State v. Stewart , 438 P.3d 515 ( 2018 )

This opinion is subject to revision before final
publication in the Pacific Reporter
2018 UT 24IN THE
SUPREME COURT OF THE STATE OF UTAH
STATE OF UTAH,
Appellant,
v.
SCOTT RICHARD STEWART,
Appellee.
No. 20160484
Filed June 12, 2018
On Appeal of Interlocutory Order
Third District, Salt Lake
The Honorable Judge Randall N. Skanchy
No. 131911542
Attorneys:
Sean D. Reyes, Att’y Gen., John J. Nielsen, Asst. Solic. Gen.,
Jacob S. Taylor, Asst. Att’y Gen., Salt Lake City, for appellant
J. Morgan Philpot, Alpine, for appellee
JUSTICE PEARCE authored the opinion of the Court in which
CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE LEE,
JUSTICE HIMONAS, and JUSTICE PETERSEN joined.
JUSTICE PEARCE, opinion of the Court:
INTRODUCTION
¶1 The State charged Scott Richard Stewart with, among other
crimes, one count of participating in a pattern of unlawful activity.
The State also alleged that Stewart had committed securities fraud
and that some of those crimes were part of his pattern of unlawful
activity. Because the statute of limitations had run on a number of
the alleged acts, Stewart moved to exclude them. Stewart argued that
a pattern of unlawful activity cannot be based on crimes that the
State could not separately charge because the statute of limitations
had run. The district court agreed and granted Stewart’s motion. The
STATE v. STEWART
Opinion of the Court
State seeks interlocutory review of that decision. This requires us to
interpret the Pattern of Unlawful Activity Act, Utah Code sections
76-10-1601 to 1609. We conclude that the statute does not prevent the
State from using evidence of acts on which the statute of limitations
has expired to prove a pattern of unlawful activity. We reverse the
district court’s order and remand.
BACKGROUND
¶2 In 2013, the State charged Stewart with, among other things,
thirteen counts of securities fraud or, in the alternative, thirteen
counts of communications fraud. 1 The State also charged Stewart
with one count of a pattern of unlawful activity. After the court
bound Stewart over for trial, we decided State v. Taylor, 2015 UT 42,
349 P.3d 696, and State v. Kay, 2015 UT 43, 349 P.3d 690. Those cases
concluded that securities fraud and communications fraud are not
continuing offenses. 2 Taylor, 2015 UT 42, ¶ 24; Kay, 2015 UT 43, ¶ 23.
These rulings undercut the State’s prosecution because the State
relied on the theory that some of the counts of securities fraud and
communications fraud were continuing offenses. In response, the
State filed an amended information to exclude several of the charges
on which the statute of limitations had expired. The amended
information charged two counts of securities fraud, one count of sale
of an unregistered security, one count of unlicensed investment
advisor activity, and one count of a pattern of unlawful activity.
¶3 The State indicated that it planned to call twelve of Stewart’s
investors to testify about the investments they made on Stewart’s
_____________________________________________________________
1 Because this case comes to us on an interlocutory appeal, the
allegations we recite have not been tried and therefore remain
allegations. “On interlocutory review, we recount the facts as alleged
and in a light most favorable to the ruling below.” State v. Taylor,
2015 UT 42, ¶ 2 n.2, 349 P.3d 696.
2 In Taylor, we explained that generally, the limitations period for
an offense “begins to run when a crime is ‘committed.’” 2015 UT 42,
¶ 12 (citation omitted). However, “the Legislature has structured the
elements of some offenses in such a way that a perpetrator continues
to commit the offense so long as he continues to satisfy the
elements.” Id. When structured this way, “criminal liability attaches
when every element is satisfied, [but] the statute of limitations does
not begin to run until the perpetrator ceases to satisfy the elements of
the crime. At that point, the whole arc of criminal conduct is
aggregated into a single criminal violation.” Id.2
Cite as: 2018 UT 24Opinion of the Court
advice—investments they claim Stewart had defrauded them into
making. In other words, the State intended to call witnesses to testify
concerning the untimely charges of securities fraud that the State
had voluntarily dismissed in response to Kay and Taylor. The State
represented that it planned to use the investor testimony to prove
the pattern of unlawful activity charge. Stewart moved to exclude
that testimony arguing that time-barred offenses cannot support a
pattern of unlawful activity.
