Smith v. Price Development Co.

2005 UT 87
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Armand L. Smith, individually No. 20040675
and as trustee for the Armand L.
Smith, Jr., and Shannon S.
Windham Trusts; and Virginia L.
Smith, individually,
Plaintiffs and Appellees,
v.
Price Development Company,
a Utah corporation, nka Fairfax
Realty, Inc.; North Plains Land
Company, Ltd., a Utah limited
partnership; and North Plains
Development Company, Ltd., a
Utah limited partnership,
Defendants.
State Treasurer Edward T.
Alter of the State of Utah,
for and on behalf of the State
of Utah, F I L E D
Additional Rule 19
Defendant and Appellant. December 2, 2005
---
Third District, Salt Lake
The Honorable Frank G. Noel
No. 940904312
Attorneys: Robert S. Campbell, Jennifer Anderson Whitlock,
Salt Lake City, for plaintiffs
Reed L. Martineau, Rex E. Madsen, James S. Jardine,
Salt Lake City, for defendants
Mark L. Shurtleff, Att’y Gen., Kevin V. Olsen, Asst.
Att’y Gen., Salt Lake City, for appellant
---
PARRISH, Justice:

1 For a more complete recital of the facts underlying the
dispute between the Smiths and Fairfax, see our opinion in Smith
v. Fairfax Realty, Inc., 2003 UT 41, ¶¶ 3–11, 82 P.3d 1064.
2 The legislature amended section 78-18-1 in 1991, 2002, and
2004. Both the Smiths and the State agree that the original,
1989 version of the provision governs this appeal. We
accordingly base our analysis on the 1989 version, and unless
otherwise indicated, all references to the split recovery
provision are to that version.
No. 20040675 2
¶1 Following a jury trial, plaintiffs Armand and Virginia
Smith obtained a substantial punitive damages award against
defendant Fairfax Realty, Inc. The State of Utah claimed a share
of the award pursuant to the 1989 version of Utah’s split
recovery provision, which gave the State an interest in
qualifying punitive damages awards. The Smiths challenged the
constitutionality of the provision, and the district court ruled
in their favor, holding that it effected an unconstitutional
taking of the Smiths’ property in violation of article I,
section 22 of the Utah Constitution and the Fifth and Fourteenth
Amendments of the United States Constitution. We agree and
affirm.
FACTUAL BACKGROUND
¶2 In 2001, the Smiths obtained a jury verdict against
Fairfax.1 The jury awarded the Smiths $410,000 in compensatory
damages, $690,000 in prejudgment interest, and $5,500,000 in
punitive damages. On appeal, we affirmed each component of the
award except for the prejudgment interest, which we remitted to
$597,221. Smith v. Fairfax Realty, Inc., 2003 UT 41, ¶ 49, 82
P.3d 1064 (“Smith I”). Fairfax then unsuccessfully petitioned
the United States Supreme Court for certiorari review. Fairfax
Realty, Inc. v. Smith, 541 U.S. 960 (2004).
¶3 Though the Smiths were successful in defending the
punitive damages award on appeal, they stood to lose a sizeable
portion of the award pursuant to the 1989 version of Utah’s split
recovery provision, Utah Code Ann. § 78-18-1(3) (Supp. 1989).2
That provision gave the State the right to half of the punitive
damages in excess of $20,000 in those cases where punitive
damages were awarded and paid. Id.
¶4 The Smiths asserted that the split recovery provision
was unconstitutional and asked the district court to join the
State as a party so that it could defend the constitutionality of
the provision. The district court granted the motion to join the

