that IBF had 
significant sales to the customers, and claimed that had he known this information before the sale 
he would have increased the price “exponentially.”  
B. PROCEDURAL BACKGROUND  
These proceedings were started when another distributor, T3 Enterprises, Inc., (“T3”) 2, 
filed a complaint alleging various tort claims against SBS and several other defendants. On 
September 16, 2014, Thurston joined the suit by filing an amended complaint, alleging claims 
for: (1) breach of contract; (2) breach of the covenant of good faith and fair dealing; (3) tortious 
interference; (4) intentional interference with prospective economic advantage; (5) conversion; 
and (6) accounting.  
On January 20, 2016, Thurston filed a discovery motion to challenge several of SBS’s 
privilege designations and redactions, alleging SBS and Deluxe had engaged in the “rampant use 
                                                 
1 While Mr. Thurston has been referred to by SBS as the “owner” of Thurston Enterprises, Inc., and he holds the role 
as principal in the corporation, Thurston Enterprises is a business entity independent of Roger Thurston. It will be 
referred to as “Thurston” throughout this opinion. To avoid confusing Thurston Enterprises with Roger Thurston, 
Roger will be referred to as “Mr. Thurston” throughout this opinion. 
2 On October 21, 2014, SBS moved to compel arbitration against T3 pursuant to the terms of their agreement. The 
district court granted SBS’s motion and severed T3’s claims against SBS so that they could proceed to arbitration; 
however, the district court allowed Thurston’s claims (as well as T3’s claims against the other defendants) to 
proceed in district court. 
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of privilege claims” to cover up key evidence. Trial counsel for SBS conducted a new review 
and withdrew the claim of privilege for all but forty-one documents. The court reviewed the 
remaining documents in camera and rejected privilege for nearly all, finding that they concerned 
“factual matters and business advice about the cross-over customers made in Mr. Dunlap’s 
capacity as corporate secretary rather than purely legal issues.”  
On June 21, 2016, Thurston filed a third amended complaint which: (1) dismissed all 
defendants except SBS and Deluxe3 with prejudice; and (2) included a new cause of action by 
Thurston against SBS for fraud in the inducement and breach of the parties’ March 2014, 
agreement. Thurston was subsequently granted leave to amend the complaint to also request 
punitive damages.  
On August 26, 2016, Thurston and SBS filed cross-motions for partial summary 
judgment. On October 21, 2016, the district court entered its memorandum decision which 
denied SBS’s motion, but granted Thurston’s motion in part, holding that the Agreement was 
unambiguous and SBS breached it by failing to rotate commissions on sales IBF and 
DocuSource made to Thurston’s protected customers. The district court determined that the 
resulting damage from such unpaid commissions was in dispute; as such, it was a matter for the 
jury to consider.  
A jury trial was held between November 29 and December 21, 2016. On December 15, 
2016, after Thurston finished with its case-in-chief, SBS and Deluxe moved for a directed 
verdict. The district court denied the motion. At the conclusion of trial the jury fully exonerated 
Deluxe and awarded Thurston $1,625,985 for its claims against SBS; the specific amounts 
awarded by the jury were broken down as follows: $494,526 for breach of the account protection 
clause; $156,628 for breach of the pricing schedule clause; $532,431 for breach of the implied 
covenant of good faith and fair dealing; and $442,400 for fraud in the inducement. The jury also 
awarded Thurston $4,750,000 in punitive damages, which the district court reduced to 
$4,408,071 to comply with Idaho Code section 6-1604. On January 13, 2017, the district court 
entered judgment in favor of Thurston against SBS for $6,034,056.  
On January 27, 2017, SBS filed a motion for post-judgment relief requesting that the 
district court: (1) eliminate the $532,431 award for diminution in value because that theory of 
                                                 