¶4 The district court excluded the evidence. The district court
explained, “Kay clarifies that securities fraud is not a continuing
offense, and a claim for pattern of unlawful activity must be
predicated on acts that, themselves, would be chargeable.” 3 The
district court quoted Kay’s conclusion that “if the actual
communication falls outside the statute of limitations, the State
cannot rely on the presence of a predicate scheme to extend the
limitations period.” (Quoting Kay, 2015 UT 43, ¶ 18). The district
court concluded that “[b]ecause the predicate acts relied on by the
State regarding [the original victims] are outside the statute of
limitations for a communications fraud claim, they may not be used
to prove the pattern of unlawful activity charge.” We granted the
State’s petition for interlocutory appeal to review that conclusion.
_____________________________________________________________
3 This appears to be a misstatement, as Kay involved
communications, and not securities, fraud. 2015 UT 43, ¶ 1. In its
amended information, the State explained that “[t]he alleged
unlawful acts which constitute the pattern of unlawful activity
include but are not limited to [instances of securities fraud] as
described above in counts 1 through 4.” Although not entirely clear
from the amended information, it appears that the State intended to
rely exclusively on alleged securities fraud to establish the pattern of
unlawful activity. Further, the proposed jury instructions refer only
to securities fraud, sale of an unregistered security, and unlicensed
investment advisor activity in its pattern of unlawful activity
instruction. And finally, the State explains in its brief that the district
court “correctly noted that the relevant predicate acts here are
securities fraud charges, but appears to mistakenly refer to them
later in its order as communications fraud charges.” However,
whether the underlying unlawful activities are instances of
communications fraud or instances of securities fraud is immaterial
to our analysis.
3
STATE v. STEWART
Opinion of the Court
ISSUE AND STANDARD OF REVIEW
¶5 The State contends that the trial court erred by excluding
evidence of predicate acts that were part of the alleged pattern of
unlawful activity. The State’s challenge requires us to interpret
Utah’s Pattern of Unlawful Activity Act. Specifically, we must
determine whether the prosecution may establish a pattern of
unlawful activity using evidence of individual acts that are time
barred under the relevant statute of limitations. See UTAH CODE
§ 76-10-1602(2). “We review questions of statutory interpretation for
correctness, affording no deference to the district court’s legal
conclusions.” Marion Energy, Inc. v. KFJ Ranch P’ship, 2011 UT 50,
¶ 12, 267 P.3d 863 (citation omitted).
ANALYSIS
Utah’s Pattern of Unlawful Activity Act
¶6 Utah’s Pattern of Unlawful Activity Act (Act) criminalizes
certain acts involving a pattern of unlawful activity. The Act
proscribes a principal of a pattern of unlawful activity from using or
investing the income derived from the unlawful activities. UTAH
CODE § 76-10-1603(1). It also penalizes the acquisition or
maintenance of an interest in or control of any enterprise that
undertakes a pattern of unlawful activity. Id. § 76-10-1603(2). Finally,
the Act forbids a person from participating in, or conducting, the
affairs of an enterprise engaged in a pattern of unlawful acts. Id.
§ 76-10-1603(3). To understand the Act and this dispute, it helps to
first focus on the definitions of “unlawful activity” and “pattern of
unlawful activity” as well as the Act’s five-year “lookback” period.