3 That figure included the following components: the
initial $20,000 of the punitive damages award; $2,740,000, which
represented the punitive damages award reduced by $20,000 and
divided in half as the split recovery provision mandated;
$517,611.40 in attorney fees incurred during trial; and
$672,302.38 in postjudgment interest that had accrued on the
undisputed portion of the award to that date.
3 No. 20040675
State, and Fairfax paid the Smiths the undisputed portion of the
award.3 The disputed portion was placed in a mutually agreed-
upon, interest-bearing depository.
¶5 The Smiths sought summary judgment, arguing that they
were entitled to the entire punitive award, including the
interest that had accrued thereon. They asserted that the split
recovery provision effected an unconstitutional taking of their
property without just compensation. Alternatively, they argued
that the provision violated separation of powers and equal
protection principles.
¶6 The State defended the constitutionality of the
provision, arguing that it was merely a manifestation of the
State’s power to define the availability of punitive damages.
Specifically, the State argued that its interest in the award
arose contemporaneously with the entry of the judgment itself and
that the Smiths consequently lacked any protectable interest in
the disputed funds. It asserted that it did not illegally take
the Smiths’ property, but rather merely claimed what it had been
awarded in the first instance.
¶7 The district court granted the Smiths’ motion for
summary judgment and declared the split recovery provision
unconstitutional. Noting that the provision failed to give the
State any interest in either the underlying cause of action or
the judgment when it was entered, the district court concluded
that the Smiths had a protectable interest in the entire punitive
damages award and that the provision effected an unconstitutional
taking of that interest. The district court reasoned that
accepting the State’s argument “would require [the] Court to read
something into the statute that simply is not there.” The
district court’s ruling in favor of the Smiths on their takings
claim obviated the need to reach their alternative claims.
¶8 The district court certified its summary judgment order
as final, and the State appealed. We have jurisdiction pursuant
to Utah Code section 78-2-2(3)(j) (2002).

No. 20040675 4
ANALYSIS
¶9 “Summary judgment is appropriate only when there is no
genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law.” Norman v. Arnold,
2002 UT 81, ¶ 15, 57 P.3d 997; see Utah R. Civ. P. 56(c). Here,
because there are no disputed issues of material fact, we need
only review the district court’s interpretation of section
78-18-1(3). That interpretation “presents a question of law,
which we review for correctness, granting no deference to the
[district] court.” Pugh v. Draper City, 2005 UT 12, ¶ 7, 114
P.3d 546.
¶10 On appeal, the State argues that the district court
erred in holding the split recovery provision unconstitutional
and that the provision did not effect an illegal taking.
Although the district court did not reach the separation of
powers and equal protection arguments, the State asserts that the
split recovery provision passes constitutional muster under these
provisions as well. Finally, the State contends that it is
entitled to postjudgment interest on the award. We hold that the
split recovery provision effected an unconstitutional taking and
therefore reach neither the separation of powers argument nor the
equal protection argument. Consistent with our holding on the
takings claim, we further hold that the State is not entitled to
any interest on the disputed portion of the award.
I. DID SECTION 78-18-1 EFFECT AN UNCONSTITUTIONAL TAKING?
¶11 Both the United States and Utah Constitutions contain a
prohibition against the taking of private property. Article I,
section 22 of the Utah Constitution states that “[p]rivate
property shall not be taken or damaged for public use without
just compensation.” The Fifth Amendment to the United States
Constitution, made applicable to the State under the Fourteenth
Amendment, Penn Central Transp. Co. v. New York City, 438 U.S.
104, 122 (1978), contains a similar prohibition. U.S. Const.
amend. V (stating that “nor shall private property be taken for
public use, without just compensation”).
¶12 “To recover under article I, section 22 [of the Utah
Constitution], a claimant must possess a protectable interest in
property that is taken or damaged for a public use.” Bagford v.
Ephraim City, 904 P.2d 1095, 1097 (Utah 1995). The Fifth
Amendment analysis is virtually identical. See Brown v. Legal
Found., 538 U.S. 216, 233 (2003) (noting that “[w]hen the
government physically takes possession of an interest in property

