## Facts

- McGillis Investment Company, LLP (MIC), through its principal Richard McGillis, financed commercial real estate loans; Paul Thurston and related First Interstate entities (FIF) sourced and evaluated loans and received origination fees.
- In 2003, MIC funded a $1,850,000 loan to Kersey Commercial Park, LLC to purchase roughly 63 acres in Kersey, Colorado (the Kersey Property).
- After default and foreclosure-related events, MIC and FIF disputed an assignment executed by MIC in favor of FIF concerning the Kersey transaction.
- MIC asserted the assignment was limited in purpose (to allow FIF to pursue claims against appraisers) and did not transfer beneficial ownership of the Kersey Property.
- FIF asserted the assignment transferred all rights/ownership interests to FIF and could be asserted against MIC; after MIC obtained a favorable judgment in earlier Utah litigation involving the parties’ broader relationship, FIF recorded the assignment in Colorado.
- MIC filed a Colorado action seeking quiet title to the Kersey Property and damages for breach of fiduciary duty and related theories.
- After an eight-day jury trial, the jury awarded MIC $1,300,625 and fee simple title to the Kersey Property; the trial court entered judgment on the verdict.
- On appeal, FIF challenged (a) submission to the jury of when MIC knew or should have known of FIF’s adverse ownership claim, and (b) evidentiary rulings and instructions permitting an adverse inference from nonparty Jonathan Sysum’s invocation of the Fifth Amendment (while instructing no inference as to another nonparty, Matthew Sysum).

## Issues

1. Whether the trial court properly submitted to the jury the factual question of when MIC knew or should have known that FIF was asserting an adverse ownership claim under the assignment, given the effect of that timing on defenses such as accrual-related limitations and preclusion theories.
2. Whether the trial court abused its discretion by allowing the jury to draw an adverse inference from a nonparty witness’s invocation of the Fifth Amendment in a civil case, and by giving different instructions for two nonparty witnesses who invoked the privilege.

## Decision

- The Colorado Court of Appeals affirmed the judgment in full.
- The court held the jury properly decided when MIC knew or should have known of FIF’s adverse claim under the assignment because the evidence permitted competing inferences.
- The court held the trial court did not abuse its discretion in admitting and permitting an adverse inference from Jonathan Sysum’s Fifth Amendment invocation because there was independent evidence linking him to the alleged misconduct and the inference’s probative value was not outweighed by unfair prejudice.
- The court upheld instructing the jury to draw no inference from Matthew Sysum’s invocation because the evidentiary record did not similarly connect him to the disputed conduct.
- The damages award ($1,300,625) and quiet-title award (fee simple ownership of the Kersey Property) remained in place.

## Legal Principles

- When a claim or defense turns on when a party “knew or should have known” of an injury or adverse claim, the determination is generally a fact question for the jury unless the evidence supports only one inference.
- In civil cases, a factfinder may draw an adverse inference from a nonparty witness’s invocation of the Fifth Amendment when supported by independent evidence connecting the witness to the alleged wrongdoing and when the inference is relevant and not unfairly prejudicial.
- Trial courts may provide different Fifth Amendment-related instructions for different witnesses based on differences in the evidentiary foundation linking each witness to the underlying conduct.
- Appellate review is deferential to jury factfinding and to trial-court evidentiary and instructional decisions made within the bounds of discretion.

## Conclusion

The court affirmed a jury verdict quieting title in MIC and awarding damages, holding that the timing of MIC’s knowledge of FIF’s adverse claim was properly left to the jury and that, in a civil trial, a nonparty’s Fifth Amendment invocation may support an adverse inference when independently corroborated and not unfairly prejudicial.


McGillis Inv. Co., LLP v. First Interstate Fin. Utah LLC, 370 P.3d 295 (Colo. App. 2015)