¶7 Unlawful activity means “to directly engage in conduct or to
solicit, request, command, encourage, or intentionally aid another
person to engage in conduct which would constitute any offense”
listed in the statutory definition. Id. § 76-10-1602(4). Unlawful
activity also means “to attempt or conspire to engage in an act which
would constitute any of those offenses, regardless of whether the act
is in fact charged or indicted by any authority or is classified as a
misdemeanor or a felony.” Id. The statute lists ninety crimes and
categories of crimes that can constitute unlawful activity. Id. 4
_____________________________________________________________
4 By way of example, these crimes include criminal violations of
the Environmental Quality Code, criminal homicide, causing a
catastrophe, theft, theft by deception, criminal usury, and mortgage
fraud. See UTAH CODE § 76-10-1602(4)(b), (l), (q), (v), (w), (ll), (qq).
4
Cite as: 2018 UT 24Opinion of the Court
¶8 And a pattern of unlawful activity means:
engaging in conduct which constitutes the commission
of at least three episodes of unlawful activity, which
episodes are not isolated, but have the same or similar
purposes, results, participants, victims, or methods of
commission, or otherwise are interrelated by
distinguishing characteristics. Taken together, the
episodes shall demonstrate continuing unlawful
conduct and be related either to each other or to the
enterprise.
Id. § 76-10-1602(2).
¶9 The Act also contains a five-year lookback period. The statute
requires that “[a]t least one of the episodes comprising a pattern of
unlawful activity shall have occurred after July 31, 1981. The most
recent act constituting part of a pattern of unlawful activity as
defined by this part shall have occurred within five years of the
commission of the next preceding act alleged as part of the pattern.”
Id.
Time-Barred Acts May Be Used to Establish
a Pattern of Unlawful Activity
¶10 The district court concluded that to be considered part of the
pattern, Stewart’s alleged fraud must have occurred within the
statute of limitations for a fraud claim. In other words, under the
district court’s interpretation, the State has to base the unlawful
pattern upon crimes for which the statute of limitations has not run.
Stewart urges us to accept this interpretation.
¶11 The State contends that the trial court misinterpreted the
Act’s plain language. The State argues that a straightforward reading
of the statute reveals that time-barred counts can be used to
demonstrate a pattern of unlawful activity.
¶12 “It is well settled that when faced with a question of
statutory interpretation, ‘our primary goal is to evince the true intent
and purpose of the Legislature.’” Marion Energy, Inc. v. KFJ Ranch
P’ship, 2011 UT 50, ¶ 14, 267 P.3d 863 (citation omitted). “The best
evidence of the legislature’s intent is ‘the plain language of the
statute itself.’” Id. (citation omitted). We “presume that the
legislature used each word advisedly and read each term according
to its ordinary and accepted meaning.” Turner v. Staker & Parsons
Cos., 2012 UT 30, ¶ 12, 284 P.3d 600 (citation omitted). “Wherever
possible, we give effect to every word of a statute, avoiding ‘[a]ny
5
STATE v. STEWART
Opinion of the Court
interpretation which renders parts or words in a statute inoperative
or superfluous.’” Id. (alteration in original) (citation omitted).
¶13 Additionally, when interpreting statutes, “we ‘presume[]
that the expression of one [term] should be interpreted as the
exclusion of another,’” and we “seek to give effect to omissions in
statutory language by presuming all omissions to be purposeful.”
Marion Energy, 2011 UT 50, ¶ 14 (alterations in original) (citation
omitted). However, “our plain language analysis is not so limited
that we only inquire into the individual words and subsections in
isolation; our interpretation of a statute requires that each part or
section be ‘construed in connection with every other part or section
so as to produce a harmonious whole.’” Anderson v. Bell, 2010 UT 47,
¶ 9, 234 P.3d 1147 (emphasis omitted) (citation omitted).
¶14 As an initial matter, we note that the Legislature could have
drafted the statute to expressly permit or reject the use of criminal
acts that are outside the statute of limitations. It did not, and in the
absence of an express statement, we are left to examine the statute
for the best textual indications of what the Legislature intended. The
State argues that the best interpretation of the statute is one that
permits the pattern to include untimely criminal acts because the
contrary interpretation—the one the district court adopted—renders
the five-year lookback period meaningless. We agree.