4 It may be more precise to say that our physical takings
jurisprudence mirrors the federal system’s jurisprudence in that
both require the taking of protected property without just
compensation. Compare Utah Const. art. I, § 22, with U.S. Const.
amend. V.
5 No. 20040675
for some public purpose, it has a categorical duty to compensate
the former owner” (internal quotation marks omitted)).4
¶13 We analyze whether the split recovery provision
effected an unconstitutional taking in two steps. We first
determine whether the Smiths had a protectable interest in the
disputed portion of the punitive damages judgment. We then
determine whether the Smiths’ interest, if any, was “taken”
within the meaning of article I, section 22 of the Utah
Constitution and the Fifth and Fourteenth Amendments to the
United States Constitution.
A. Did the Smiths Have a Protectable Interest in
the Disputed Portion of the Punitive Damages Judgment?
¶14 It has long been recognized that rights fixed by
judgment are a form of property protected by the takings clause.
In the seminal case of McCullough v. Virginia, 172 U.S. 102, 123-
24 (1898), the United States Supreme Court recognized:
It is not within the power of a legislature
to take away rights which have been once
vested by a judgment. Legislation may act on
subsequent proceedings, may abate actions
pending, but when those actions have passed
into judgment the power of the legislature to
disturb the rights created thereby ceases.
Id.
¶15 The first step in our analysis is therefore to
determine whether the Smiths had a vested interest in the
disputed portion of the punitive damages judgment. Though the
district court found that they did, the State argues that the
Smiths never acquired any interest in the disputed portion of the
judgment because the split recovery provision vested that portion
of the judgment in the State. The Smiths, on the other hand,
argue that the State’s interest in the award arose only when the
punitive damages were actually paid.
¶16 Our “primary objective” in interpreting the split
recovery provision “is to give effect to the legislature’s

No. 20040675 6
intent.” Gohler v. Wood, 919 P.2d 561, 562 (Utah 1996). The
legislature’s intent is manifested by the language it employed.
See Green River Canal Co. v. Olds, 2004 UT 106, ¶ 18, 110 P.3d
666. We may turn to secondary principles of statutory
construction or look to a provision’s legislative history only if
we find the provision ambiguous. Wilcox v. CSX Corp., 2003 UT
21, ¶ 8, 70 P.3d 85; see also Dep’t of Natural Res. v.
Huntington-Cleveland Irrigation Co., 2002 UT 75, ¶ 13, 52 P.3d
1257 (“Unless a statute is ambiguous, we will not look beyond the
plain language of the statute.”).
¶17 Because the first step in statutory construction is an
analysis of the language actually employed by the legislature, we
start with the language of the provision itself. Savage v. Utah
Youth Vill., 2004 UT 102, ¶ 18, 104 P.3d 1242. The 1989 version
of the split recovery provision provides:
In any judgment where punitive damages are
awarded and paid, 50% of the amount of the
punitive damages in excess of $20,000 shall,
after payment of attorneys’ fees and costs,
be remitted to the state treasurer for
deposit into the General Fund.
Utah Code Ann. § 78-18-1(3). The operative question is whether
this language vested the disputed portion of the judgment in the
Smiths or in the State.
¶18 We conclude that the statutory language gave the State
no interest in the judgment entered by the district court.
Rather, the State’s interest in the disputed portion of the
punitive damages award arose only when the judgment was actually
“paid.” Id. By its terms, the provision does not give the State
an interest in every punitive damages award. The statutory
language directing remittance of punitive damages awards to the
State is contingent. It applies only to that class of cases
described therein--those cases “where punitive damages are
awarded and paid.” Id. In fact, because the specified
contingency can be satisfied only when a judgment is paid, the
statute gives the State no interest whatsoever in the underlying
judgment. Once a judgment is paid, it is, by definition,
satisfied. Am. Sharecom, Inc. v. LDB Int’l Corp., 553 N.W.2d
433, 434 (Minn. Ct. App. 1996) (“Once a judgment is satisfied, it
ceases to exist . . . .”). The State’s only interest, therefore,
is one to the proceeds of punitive damages judgments. We
accordingly conclude that the entire interest in the judgment for
punitive damages vested in the Smiths.