3 On August 26, 2015, Thurston had filed a second amended complaint to include allegations against Deluxe.  
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loss was unsupported by the evidence; (2) reduce the award for breach of account protection by 
$291,010 because the future losses were premised on impermissibly speculative expert 
testimony; (3) eliminate the pricing preference verdict as legally and factually unfounded as well 
as the damages of $156,628 as excessive and unsupported; (4) dismiss the fraudulent inducement 
claim due to a failure of proof that Thurston did not know he lacked sales information for IBF or 
DocuSource and eliminate the punitive damages because of the lack of malice; and (5) reject the 
jury’s award of punitive damages for breach of contract because there was no evidence SBS had 
an “extremely harmful state of mind” towards Thurston. The district court denied SBS’s motion 
for post-judgment relief on all grounds. On May 5, 2017, the district court awarded Thurston 
$758,593.74 in attorney fees and costs. SBS timely appealed to this Court.  
II. ISSUES ON APPEAL 
1. 
Whether the district court erred in ruling as a matter of law that Thurston’s account 
protection rights were breached under the Agreement. 
2. 
Whether the district court’s ruling on SBS’s attorney-client privilege was an abuse of 
discretion. 
3. 
Whether the district court erred in denying post-judgment relief regarding the jury’s 
finding of fraud in the inducement of the March 2014 agreement. 
4. 
Whether the district court erred in denying post-judgment relief regarding the jury’s 
finding that SBS breached the “pricing guarantee” in the Agreement. 
5. 
Whether the district court erred as to the good faith and fair dealing claim. 
6. 
Whether the district court erred in denying post-judgment relief regarding the jury’s 
award of punitive damages. 
7. 
Whether the district court erred in denying post-judgment relief regarding the jury’s 
award of future damages. 
8. 
Whether either party is entitled to attorney fees on appeal.  
III. STANDARD OF REVIEW 
A. SUMMARY JUDGMENT  
This Court applies the same standard of review that was used by the trial court in ruling 
on a motion for summary judgment. Lincoln Land Co., LLC v. LP Broadband, Inc., 163 Idaho 
105, 108, 408 P.3d 465, 468 (2017). Summary judgment is proper if there is “no genuine dispute 
as to any material fact and the movant is entitled to judgment as a matter of law.” I.R.C.P. 56(a). 
“[T]his Court construes disputed facts, and all reasonable inferences that can be drawn from the 
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record, in favor of the non-moving party.” Grabicki v. City of Lewiston, 154 Idaho 686, 690, 302 
P.3d 26, 30 (2013) (internal citation omitted). 
B. DISCOVERY AND EVIDENTIARY MATTERS  
“When reviewing the trial court’s evidentiary rulings, this Court applies an abuse of 
discretion standard.” Edmunds v. Kraner, 142 Idaho 867, 871, 136 P.3d 338, 342 (2006). These 
include trial court decisions admitting or excluding expert witness testimony and excluding 
evidence because it is more prejudicial than probative. Perry v. Magic Valley Reg’l Med. Ctr., 
134 Idaho 46, 50–51, 995 P.2d 816, 820–21 (2000) (internal quotations and citations omitted). 
“Error is disregarded unless the ruling is a manifest abuse of the trial court’s discretion and 
affects a substantial right of the party.” Id. The test for an abuse of discretion is  
whether the trial court: (1) correctly perceived the issue as one of discretion; (2) 
acted within the outer boundaries of its discretion; (3) acted consistently with the 
legal standards applicable to the specific choices available to it; and (4) reached 
its decision by the exercise of reason.  
Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018). 
C. JUDGMENT NOTWITHSTANDING THE VERDICT  
“In determining whether a directed verdict or judgment n.o.v. should have been granted, 
the appellate court applies the same standard as does the trial court which passed on the motion 
originally.” Quick v. Crane, 111 Idaho 759, 764, 727 P.2d 1187, 1192 (1986) (internal citation 
omitted). 
When a trial judge receives such a motion, the judge begins the inquiry by 
asking him or herself whether there is substantial evidence in the record upon 
which the jury could properly find a verdict for the party against whom the 
judgment notwithstanding the verdict is sought. See Quick v. Crane, 111 Idaho 
759, 763, 727 P.2d 1187, 1191 (1986). The judge’s task in answering this 
question is to review all the evidence and draw all the reasonable inferences 
therefrom in the light most favorable to the non-moving party. Id. at 764, 727 
P.2d at 1192. (The party seeking a judgment notwithstanding the verdict admits 
the truth of all the other side’s evidence and every legitimate inference that can be 
drawn from it. Stephens v. Stearns, 106 Idaho 249, 252–53, 678 P.2d 41, 44–45 
(1984).) The judge is not an extra juror, though; there is no weighing of evidence 
or passing on the credibility of witnesses or making of independent findings on 
factual issues. Gmeiner v. Yacte, 100 Idaho 1, 4, 592 P.2d 57, 60 (1979). Instead, 
the judge must determine whether the evidence is substantial—that is, whether it 
is of sufficient quality and probative value that reasonable minds could arrive at 
the same conclusion as did the jury. Mann v. Safeway Stores, Inc., 95 Idaho 732, 
736, 518 P.2d 1194, 1198 (1974). 
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Schwan’s Sales Enterprises, Inc. v. Idaho Transp. Dep’t, 142 Idaho 826, 830, 136 P.3d 297, 301 
(2006). “Whether the trial court should have entered a judgment notwithstanding the verdict is 
purely a question of law.” Id. 
IV. ANALYSIS 
A. 
The district court correctly decided that SBS breached Thurston’s account 
protection rights under the Agreement as a matter of law.  
The district court entered summary judgment in favor of Thurston on its claim that SBS 
breached the account protection provision of the Agreement after finding the provision was not 
ambiguous. The account protection provision stated: 
For so long as is specified in Attachment B, you shall have the exclusive right to 
the commissions generated on sales of Safeguard Systems to any customer listed 
on Attachment B. This exclusive right to commissions applies to all new and 
repeat Safeguard System sales to each customer until this Agreement is 
terminated (see paragraph 7). 
 