¶15 The lookback period requires that “[t]he most recent act
constituting part of a pattern . . . occur[] within five years of the
commission of the next preceding act alleged as part of the pattern.”
UTAH CODE § 76-10-1602(2). 5 By its plain language, the lookback
period requires that no more than five years separate the
penultimate episode of unlawful activity from the most recent
episode in the pattern. As noted above, the Act does not refer to the
statute of limitations for the underlying crimes.
¶16 An examination of the definition of “unlawful activity”
suggests that the Legislature intended that the lookback would serve
as the only temporal consideration to establish a pattern of unlawful
activity. Ninety crimes and categories of crimes, including both
felonies and misdemeanors, fall within the definition of unlawful
activity; each has its own statute of limitations. See id.
_____________________________________________________________
5 The lookback period also requires that at least one of the
episodes comprising a pattern of unlawful activity occur after July
31, 1981. UTAH CODE § 76-10-1602(2). That provision is not at issue
here.
6
Cite as: 2018 UT 24Opinion of the Court
§ 76-10-1602(4).Prosecution for misdemeanor crimes, some of which
fall under the definition of unlawful activity must be commenced
within two years after the commission of the crime. Id. § 76-1-
302(1)(b). Prosecution for felony crimes, subject to several
exceptions, must be commenced within four years after commission
of the crime. Id. § 76-1-302(1)(a). And certain crimes are not subject to
a statute of limitations at all. Id. § 76-1-301(2). For example, the
definition of unlawful activity includes assault, a misdemeanor
subject to a two-year statute of limitations. Id. §§ 76-10-1602(4)(j),
76-5-102(2),(3), 76-1-302(1)(b). The definition also includes
aggravated assault, a felony subject to a four-year statute of
limitations. Id. §§ 76-10-1602(4)(j), 76-5-103(2), (3), 76-1-302(1)(a).
And the definition encompasses aggravated kidnapping, a felony
that is not subject to a statute of limitations. Id. §§ 76-10-1602(m),
76-1-301(2)(f).
¶17 If we read the statute to require individual instances of
unlawful activity to be timely under their relevant statutes of
limitations, we would read the five-year lookback out of the statute.
By way of example, imagine a prosecutor who relies on three
instances of misdemeanor assault to establish a pattern of unlawful
activity. If the statute required all three instances of assault to be not
time barred, all three instances must occur within the two year
statute of limitations for misdemeanor crimes. This interpretation
renders the five-year lookback period meaningless. And when faced
with competing interpretations, we generally prefer the one that
breathes meaning into each provision of the statute. See Oliver v.
Utah Labor Comm’n, 2017 UT 39, ¶ 21, --- P.3d --- (“A proposed
interpretation that is plausible in isolation may . . . ‘lose[] its
persuasive effect when we [seek to] harmonize [it] with the rest of’
the statutory scheme.” (alterations in original) (citation omitted)); In
re J.M.S., 2011 UT 75, ¶ 22, 280 P.3d 410 (“In essence, statute[s]
should be construed . . . so that no part [or provision] will be
inoperative or superfluous, void or insignificant, and so that one
section will not destroy another.” (alterations in original) (omission
in original) (citation omitted)).
¶18 Stewart’s main counter to the State’s argument focuses on
the Act’s definition of unlawful activity. The statute defines
unlawful activity, in part, as conduct “which would constitute any
offense.” UTAH CODE § 76-10-1602(4). Stewart argues that conduct
which falls outside the limitations period is not chargeable and
therefore cannot be deemed to be an offense. And Stewart finds
some superficial support for that argument in our jurisprudence.
7
STATE v. STEWART
Opinion of the Court
¶19 In State v. Crank, we noted that a “statute of limitations is not
a mere limitation on penalty, but is a bar to prosecution. . . . The
statute runs against the filing of [a] complaint or information;
against the attempt to prosecute.” 142 P.2d 178, 193 (Utah 1943). We
concluded that “in effect, that as far as such offense is concerned, a
man may not in law be considered as having committed it; he may
not, within the spirit of the law be properly accused thereof or
charged therewith.” Id. at 193–94. We ultimately held that a
“[d]efendant has a right to insist that a complaint or information in
as far as it charges an offense barred by limitations be quashed.” Id.
at 193.
