The Utah Supreme Court on Friday upheld the millions of dollars that John Price, a former state resident and real estate magnate now serving as U.S. Ambassador in Africa, was ordered two years ago to pay for dishonest business dealings with two former partners.
Price and his company, Fairfax Realty Inc., formerly Price Development Co., must pay $6.5 million in compensatory and punitive damages, plus interest and attorney fees to Armand and Virginia Smith of Clovis, N.M.
The Smiths were awarded the money in spring 2001 by a 3rd District jury that found Price cheated them out of close to $1 million they should have gotten for their share of a shopping mall in Clovis.
After his state court trial, Price, who developed some of the biggest shopping malls in the West, was appointed as ambassador to the east African country of Mauritius, the Seychelles and the Comoros Republic, all islands in the Indian Ocean. A prominent Republican, Price handled Utah finances for the Bush campaign in 2000 and personally donated $471,550 to the Republican party during that election year.
Price was in Mauritius on Friday and unavailable for comment, said his attorney, James Jardine.
In the early 1980s, Price purchased land from the Smiths to build a shopping mall. The Smiths got a 15 percent share of the North Plains Mall, which opened in 1985.
The Smiths hadn't met Price prior to the land sale, their Salt Lake attorney, Robert Campbell, said Friday. "They knew John Price in 1984 as a reputable owner of a number of large shopping malls," including the Cottonwood Mall in Holladay and the Boise (Idaho) Towne Square Mall.
In July 1993, Price told the Smiths he had decided to join the Clovis mall with other malls and commercial properties to form a real estate investment trust, or REIT. Without telling the Smiths, he transferred the mall into the REIT despite contract provisions that said the Smiths had the right to consent to or block the move.
The REIT's initial public offering was released in January 1994. After dodging the Smiths' questions and giving them conflicting estimates of how much of the proceeds they were entitled to, Price told the Smiths they were entitled to $6,160 for the property, valued between $14 million and $16 million. The stock sale raised $198 million.
The Smiths sued Price in 1994, accusing him of financial chicanery. After a 14-day trial, a jury found Price had breached the partnership agreements and fiduciary duties to the Smiths. The jury awarded the Smiths $5.5 million in punitive damages and $1.1 million in compensatory damages, plus interest and attorney fees.
In its appeal, Price-Fairfax argued the prejudgment interest and punitive damages were too high. The justices agreed that the prejudgment interest award of $690,000 was too high, and lowered it to $597,221.
But the punitive damages were warranted, the justices ruled, because Price's relative wealth, valued at $37 million, meant the $5.5 million, or 15 percent of assets, was appropriate. The high court also found that Price's deliberate false statements constituted trickery and deceit, and agreed with the lower court jury that Price-Fairfax had breached its fiduciary duty to the Smiths.
Price has 14 days to file for a rehearing and 60 days to file a petition for a hearing before the U.S. Supreme Court. Jardine said his client has made no decision whether to pursue either option.