SBS argued that account protection—as a matter of plain language and historical 
practice—applied only to the specific products a distributor was first to successfully solicit from 
a particular account. SBS argued that any other interpretation would enable Thurston to receive 
commissions where it solicited the sale of a single envelope from one biller in an entity like St. 
Luke’s Hospital and sit back to receive commissions on all sales to the entire hospital system by 
others even if Thurston did not offer the products (e.g., medical ID bands) or have the 
capabilities demanded by the customer (e.g.¸warehousing/drop shipping). On appeal SBS 
contends that the district court’s grant of summary judgment was erroneous because: (1) a 
product-specific interpretation is supported by the Agreement’s plain language; (2) there was a 
factual issue of whether the products sold by IBF and DocuSource were “Safeguard Systems” 
under the Agreement; and (3) there is a latent ambiguity in the term “customer”.  
As a threshold matter we reject SBS’s position that there is a latent ambiguity in the term 
“customer” because this argument was not argued before the district court.  Kolar v. Cassia Cnty. 
Idaho, 142 Idaho 346, 350, 127 P.3d 962, 966 (2005) (“we will not entertain issues or theories 
not raised in the court below”). We will only address the first two arguments.  
The purpose of interpreting a contract is to determine the intent of the contracting parties 
at the time the contract was formed. Shawver v. Huckleberry Estates, L.L.C., 140 Idaho 354, 361, 
93 P.3d 685, 692 (2004) (internal citation omitted). In determining the intent of the parties, the 
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contract is to be viewed as a whole. Daugharty v. Post Falls Highway Dist., 134 Idaho 731, 735, 
9 P.3d 534, 538 (2000).  
[T]his Court begins with the document’s language. In the absence of ambiguity, 
the document must be construed in its plain, ordinary and proper sense, according 
to the meaning derived from the plain wording of the instrument. Interpreting an 
unambiguous contract and determining whether there has been a violation of that 
contract is an issue of law subject to free review. A contract term is ambiguous 
when there are two different reasonable interpretations or the language is 
nonsensical. Whether a contract is ambiguous is a question of law, but 
interpreting an ambiguous term is an issue of fact. 
Phillips v. Gomez, 162 Idaho 803, 807, 405 P.3d 588, 592 (2017) (quoting Potlatch Educ. Ass’n 
v. Potlatch Sch. Dist. No. 285, 148 Idaho 630, 633, 226 P.3d 1277, 1280 (2010)). 
There are two types of ambiguity, patent and latent. Knipe Land Co. v. Robertson, 151 
Idaho 449, 455, 259 P.3d 595, 601 (2011). A patent ambiguity is an ambiguity clear from the 
face of the instrument in question. Id. On the other hand, “[a] latent ambiguity exists where an 
instrument is clear on its face, but loses that clarity when applied to the facts as they exist.” Id. If 
the Court finds an ambiguity, the interpretation of the contract term is a question for the fact-
finder. Id. If the Court finds no ambiguity, “the document must be construed in its plain, ordinary 
and proper sense, according to the meaning derived from the plain wording of the instrument.” 
Potlatch, 148 Idaho at 633, 226 P.3d at 1280 (quoting C & G, Inc. v. Rule, 135 Idaho 763, 765, 
25 P.3d 76, 78 (2001)). Interpreting an unambiguous contract and determining whether there has 
been a violation of that contract is an issue of law. Id. (internal citation omitted).  
The Agreement, in relevant part, provides:  
1. PRODUCTS 
You shall have the right in your territory to act as our sales distributor 
(representative) to solicit the sale of those products and services defined in the 
Addenda attached hereto (“Safeguard Systems”) in accordance with the price 
schedules published by Safeguard and on the terms and conditions set by 
Safeguard from time to time. 
2. TERRITORY 
Your territory is the geographical area described in Attachment A. You are 
not authorized to represent Safeguard or solicit sales of Safeguard Systems 
outside this territory, and Safeguard may appoint additional persons to solicit 
sales of Safeguard Systems inside the territory.  
3. ACCOUNT PROTECTION RIGHTS 
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For so long as is specified in Attachment B, you shall have the exclusive right 
to the commissions generated on sales of Safeguard Systems to any customer 
listed on Attachment B. This exclusive right to commissions applies to all new 
and repeat Safeguard System sales to each customer until this Agreement is 
terminated (see paragraph 7). 
Further, Attachment B to the Agreement provides:  
You shall have the exclusive right to the commissions on sales of Safeguard 
Systems to: (i) each customer in you sales territory described in Attachment A 
whose first order of Safeguard Systems is directly a result of your efforts and 
credited to you . . . . 
**** 
In addition, your exclusive right to commissions on sales of Safeguard Systems to 
any customer shall expire if that customer has not purchased any Safeguard 
System and paid in full for such purchase, within thirty-six (36) months after the 
invoice date of such customer’s last prior purchase of any Safeguard System. 
There were originally seven addenda to the Agreement, which each described a different product 
for which Thurston had a right to solicit orders. On November 26, 2000, Addendum No. 8 was 
added to the Agreement, which granted Thurston the right to offer “sourced or brokerage 
products” defined as: 
Ancillary business forms, checks or other business products that are not 
manufactured or offered by Safeguard, including those through their preferred 
sourced relationships, but which will, from time to time, be made available for 
sale by Safeguard through Distributors to the small business marketplace. . . .  
Regarding Thurston’s commission, Addendum No. 8 provided: 
Each product covered by this Addendum shall be sold and billed to the 
customer at the price agreed to by the Distributor and communicated to 
Safeguard. Safeguard shall maintain a schedule of handling and processing 
charges for BODP [Bill Only Distributor Paid] orders, which may from time to 
time be changed by Safeguard. Your commission will be 1) the amount billed to 
the end-user customer, as agreed to between the customer and the Distributor and 
communicated to Safeguard, less 2) the applicable processing charge as 
determined by the schedule then in effect, and less 3) sales tax, subject to 
applicable reversal provisions for Sourced or Brokerage orders. . . .  
Addendum No. 9 gave Thurston the right to solicit orders for payroll processing products 
including, but not limited to, W-2 forms.  
This Court has free review over the district court’s holding that the language in the 
agreement was unambiguous. See Swanson v. Beco Constr. Co., Inc., 145 Idaho 59, 62, 175 P.3d 
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748, 751 (2007) (“free review” over ambiguity). In granting Thurston’s motion for summary 
judgment the district court held:  
Under the plain language of Thurston’s RDA [Regional Distributor Agreement], 
Thurston is entitled to commissions on sales of any Safeguard product or service 
(i.e., “Safeguard Systems”) to any customers over which Thurston holds account 
protection rights; that is, where the first order of a Safeguard System by a 
customer within Thurston’s territory was a result of Thurston’s efforts and 
credited to Thurston. By failing to pay or rotate commissions to Thurston on any 
such sales made by IBF and DocuSource, Safeguard breached the RDA, thereby 
causing Thurston damages.  
We agree with the district court that the account protection language in the Agreement is 
not ambiguous. The plain language of the Agreement provides that “[Thurston] shall have the 
exclusive right to the commissions generated on sales of Safeguard Systems to [each customer in 
[Thurston’s] sales territory . .  . whose first order of Safeguard Systems is directly a result of 
[Thurston’s] efforts and credited to [Thurston]. This exclusive right to commissions applies to all 
new and repeat Safeguard System sales until this Agreement is terminated.” (Emphasis added). 
This right to commissions continues for thirty-six months after the invoice date of the customer’s 
last purchase of a Safeguard System. If the customer purchases a new Safeguard System within 
the thirty-six months—regardless of whether that purchase is from Thurston—that period starts 
over. If another Safeguard distributor sold to one of Thurston’s protected customers in that 
period, SBS’s practice was to rotate the commission on the sale back to Thurston.  
SBS’s product specific interpretation adds language into the Agreement that is not there. 
There is no language limiting Thurston’s right to commissions based on what specific product it 
sold. Instead, if the product qualifies as a Safeguard System, Thurston is entitled to the 
commission on the sale. Further, the Agreement’s use of the term “Safeguard System” makes it 
clear that commissions on all products and services offered through SBS and its preferred 
suppliers, including Deluxe, are encompassed by the exclusive right. As a result, even though W-
2 processing products were historically sold by IBF, after the BAM acquisition, they became a 
Safeguard System. Under the plain language of the Agreement, Thurston was entitled to 
commissions on the sale of such products to any customer in its territory to whom Thurston first 
sold any Safeguard System and which was credited to Thurston by SBS. We affirm the district 
court’s grant of summary judgment holding that SBS breached the Agreement by failing to rotate 
IBF and DocuSource commissions on Thurston’s protected accounts.  
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B. 
SBS waived its right to object to the district court’s ruling on attorney-client 
privilege. 
Approximately eight months before trial, the district court conducted an in camera 
review of forty-one documents that SBS claims were protected by the attorney-client privilege 
and found “that the majority concerned factual matters and business advice about the cross-over 
customers made in Dunlap’s capacity as corporate secretary rather than purely legal issues.” The 
district court thus ordered that SBS produce several of these documents to Thurston. On appeal 
both parties agreed that there were only seven exhibits at issue; however, at the beginning of 
trial, SBS stipulated to the admission of all seven. Because the district court decision concerned a 
discovery matter, that decision stood on its own, independent of whether the documents were 
admissible at trial. By stipulating to admit the documents at trial, SBS waived any right to 
challenge the district court’s privilege ruling on appeal.  
This Court’s opinion in Saint Alphonsus Diversified Care, Inc. v. MRI Associates, LLP, 
148 Idaho 479, 224 P.3d 1068 (2009) helps explain this result. There, Saint Alphonsus brought a 
motion to strike a document that contained matters it contended were legal advice and subject to 
the attorney-client privilege. Id. at 492, 224 P.3d at 1081. The trial court denied the motion to 
strike, finding that the statements were not covered by attorney-client privilege. Id. Later, prior to 
trial, Saint Alphonsus brought a motion in limine to preclude admission of the allegedly 
privileged statements; however, Saint Alphonsus failed to argue its privilege claims during a 
motion hearing involving twenty-nine other motions. Id. at 493, 224 P.3d at 1082. In ruling on 
the motion, the district court did not address the attorney-client privilege claim, and we noted 
that “[t]he court apparently overlooked that portion of the motion because nobody mentioned it 
or argued attorney-client privilege during oral argument on the motion.” Id. at 494, 224 P.3d at 
1083. Saint Alphonsus then filed another motion in limine, but it failed to bring the attorney-
client privilege issue to the court’s attention other than through its written motion. Id.  
We held that Saint Alphonsus had failed to preserve the attorney-client privilege issue for 
appeal, even though it had received an adverse ruling when the trial court denied the motion to 
strike. We stated: 
If the trial court unqualifiedly rules on the admissibility of evidence prior to trial, 
no further objection is necessary in order to preserve the issue for appeal. If the 
trial court does not do so, however, then the party opposing the evidence must 
continue to object as the evidence is presented. By failing to object when the 
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memorandum was offered into evidence during the trial, St. Alphonsus waived 
any objection.  
Id. (emphasis added) (internal citations omitted). 
This holding is directly on point regarding SBS’s claim about its allegedly privileged 
documents here. While SBS received an adverse discovery ruling when the court ordered the 
documents produced, it did not receive an unqualified ruling on the admissibility of those 
documents at any time before trial. By stipulating to the documents’ admissibility, SBS waived 
any objection it had to the district court’s privilege ruling. State v. Ellington, 151 Idaho 53, 64, 
253 P.3d 727, 738 (2011) (“a party waives an objection to the admission of evidence by failing 
to object at the time of its admission.”).  
C. 
The district court properly denied SBS’s motion for post-judgment relief on 
Thurston’s claim for fraud in the inducement of the March 2014 agreement because 
the jury’s finding was supported by substantial evidence.  
SBS asserts that the jury’s award of $442,400 for Thurston’s fraudulent inducement 
claim should be vacated because it was not supported by the evidence. SBS argues that Mr. 
Thurston chose to enter into the March 2014 agreement knowing he did not have IBF sales 
information on the accounts he was selling. A party alleging fraud must prove the following nine 
elements by clear and convincing evidence:  
(1) a statement of fact; (2) its falsity; (3) its materiality; (4) the speaker’s 
knowledge of its falsity; (5) the speaker’s intent to induce reliance; (6) the 
hearer’s ignorance of the falsity of the statement; (7) reliance by the hearer; (8) 
the hearer’s right to rely; and (9) consequent and proximate injury.  
Country Cove Dev., Inc. v. May, 143 Idaho 595, 600, 150 P.3d 288, 293 (2006) (citing Lettunich 
v. Key Bank Nat’l Ass’n, 141 Idaho 362, 368, 109 P.3d 1104, 1110 (2005)).   
 