5 As noted above, the split recovery provision has undergone
numerous amendments since 1989. It currently provides:
(a) In any case where punitive damages
are awarded, the judgment shall provide that
50% of the amount of the punitive damages in
excess of $20,000 shall, after an allowable
deduction for the payment of attorneys’ fees
and costs, be remitted by the judgment debtor
to the state treasurer for deposit into the
General Fund.
. . . .
(c) The state shall have all rights due
a judgment creditor until the judgment is
satisfied, and stand on equal footing with
the judgment creditor of the original case in
securing a recovery.
Utah Code Ann. § 78-18-1(3)(a), (c) (Supp. 2005) (emphasis
added). We recognize that the current version of the split
recovery provision requires the judgment debtor to pay the
State’s share directly to the State treasurer and makes the State
a judgment creditor. While we acknowledge that such attributes,
(continued...)
7 No. 20040675
¶19 Our conclusion is not only consistent with what the
statutory provision says, it is also consistent with what the
statutory provision does not say. It is significant that the
provision contains no language making the State a party to the
Smiths’ action or a judgment creditor in the Smiths’ punitive
damages award. There is no language requiring Fairfax to pay the
State’s share of the Smiths’ punitive damages award directly to
the State, nor is there language requiring the Smiths to hold the
State’s share as trustee. The Smiths had dominion and control
over the judgment until it was paid. The only plausible
conclusion is that the split recovery provision gave the State no
interest in the judgment itself. Rather, it gave the State an
interest in only the monetary proceeds of the Smiths’ judgment,
an interest that first arose when the judgment was satisfied.
¶20 The State suggests that we disregard both the
contingent structure of the provision and the plain meaning of
the term “paid” in order to give effect to the “reason, spirit
and sense of the legislation.” It argues that the word “paid”
speaks to the timing of any remittance to the State, not to the
vesting of the State’s interest. To support this construction,
the State urges us to consider secondary evidence of the
legislature’s intent. Specifically, it points to the legislative
history of the provision, to the caption of the provision, and to
the legislature’s subsequent amendment of the provision.5 While

5 (...continued)
if present in the 1989 version of the provision, would
dramatically affect our analysis, we need not, and do not, opine
on the constitutionality of the current version of the split
recovery provision.
No. 20040675 8
the State’s arguments are plausible in the abstract, they are not
grounded in the provision’s plain language. Because there is
only one plausible interpretation of the actual statutory
language, it is unambiguous, see State v. Willis, 2004 UT 93,
¶ 12, 100 P.3d 1218, and we may not consider the secondary
evidence advanced by the State, Funk v. Utah State Tax Comm’n,
839 P.2d 818, 820 (Utah 1992) (stating that we may rely on
captions as interpretative tools only when the statutory text is
ambiguous).
¶21 The State also defends the provision by invoking the
mantra that it is our duty to presume the validity of legislative
enactments and therefore to “resolve any reasonable doubts in
favor of constitutionality.” Willis, 2004 UT 93, ¶ 4. Only
reasonable doubts, however, can be resolved in favor of
constitutionality. So while the State urges us to rewrite the
statute under the guise of statutory “interpretation,” we must
resist the urge to infringe on the legislative domain.
¶22 As previously discussed, the 1989 version of the split
recovery provision limits the State’s interest in punitive
damages awards to those cases where “punitive damages are awarded
and paid.” Utah Code Ann. § 78-18-1(3). From this language, the
State invites us to hold that it has a vested interest in half
the amount of judgment creditors’ punitive damages judgments. It
asks us to do this in spite of (1) language explicitly stating
that the appropriate amount need be “remitted” only after the
punitive damages are “awarded and paid”; (2) a complete lack of
any language giving the State such an interest, making the
judgment creditor a trustee of the State’s share, or even
suggesting that the State may seek to enforce the judgment or
claim the right to initial payment of such awards; and (3) the
contingent nature of the State’s interest.
¶23 The radical change the State prescribes would
undoubtedly make the split recovery provision more
constitutionally appealing. But only the legislature, not this
court, can effect such a transformation. Although we must
“resolve any reasonable doubts in favor of constitutionality,”
Willis, 2004 UT 93, ¶ 4, we also must adhere to our role as
interpreters, not drafters, of legislation. See Bd. of Educ. v.
Salt Lake County, 659 P.2d 1030, 1037 (Utah 1983) (noting that,

