Opinion ID: 2520201
Heading Depth: 3
Heading Rank: 3

Heading: Facts and Circumstances Surrounding Price's Misconduct

Text: ¶ 38 This factor looks to the circumstances surrounding the illegal conduct, particularly with respect to what the defendant knew and what was motivating his or her actions. Campbell I, 2001 UT 89 at ¶ 35, 65 P.3d 1134. Throughout the creation of the REIT, Price was aware of its fiduciary obligations to the Smiths and of the consent clause written into the partnership agreements. Price consciously disregarded its obligations. ¶ 39 Price argues that the motivation for its actions was to benefit the Smiths and everyone involved in the REIT transaction. Price also reasserts that its actions were necessary to save the mall from foreclosure. However, the evidence presented at trial (and not fully marshaled by Price in its brief) was that Price, John Price, and the Price-related entities making up the general partnership all had significant financial incentives to carry out the REIT transaction. These incentives included repayment to Price of $27 million of loans made to the Price-related malls, acquisition of stock holdings in the REIT, elimination of $94 million of John Price's personal guarantees on existing loans for the mall and other properties, and deferral of federal income tax consequences. ¶ 40 With respect to Price's failure to disclose its dealings with the partnership property to the Smiths, Price asserts without elaboration that it avoided responding to the Smiths' inquiries on the advice of legal counsel. As noted by the trial court, substantial evidence was presented at trial that Price did not want the Smiths to interfere with the REIT's formation by filing an adverse claim or a lawsuit prior to January 1994 when the REIT went public. Thus, Price's self-interested actions, made in the face of known fiduciary obligations, support a substantial punitive damage award.