The element at issue is “the hearer’s ignorance of the falsity of the statement.” SBS 
argues that before entering into the March 2014 agreement, Mr. Thurston was fully aware IBF 
was still selling to all nine overlapping organizations. SBS contends that the following facts 
demonstrate that Mr. Thurston agreed to sell his commission rights to the affected accounts 
while knowing that no sales data had been disclosed: 
• Mr. Thurston was a long-time sophisticated distributor who bought several 
other distributorships over the years and knew how to value accounts.  
• As a long-time competitor of IBF prior to SBS’s purchase, Mr. Thurston 
was very familiar with IBF and already knew it was “in the accounts we 
have.”  
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• During the October 3, 2013, in-person meeting between Mr. Thurston and 
Mr. Dunlap at a dinner in Boise, Mr. Thurston became aware that Mr. 
Dunlap had historical data on IBF.  
• By October 15, 2013, Mr. Thurston was specifically informed of at least 
20 of his current customers overlapping with IBF due to a marketing letter 
IBF sent to those customers.  
• Mr. Thurston acknowledged he did not receive any sales figures for IBF or 
DocuSource at the time he entered into the March 2014 agreement, and 
admitted he knew he was negotiating based on his company’s own sales to 
the accounts at issue.  
• Nevertheless, Mr. Thurston negotiated a significantly higher amount for 
one account (Norco) because he at least suspected IBF had ongoing sales 
to that customer much greater than his own.  
SBS also relies heavily on an email from Mr. Thurston to Mr. Dunlap for its argument 
that Mr. Thurston was “clearly” aware of IBF’s post-acquisition sales to his protected customers. 
The email provides “[s]ince the client list we have been going through is based on sales since 
August 27 [the date IBF was acquired], I imagine that there are specifics associate [sic] with 
those sales and accounts.” Even so, it is undisputed that SBS concealed IBF and DocuSource’s 
sales to Thurston’s protected customers prior to the execution of the March 2014 agreement. 
Indeed, Mr. Dunlap and Mr. Thurston both testified that no information relating to IBF sales on 
Thurston’s protected accounts was exchanged before the March 2014 agreement. 
On review, this Court applies the same standard as the trial court; thus, all reasonable 
inferences must be drawn in the light most favorable to Thurston as the non-moving party. Quick 
v. Crane, 111 Idaho at 764, 727 P.2d at 1192. We do not find that any of the above statements 
conclusively demonstrate that Mr. Thurston was aware of IBF sales to Thurston’s protected 
accounts after SBS acquired IBF. Drawing all inferences in favor of Thurston, the jury could 
have reasonably found that Mr. Thurston’s comments did not distinguish between knowledge of 
IBF sales to Thurston’s protected accounts prior to IBF’s acquisition by SBS and after IBF’s 
acquisition.  
This holding is consistent with the district court’s determination that SBS failed to 
establish that Mr. Thurston knew that IBF was selling Safeguard Systems to protected accounts 
or that Mr. Thurston knew SBS was failing to disclose such sales. Instead, the evidence simply 
established that Mr. Thurston knew IBF had sold products to Thurston’s protected accounts (i.e., 
had common customers) before becoming a Safeguard distributor. SBS’s normal practice to 
14 
 