6 Alaska’s split recovery provision, and the Alaska Supreme
Court’s treatment of it, is admittedly anomalous. In Evans v.
State, 56 P.3d 1046, 1057-59 (Alaska 2002), the Alaska Supreme
Court affirmed a trial court’s decision upholding the facial
constitutionality of a split recovery provision that did “not
grant the state the right to file or join a civil action to
recover punitive damages.” Alaska Stat. § 09.17.020(j) (Michie
1997). Evans is without precedential value because the court was
evenly divided, with two justices voting to affirm the trial
court and two voting to reverse. In Alaska, a split opinion
results in an affirmance of the trial court’s decision, Thoma v.
Hickel, 947 P.2d 816, 824 (Alaska 1997), but such affirmances
have no precedential effect, City of Kenai v. Burnett, 860 P.2d
1233, 1239 n.11 (Alaska 1993).
9 No. 20040675
while we “will continue to exercise [our] authority to interpret
the law,” we will “refrain from assuming the legislature’s task
of writing it”). The State essentially asks us to redraft the
provision, inserting language that the legislature did not and
removing language that the legislature selected, all to arrive at
an interpretation that, in our opinion, says the opposite of the
plain language the legislature actually employed. Our duty to
construe statutory provisions to avoid holding them
unconstitutional does not extend this far, and we refuse to
engage in the drastic rehabilitation the State requests.
¶24 Although we base our decision in this case on the plain
language of the Utah provision, we pause to address the parties’
arguments with respect to case precedent from other
jurisdictions. We acknowledge that a number of courts in our
sister states have upheld the constitutionality of split recovery
provisions. Unlike the Utah provision at issue here, however,
each of those respective provisions gave the state an interest in
the underlying punitive damages judgments. See, e.g., Cheatham
v. Pohle, 789 N.E.2d 467, 470 (Ind. 2003) (requiring judgment
debtors to “pay the punitive damage award to the clerk of the
court where the action is pending”); Fust v. Att’y Gen., 947
S.W.2d 424, 431 (Mo. 1997) (stating that state’s portion of
punitive damages award be deemed rendered in favor of the state);
DeMendoza v. Huffman, 51 P.3d 1232, 1235 (Or. 2002) (requiring
payment of the state’s portion directly to the state and
explicitly giving the state judgment creditor status).6
¶25 We find it persuasive that the 1989 version of Utah’s
split recovery provision is akin to the provision the Colorado
Supreme Court struck down in Kirk v. Denver Publishing Co., 818
P.2d 262 (Colo. 1991). The ill-fated provision in Kirk stated:

No. 20040675 10
“One-third of all reasonable damages
collected pursuant to this section shall be
paid into the state general fund. The
remaining two-thirds of such damages
collected shall be paid to the injured party.
Nothing in this subsection (4) shall be
construed to give the general fund any
interest in the claim for exemplary damages
or in the litigation itself at any time prior
to payment becoming due.”
Id. at 266 (quoting Colo. Rev. Stat. § 13-21-102(4) (1987)). The
Colorado court noted that the provision, like the provision we
address here, gave the state no “interest in the judgment prior
to collection.” Id. at 273. And we see little difference
between the Colorado provision’s explicit renunciation of such an
interest and the failure of Utah’s split recovery provision to
provide for such an interest. Like Utah’s 1989 version of the
split recovery provision, the Colorado provision gave the state
an “interest . . . not in the judgment itself but in the monies
collected on the judgment, and that interest [arose] only at a
point in time after the judgment creditor’s property interest in
the judgment has vested by operation of law.” Id. at 272. That
fact made the state’s interest more of a “statutory imposition of
[a] forced contribution on the person injured by the wrongful
conduct,” id. at 273, than a constitutionally permissible means
of prospectively limiting the availability of punitive damages.
In short, Utah’s split recovery provision is, for all intents and
purposes, identical to the provision invalidated by the Colorado
Supreme Court. We therefore hold that the 1989 version of Utah’s
split recovery provision did not grant the State any interest in
the Smiths’ punitive damages judgment. Rather, the State’s
interest was limited to an interest in the monetary proceeds of
that award.
¶26 Our conclusion that the State’s interest in the Smiths’
award was limited to an interest in the monetary proceeds of the
judgment, rather than an interest in the judgment itself, leads
to the conclusion that the Smiths owned the entire punitive
damages judgment. The Smiths, not the State, had standing to
defend the validity of the judgment and to enforce it as well.
When the judgment was satisfied, the Smiths obtained a
“completed, consummated right” to the proceeds. In short, they
had a vested property interest therein. See Banks v. Means, 2002
UT 65, ¶ 12 n.3, 52 P.3d 1190 (noting that a vested interest is
one “that has become a completed, consummated right for present
or future enjoyment” (internal quotation marks omitted)). Such
vested rights are protectable property interests for purposes of