issue a rotation notice every time a sale of a Safeguard product was made to a distributor’s 
protected account supports the inference that Mr. Thurston did not know that IBF was continuing 
to sell to Thurston’s protected accounts prior to executing the March 2014 agreement. Thurston 
never received a rotation notice regarding IBF’s sales as a distributor for SBS. This Court cannot 
reweigh the evidence. See Schwan’s Sales Enterprises v. Idaho Transp. Dep’t, 142 Idaho 826, 
830, 136 P.3d 297, 301 (2006) (“[t]he judge is not an extra juror, though; there is no weighing of 
evidence or passing on the credibility of witnesses or making of independent findings on factual 
issues.”). We hold that the district court correctly denied SBS’s motion for post-judgment relief 
on Thurston’s fraud in the inducement claim because the jury’s verdict was supported by 
substantial evidence.  
D. 
The district court properly denied SBS’s motion for post-judgment relief on 
Thurston’s claim that SBS breached the pricing guarantee in the Agreement 
because the jury’s finding was supported by substantial evidence.  
SBS also argues that the jury’s award of $156,628 for breach of the pricing schedule 
clause should be vacated because it is not supported by the evidence.  
The following provision in the Agreement is in dispute: 
1. PRODUCTS 
You shall have the right in your territory to act as our sales distributor 
(representative) to solicit the sale of those products and services defined in the 
Addenda attached hereto (“Safeguard Systems”) in accordance with the price 
schedules published by Safeguard and on the terms and conditions set by 
Safeguard from time to time. 
First SBS argues that the district court erred when it ruled the pricing provision was 
ambiguous; however, in opposition to Thurston’s motion for summary judgment, SBS argued 
that the clause was ambiguous, contending there was a factual dispute about the interpretation of 
the provision. The district court agreed with SBS and found the provision to be ambiguous. Thus, 
the claim went before the jury as the trier of fact, which found that Thurston proved its claim for 
breach of the Agreement under the “pricing schedule” clause and awarded Thurston $156,628 in 
damages.  
After trial, SBS moved for post-judgment relief arguing that this language guaranteed no 
uniformity of price. SBS argued that testimony from trial demonstrated that the Agreement did 
not guarantee the same pricing among distributors. SBS’s president, Mr. Sorrenti, testified there 
is no uniform pricing clause in SBS distributorship agreements and that “[a]t certain volumes, 
15 
 
you get discounts.” Even so, the district court denied SBS’s request for relief, finding that the 
jury, as the trier of fact, was appropriately instructed (1) that the terms of the provision were in 
dispute, and (2) by providing it the rules of contract interpretation to determine the parties’ 
intent. The jury having been properly instructed, and having reached a conclusion based on 
“evidence of sufficient quantity and probative value that reasonable minds could have reached a 
similar conclusion,” Knipe Land Co. v. Robertson, 151 Idaho 449, 454, 259 P.3d 595, 600 
(2011), we are not in a position to weigh the evidence or pass on the credibility of witnesses on 
appeal.  
The district court held that the following testimony was sufficient evidence to support the 
jury’s finding that there was a breach of the pricing provision: (1) Mr. Taylor, Thurston’s expert, 
testified that SBS offered IBF a base price on two products which was approximately 40% less 
than that offered to Thurston; and (2) both Mr. Thurston and Ms. Teply4 testified that they 
understood the preferential pricing clause to give them the right to the same base price schedules 
other distributors received. The district court determined that while Mr. Sorrenti’s testimony 
contradicted that of Mr. Thurston and Ms. Teply, the jury was “free to disregard that testimony.” 
In considering a motion for judgment notwithstanding the verdict the court does not reweigh the 
evidence considered by the jury; rather, it considers whether there was substantial evidence to 
support the jury’s verdict. See Schwan’s Sales Enterprises, 142 Idaho at 830, 136 P.3d at 301 
(internal citation omitted). We hold that the evidence highlighted by the district court is 
sufficient to support the jury’s finding that SBS breached the pricing provision in the Agreement. 
Thus, the district court properly denied SBS’s motion for post-judgment relief.  
E. 
The district court properly denied SBS’s motion for post-judgment relief on 
Thurston’s claim for good faith and fair dealing because the jury’s finding was 
supported by substantial evidence. 
Next, SBS contends the jury’s award of $532,431 to Thurston for damages caused by 
SBS’s breach of the implied covenant of good faith and fair dealing should be vacated.  
“Idaho law recognizes a cause of action for breach of an implied covenant of good faith 
and fair dealing.” Jenkins v. Boise Cascade Corp., 141 Idaho 233, 242, 108 P.3d 380, 389 (2005) 
(internal citation omitted).  
                                                 
4 Ms. Teply is a Safeguard distributor under a franchise agreement between T3 Enterprises, Inc. and SBS. She 
formed the T3 business as a closely held corporation.  
16 
 
No covenant will be implied which is contrary to the terms of the contract 
negotiated and executed by the parties. First Security Bank of Idaho v. Gaige, 115 
Idaho 172, 765 P.2d 683 (1988); Clement v. Farmers Ins. Exchange, 115 Idaho 
298, 766 P.2d 768 (1988) (an implied covenant of good faith and fair dealing 
cannot override an express provision in a contract). The covenant requires “that 
the parties perform in good faith the obligations imposed by their agreement,” 
Badgett v. Security State Bank, 116 Wash.2d 563, 807 P.2d 356, 356 (1991), and 
a violation of the covenant occurs only when “either party  . . . violates, nullifies 
or significantly impairs any benefit of the . . . contract. . . .” Sorensen v. Comm 
Tek, Inc., 118 Idaho 664, 669, 799 P.2d 70, 75 (1990); Metcalf v. Intermountain 
Gas Co., 116 Idaho 622, 778 P.2d 744 (1989). 
Idaho First Nat’l Bank v. Bliss Valley Foods, Inc., 121 Idaho 266, 288, 824 P.2d 841, 863 
(1991).  
SBS asserts that the district court erred during three stages of litigation: (1) denying 
SBS’s motion for summary judgment; (2) allowing Thurston to change the remedy he was 
seeking from the right to force SBS to purchase the distributorship at its full current value—i.e., 
$798,647—to a theory that SBS’s breach did not destroy Thurston’s business but instead 
transformed it in to a non-Safeguard distributorship, causing a two-thirds depreciation in value—
i.e., $532,431; and (3) denying SBS’s motion for post-judgment relief under the devaluation 
theory because it was not supported by substantial evidence. 
a. This Court will not review the district court’s denial of SBS’s motion for 
summary judgment.  
SBS argues that Thurston’s good faith and fair dealing claim should have been dismissed 
at summary judgment because it was duplicative of the other contract breaches and contrary to 
the express terms of the contract; however, we do not review the denial of a motion for summary 
judgment when a party has had a trial on the merits. We have consistently explained the rationale 
for this rule: 
[B]y entering an order denying summary judgment, the trial court merely 
indicates that the matter should proceed to trial on its merits. The final judgment 
in a case can be tested upon the record made at trial, not the record made at the 
time summary judgment was denied. Any legal rulings made by the trial court 
affecting that final judgment can be reviewed at that time in light of the full 
record. This will prevent a litigant who loses a case, after a full and fair trial, from 
having an appellate court go back to the time when the litigant had moved for 
summary judgment to view the relative strengths and weaknesses of the litigants 
at that earlier stage. Were we to hold otherwise, one who had sustained his 
position after a fair hearing of the whole case might nevertheless lose, because he 
had failed to prove his case fully on the interlocutory motion. 
17 
 
Am. Bank v. BRN Dev., Inc., 159 Idaho 201, 206, 358 P.3d 762, 767 (2015) (quoting Garcia v. 
Windley, 144 Idaho 539, 542, 164 P.3d 819, 822 (2007)). We therefore decline to review the 
district court’s denial of SBS’s motion for summary judgment.  
b. The district court did not abuse its discretion in allowing Mr. Thurston to 
present evidence concerning the value of his distributorship.  
Next, SBS argues that the district court impermissibly allowed Thurston to shift its 
damage theory midway through trial from a “forced sale theory” to a new theory that Thurston’s 
business was transformed into a non-Safeguard distributorship. SBS’s argument lacks merit. 
From the time Thurston joined the case by amended complaint it sought damages for “business 
devaluation suffered by Thurston Enterprises” arising from SBS’s breach of its good faith and 
fair dealing.  
Evidence regarding the value of Thurston’s business was presented mainly through the 
testimony of Mr. Taylor, Mr. Thurston, and Mr. Sorrenti. It is undisputed that Mr. Taylor only 
provided testimony about the value of Thurston’s distributorship prior to the harm but not the 
devaluation. Mr. Taylor testified that the value of Thurston’s entire business was $798,646. Mr. 
Taylor came to this figure by applying SBS’s metric of “one times annual revenue.” Mr. 
Thurston and Mr. Sorrenti both confirmed that SBS uses this metric to value Safeguard 
distributorships.  
Mr. Thurston then testified that without Safeguard’s contractual benefits, i.e., account 
protection, the value of an independent distributorship is around one-third of the price of a 
Safeguard distributorship. SBS claims that Mr. Thurston’s testimony “invented a brand new 
theory mid-way through trial that the express contract breaches did not destroy its business, but 
instead transformed it into a non-Safeguard distributor causing a two-thirds depreciation in 
value.” We review the district court’s decision to permit Mr. Thurston’s testimony for an abuse 
of discretion. Edmunds v. Kraner, 142 Idaho 867, 871, 136 P.3d 338, 342 (2006). The test for an 
abuse of discretion is:  
[W]hether the trial court: (1) correctly perceived the issue as one of discretion; (2) 
acted within the outer boundaries of its discretion; (3) acted consistently with the 
legal standards applicable to the specific choices available to it; and (4) reached 
its decision by the exercise of reason. 
Lunneborg v. My Fun Life, 163 Idaho 856, 863, 421 P.3d 187, 194 (2018). 
18 
 
We hold the district court did not abuse its discretion in allowing Mr. Thurston to testify 
about the devaluation of his distributorship. As set forth previously, the legal theory pursued 
from complaint to verdict was that SBS’s actions had impaired the value of Thurston’s 
distributorship. Mr. Thurston was competent to provide testimony on the value of his business. 
Schroeder v. Partin, 151 Idaho 471, 477, 259 P.3d 617, 623 (2011) (“It is a settled rule in Idaho 
that the owner of property is a competent witness to its value, as he is presumed to be familiar 
with its value by reason of inquiries, comparisons, purchases and sales.”). SBS even conceded 
that “Mr. Thurston was a long-time sophisticated distributor who bought several other 
distributorships over the years and knew how to value accounts” in its opposition to Thurston’s 
fraud in the inducement claim. Moreover, Mr. Thurston’s testimony that non-Safeguard 
distributorships were worth less than Safeguard distributorships was confirmed by Mr. Sorrenti 
as well as Scott Sutton, SBS’s vice president of franchise development, who testified that SBS 
places a lower value on non-Safeguard distributorships. This evidence was not a surprise to SBS 
and thus the district court did not abuse its discretion in permitting the jury to consider this 
testimony in evaluating the good faith and fair dealing claim.  
c. The district court correctly denied SBS’s motion for post-judgment relief. 
In denying SBS’s motion for post-judgment relief the district court recognized that the 
evidence before the jury regarding the breach of the implied covenant was presented through Mr. 
Taylor, Mr. Thurston, and Mr. Sorrenti. Mr. Thurston and Mr. Sorrenti both testified that the 
metric of “one times annual revenue” was used by SBS to value Safeguard distributorships. Mr. 
Taylor then applied this metric to calculate the value of Thurston’s business, and based on 
Thurston’s sales data from December 1, 2014, through November 30, 2015, he determined that 
the distributorship value was $798,646. Mr. Thurston testified that the value of an independent 
distributorship is around one-third of the price of a Safeguard distributorship. Mr. Sorrenti 
confirmed that the valuation metrics differ between independent distributors and those in the 
Safeguard network. This testimony supports the jury’s award of $532,431 for SBS’s breach of 
the good faith and fair dealing claim—two-thirds diminution as to the amount Mr. Taylor 
testified was Thurston’s entire business.  
Ultimately, the district court held  
The valuation metric and figures presented to the jury here were 
appropriate given the facts and circumstances of the case—they are metrics used 
19 
 
by Safeguard itself in valuing both its own and independent distributorships. 
Indeed, Mr. Thurston, as the owner Thurston Enterprises, is “a competent witness 
to its value, as he is presumed to be familiar with its value by reason of inquiries, 
comparisons, purchases and sales.” Schroeder v. Partin, 151 Idaho 471, 477, 259 
P.3d 617, 623 (2011). See also, Mercury Marine Div. of Brunswick Corp. v. Boat 
Town U.S.A., Inc., 444 So.2d 88 (Fla. Dist. Ct. App. 1984) (holding that owner of 
corporate franchise was competent to testify as to loss of business value suffered 
by franchisee due to franchisor’s breach). 
. . . . The jury was presented with evidence of the value or marketability of the 
business, the two metrics used by [SBS] and Mr. Thurston in valuing Safeguard 
distributors versus independent distributors, and heard testimony from Mr. 
Thurston that he valued his business at zero given [SBS’s] breaches; namely, his 
lack of account protection and competition from IBF. This evidence is not 
speculative; rather, it is largely based on [SBS’s] own practices and evidence of 
Thurston’s sale and purchase history involving similar businesses. Drawing all 
inferences from this evidence in Thurston’s favor, it was reasonable for the jury to 
conclude that [SBS’s] breaches effectively transformed Thurston into a non-
Safeguard distributor, and applying the valuation metric used for independent 
distributors, determine that, as a consequence of the breaches, Thurston was worth 
only 2/3 of its prior value.  
The district court also held that while there was evidence that the account protection 
violations only affected a portion of Thurston’s protected accounts, the jury was within its 
bounds to determine that the violations affected the overall marketability of the company since 
“exclusive” account protection and other contractual rights were breached by SBS. We agree 
with this reasoning so aptly stated by the district court and hold the jury’s award of $532,431 is 
supported by substantial evidence. The district court properly denied SBS’s motion for post-
judgment relief on this claim.  
F. 
The district court properly denied SBS’s motion for post-judgment relief on 
Thurston’s claim for punitive damages because the jury’s finding was supported by 
substantial evidence. 
SBS challenges the district court’s ruling that sufficient evidence existed to support an 
award of punitive damages for breach of contract. Simply put, SBS argues that the breach of 
contract here did not rise to the level of “crime or intentional tort” as required by this Court to 
warrant an award of punitive damages. Alternatively, SBS argues this Court should modify 
Idaho law to prohibit punitive damages from being awarded when a commercial contract has 
been breached.  
20 
 