11 No. 20040675
a takings analysis. See Jones v. Hardesty, 551 S.W.2d 543, 546
(Ark. 1977); Cleek v. Va. Gold Mining & Milling Co., 122 P.2d
232, 237 (Idaho 1942).
¶27 The State advances two arguments in an attempt to avoid
this conclusion. First, it asserts that because plaintiffs have
no vested right to punitive damages, the legislature was free to
prospectively limit the availability of these damages. Second,
it suggests that the mere existence of the split recovery
provision precludes the Smiths from claiming a protectable
interest in the award because it would be inherently unreasonable
for the Smiths to claim a protectable property interest in
something they knew they would eventually have to forfeit. We
find neither argument persuasive.
¶28 With respect to the first argument, we do not dispute
the State’s premise that the legislature may prospectively limit
the availability of punitive damages awards. But that is not
what occurred here. This case requires us to address neither the
nature of punitive damages nor the legislature’s power to abolish
them. Instead, it raises the question of whether the State may
assert an interest in the proceeds of the Smiths’ punitive
damages judgment.
¶29 With respect to the second argument, notice that the
State plans to unconstitutionally take an individual’s property
does not vitiate his interest in that property. If accepted,
such an argument would improperly elevate the mere existence of
the split recovery provision over its actual language, which, as
we have already concluded, gave the Smiths a protectable interest
in the entire judgment.
B. Did the Split Recovery Provision Allow the State
to Unconstitutionally Take the Smiths’ Property?
¶30 Having concluded that the Smiths had a protectable
property interest in the entire punitive damages award, we now
assess whether the split recovery provision effected an
unconstitutional taking of that interest. Because taking the
Smiths’ money denied them the use of that money, it constituted a
taking for which just compensation is constitutionally required.
See Bagford, 904 P.2d at 1097; Colman v. Utah State Land Bd., 795
P.2d 622, 626 (Utah 1990) (noting that “a taking is any
substantial interference with private property which destroys or
materially lessens its value, or by which the owner’s right to
its use and enjoyment is in any substantial degree abridged or
destroyed” (internal quotation marks omitted)). The split
recovery provision is therefore unconstitutional.

No. 20040675 12
II. IS THE STATE ENTITLED TO POSTJUDGMENT INTEREST
ON THE PUNITIVE DAMAGES AWARD?
¶31 The State argues that it is entitled to the
postjudgment interest that has accrued on the disputed portion of
the punitive damages award. This argument, however, is premised
on the assumption that the disputed portion of the award belongs
to the State. Our conclusion that the disputed portion of the
award actually belongs to the Smiths vitiates the State’s claim.
Because the postjudgment interest accrued on the Smiths’ money,
the Smiths are entitled to that interest.
CONCLUSION
¶32 The 1989 version of the split recovery provision did
not give the State a vested interest in the Smiths’ punitive
damages award. Accordingly, it effected an unconstitutional
taking of the Smiths’ property because it allowed the State to
appropriate a portion of the Smiths’ award without providing
concomitant compensation. Our conclusion on this point obviates
the need for us to consider the Smiths’ alternative arguments
with respect to the constitutionality of the provision. We
therefore affirm the judgment of the district court.
---
¶33 Chief Justice Durham, Associate Chief Justice Wilkins,
Justice Durrant, and Justice Nehring concur in Justice Parrish’s
opinion.