A party seeking to recover for punitive damages must prove by clear and convincing 
evidence oppressive, fraudulent, malicious or outrageous conduct by the party against whom the 
claim for punitive damages is asserted. I.C. § 6-1604. In addition to oppressive behavior in a 
business context, the Idaho Court of Appeals has articulated five factors that courts consider in 
deciding whether there is substantial evidence of an extreme deviation from standards of 
reasonable conduct:  
(1) the presence of expert testimony; (2) whether the unreasonable conduct 
actually caused harm to the plaintiff; (3) whether there is a special relationship 
between the parties, as in the Garnett insured-insurer relationship; (4) proof of a 
continuing course of oppressive conduct; and (5) proof of the actor’s knowledge 
of the likely consequences of the conduct. 
Cuddy Mountain Concrete Inc. v. Citadel Const., Inc., 121 Idaho 220, 229–30, 824 P.2d 151, 
160–61 (Ct. App. 1992). 
It is well established that punitive damages are unavailable in routine, ordinary breach of 
contract cases, however, this “should not be construed as a blanket prohibition against punitive 
damages in breach of contract claims.” Myers v. Workmen’s Auto Ins. Co., 140 Idaho 495, 503, 
95 P.3d 977, 985 (2004). “[N]umerous situations arise where the breaking of a promise may be 
an extreme deviation from standards of reasonable conduct, and, when done with knowledge of 
its likely effects, may be grounds for an award of punitive damages.” Id. (quoting Linscott v. 
Rainier Nat’l Life Ins. Co., 100 Idaho 854, 860, 606 P.2d 958, 964 (1980)). 
“The assessment of punitive damages, like the assessment of all damages, is in the first 
instance for the discretion of the jury.” Boise Dodge, Inc. v. Clark, 92 Idaho 902, 908, 453 P.2d 
551, 557 (1969).  
[T]hose who deliberately and cooly engage in a far-flung fraudulent scheme, 
systematically conducted for profit, are very much more likely to pause and 
consider the consequences if they have to pay more than the actual loss suffered 
by an individual plaintiff. An occasional award of compensatory damages against 
such parties would have little deterrent effect. A judgment simply for 
compensatory damages would require the offender to do no more than return the 
money which he had taken from the plaintiff. In the calculation of his expected 
profits, the wrongdoer is likely to allow for a certain amount of money which will 
have to be returned to those victims who object too vigorously, and he will be 
perfectly content to bear the additional cost of litigation as the price for 
continuing his illicit business. It stands to reason that the chances of deterring him 
are materially increased by subjecting him to the payment of punitive damages. 
Id. at 558, 453 P.2d at 909. 
21 
 
In permitting the jury to consider punitive damages, the district court well-recognized 
that under Idaho law a “party may breach a contract if it determines doing so is in its own 
economic interest, if it is prepared to accept responsibility for the breach. It may not—without 
exposing itself to punitive damages—avoid the consequences of the breach by means of 
concealment, oppression, intimidation, or despotism.” On appeal, SBS maintains that punitive 
damages are not appropriate when the undisputed evidence shows that Thurston’s own profits 
continually increased after the acquisitions. However, the district court held the following 
evidence supported the jury’s conclusion that SBS sought to avoid the consequences of its breach 
of Thurston’s contractual rights through concealment and deception: 
[SBS] had a contractual obligation under Thurston’s distributorship 
agreement to pay commissions on certain sales of Safeguard products by other 
distributors to Thurston’s protected accounts. . . .  [SBS] knew from its due 
diligence that DocuSource and IBF shared a large number of customers with 
Thurston and that [SBS’s] acquisition of the companies under the BAM program 
would lead infringing sales of Safeguard products to Thurston’s protected 
accounts . . .  Rather than honor Thurston’s account protection rights through its 
typical practice of rotating commissions, [SBS] set an arbitrary account mitigation 
budget and sent Mr. Dunlap to “negotiate” with Thurston. [SBS] expected that 
Mr. Dunlap would “underspend” or compel Thurston to capitulate to giving up his 
protected accounts for an amount less than the set budget. 
When attempting to negotiate with Thurston, the jury heard that Mr. 
Dunlap, over a period of several months, consistently misrepresented and/or 
concealed the extent of account protection violations, despite receiving 
DocuSource and IBF’s monthly reports showing infringing sales. . . . After 
Thurston refused to capitulate, [SBS] did not attempt to prevent DocuSource and 
IBF from making the infringing sales and did not rotate the commissions on such 
sales to Thurston as it was contractually obligated to do, thereby compelling him 
to file suit. . . . Mr. Taylor established that [SBS] failed to rotate to Thurston 
commissions totaling $231,169 (or $201,516 with a source fee deduction) on sales 
made by DocuSource and IBF. 
Punitive damages are reserved for cases that involve “oppressive, fraudulent, malicious 
or outrageous conduct.” SBS’s active concealment of IBF and DocuSource sales to Thurston’s 
protected customers supported the jury’s award of punitive damages. The point of punitive 
damages is to deter such conduct. Davis v. Gage, 106 Idaho 735, 739, 682 P.2d 1282, 1286 (Ct. 
App. 1984) (“an assessment of punitive damages takes away the incentive for engaging in bad 
conduct by making such conduct unprofitable.”). Here, SBS’s president, Mr. Sorrenti, testified 
that he did not consider $4 million in revenue associated with account protection conflicts to be a 
22 
 
large number of shared customers; thus, it appears that punitive damages were not only 
appropriate, but necessary for SBS to appreciate the damage caused by its breach of the 
Agreement.  
Alternatively, SBS requests this Court modify Idaho law to prohibit punitive damages in 
cases involving the breach of a commercial contract. This Court has already directly held that 
“[i]t is not the nature of the case, whether tort or contract, that controls the issue of punitive 
damages.” Myers v. Workmen’s Auto Ins. Co., 140 Idaho 495, 503, 95 P.3d 977, 985 (2004) 
(emphasis added). In 2003, Idaho Code section 6-1604 was amended to require “[i]n any action 
seeking recovery of punitive damages, the claimant must prove, by clear and convincing 
evidence, oppressive, fraudulent, malicious or outrageous conduct by the party against whom the 
claim for punitive damages is asserted.” (Emphasis added). The Legislature limited potential 
liability by capping punitive damages rather than limiting the type of claims that may warrant 
punitive damages. See I.C. § 6-1604(3) (“No judgment for punitive damages shall exceed the 
greater of two hundred fifty thousand dollars ($250,000) or an amount which is three (3) times 
the compensatory damages contained in such judgment.”).  
We decline to modify Idaho law as SBS invites. The standards set forth in the statute, as 
well as in this Court’s cases, will continue to guide litigants and courts regarding the parameters 
for awarding punitive damages in Idaho. We hold that the district court appropriately sustained 
the jury’s award of punitive damages based on the facts in this case.  
G. 
The district court properly denied SBS’s motion for post-judgment relief on 
Thurston’s claim for future damages because the jury’s finding was supported by 
substantial evidence. 
SBS separately challenges the jury’s award of future damages arguing that Thurston’s 
expert, Mr. Taylor, used a flawed metric that (1) compensated a 36-month right of account 
protection with 8+ years of future commissions; (2) failed to account for historical account 
attrition rates; and (3) ignored the at-will nature of the parties’ relationship.  
 “Compensatory damages for lost profits and future earnings must be shown with a 
reasonable certainty.” Inland Grp. of Companies, Inc. v. Providence Washington Ins. Co., 133 
Idaho 249, 257, 985 P.2d 674, 682 (1999) (citing Hummer v. Evans, 129 Idaho 274, 280, 923 
P.2d 981, 987 (1996)). Thus, damage awards based on speculation and conjecture will not be 
allowed. Id. (citing Rindlisbaker v. Wilson, 95 Idaho 752, 519 P.2d 421 (1974)). 
23 
 
“[E]vidence is sufficient if it proves the damages with reasonable certainty. 
‘Reasonable certainty requires neither absolute assurance nor mathematical 
exactitude; rather, the evidence need only be sufficient to remove the existence of 
damages from the realm of speculation.’ ” Griffith v. Clear Lakes Trout Co., Inc., 
146 Idaho 613, 618, 200 P.3d 1162, 1167 (2009) (citation omitted). “The measure 
of damages for loss of profits is ‘rarely susceptible of accurate proof. . . .’ 
Therefore, the law does not require ‘accurate proof with any degree of 
mathematical certainty. . . . ’ ” Trilogy [Network Sys., Inc. v. Johnson, 144 Idaho 
844, 846, 172 P.3d 1119, 1121 (2007)](citations omitted). “Any claim of damages 
for prospective loss contains an element of uncertainty, but that fact is not fatal to 
recovery. ‘The most elementary conceptions of justice and public policy require 
that the wrongdoer shall bear the risk of the uncertainty which his own wrong has 
created.’ ” Smith v. Mitton, 140 Idaho 893, 900, 104 P.3d 367, 374 (2004) 
(citations omitted).  
Saint Alphonsus Diversified Care, Inc. v. MRI Assocs., LLP, 157 Idaho 106, 116, 334 P.3d 780, 
790 (2014).  
At trial, Mr. Taylor determined the present value of Thurston’s future account protection 
damages by applying a one times annual revenue metric based on IBF and DocuSource’s sales to 
Thurston’s protected accounts in 2015. Using this metric, Mr. Taylor calculated $241,869 for 
future IBF sales and $73,719 for DocuSource sales. SBS characterizes Mr. Taylor’s testimony as 
awarding eight years of future damages when the Agreement only purports to guarantee three. 
SBS emphasizes the following testimony given by Mr. Taylor during cross-examination: 
Q: How far out are you valuing the commission rights for the metric one times 
annual sales that you were using? . . . 
A: . . .  I think about eight years, I think you get most of the way there. 
Q: Eight years, not 8 to 12 or beyond? 
A: I just put eight for the period. You get $356,725, which is pretty [sic] most of 
the way there to that $373,000 number. So it’s about eight years to pretty much 
get there. 
Q. Your calculation would pay T3 and Thurston right now for eight years of 
future commissions, is that right? 
A. That’s the math of it. . . . 
However, SBS’s interpretation is misleading. Mr. Taylor testified that the applicable 
metric was the equivalent of three times IBF and DocuSource’s gross profits for 2015, and that 
one times annual revenues equates to approximately three years of commissions. Thus, Thurston 
would be compensated for IBF and DocuSource’s commissions for three years into the future, 
24 
 
which is consistent with the Agreement. It is also worth noting that SBS failed to provide any 
evidence to counter or contradict Mr. Taylor’s conclusions at trial.  
Next, SBS asserts that Mr. Taylor disregarded historical attrition rates of 35% for IBF 
customers and 26% for Thurston’s customers. Mr. Taylor testified that several risk factors, 
including customer attrition, were factored into the one times revenue metric (“[SBS] is the one 
who buys a lot of these, they establish what these values are, and they know what the attrition 
factor is, and all I’m doing is using the metric that [SBS] is using.”). The district court found that 
Mr. Taylor’s estimation of future damages was supported by a reliable metric based on sound 
assumptions and his calculations were supported by the evidence.  
Last, SBS argues that future damages are not appropriate because the Agreement could 
have been terminated. However, the Agreement only allowed for termination if certain 
conditions were met and SBS presented no evidence those conditions existed at trial. The district 
court acknowledged this and held there was no evidentiary basis for SBS to rely on a termination 
to limit Thurston’s future damages. We hold that substantial evidence supported the jury’s 
verdict as it pertained to future damages and the district court properly denied SBS’s motion for 
post-judgment relief.  
H. 
Thurston is awarded attorney fees on appeal.  
SBS and Thurston both request attorney fees on appeal under Idaho Code section 12-
120(3). Thurston also requests attorney fees under Idaho Code section 12-121. SBS also argues 
that we modify the amount of attorney fees awarded Thurston due its claimed errors by the trial 
court.  
When a party prevails at both trial and on appeal, and that party received an award 
of attorney fees under Idaho Code section 12-120(3) at the trial level and the 
award is affirmed on appeal, that party is also entitled to an award of attorney fees 
for the appeal pursuant to Idaho Code section 12-120(3).  
Idaho Transp. Dep’t v. Ascorp, Inc., 159 Idaho 138, 142, 357 P.3d 863, 867 (2015). As the 
prevailing party, Thurston is entitled to attorney fees under Idaho Code section 12-120(3). 
Because Thurston is the prevailing party on appeal we will not consider SBS’s request to modify 
the district court’s award of attorney fees.  
V. CONCLUSION 
The district court’s judgment is affirmed. Costs and attorney fees awarded to Thurston.  
 
25 
 
 
Chief Justice BURDICK, Justices BRODY, STEGNER and HORTON, 
CONCUR.