¶20 The flaw in Stewart’s argument is that although a statute of
limitations may serve as a bar to prosecution, it does not negate the
illegality of conduct. In other words, a criminal act does not cease to
be an offense just because the State cannot properly charge the
defendant with the crime. This becomes plain when we remember
that a “criminal statute of limitations is an affirmative defense that
can be forfeited if not raised before or during trial.” State v. Jackson,
2011 UT App 318, ¶ 35, 263 P.3d 540, cert. denied, 272 P.3d 168 (Utah
2012). Thus, our general discussion in Crank does not mandate a
different result than the one we reach.
¶21 Finally, we note that the district court relied, in part, on
language from State v. Kay, 2015 UT 43, 349 P.3d 690, to reach its
conclusion. The court explained that Kay clarifies that
communications fraud is not a continuing offense, and “a claim for
pattern of unlawful activity must be predicated on acts that,
themselves, would be chargeable.” 6 Relying on Kay, the court
explained that “‘if the actual communication falls outside the statute
of limitations, the State cannot rely on the presence of a predicate
scheme to extend the limitations period.’” (Quoting id. ¶ 18). The
court concluded that “[b]ecause the predicate acts relied on by the
State . . . are outside the statute of limitations for a communications
_____________________________________________________________
6 The district court’s order states that “Kay clarifies that securities
fraud is not a continuing offense . . . .” However, Kay examined the
issue of whether or not communications fraud is a continuing offense.
2015 UT 43, ¶ 1. In Kay’s companion case, State v. Taylor, we relied on
similar reasoning to conclude that securities fraud is not a
continuing offense. 2015 UT 42, ¶¶ 18–24, 349 P.3d 696. Although it
is unclear whether the district court intended to rely on Kay or
Taylor, the logic of neither case answers the question presented here
for the reasons discussed above.
8
Cite as: 2018 UT 24Opinion of the Court
fraud claim, they may not be used to prove the pattern of unlawful
activity charge.”
¶22 Kay examined the question of whether or not
communications fraud is considered a continuing offense. Id. ¶ 9.
We concluded that communications fraud is not a continuing
offense, despite the State’s argument that the language “‘scheme or
artifice’ compels the conclusion that communications fraud is a
continuing offense inasmuch as ‘schemes continue as long as they
are in operation.’” Id. ¶ 18. We acknowledged that “[a]mple
authority recognizes that an ongoing criminal design or scheme is
not the same as a continuing offense[,]” and “[e]ach are specific
terms of art . . . .” Id. ¶ 19. The district court relied on our conclusion
that “if the actual communication falls outside the statute of
limitations, the State cannot rely on the presence of a predicate
scheme to extend the limitations,” id. ¶ 18, but this conclusion does
not speak to the question of whether those communications could be
used to prove an unlawful pattern.
¶23 The district court also relied on other language in Kay that
suggested that the underlying instances of unlawful activity must be
within the statute of limitations to form the basis of a pattern charge.
After concluding that the charges for communications fraud were
untimely, we noted that “because the pattern of unlawful activity
charge was predicated on the four [untimely] charges of
communications fraud, the district court correctly dismissed all of
the charges . . . .” Id. ¶ 23. Although this language supports the
district court’s interpretation, in Kay we were not squarely presented
with the issue that the State presses here—whether or not a pattern
of unlawful activity may be based on untimely acts. In Kay, the State
did not argue that the pattern of unlawful activity charge could
stand alone without the underlying communications fraud charges.
Nor did the State argue that anything else could sustain a pattern of
unlawful activity charge. And because we were not presented with
the issue in Kay, the language the district court relied upon—which
comprises one sentence devoid of analysis—did not examine the
statute or consider the arguments that the parties raise here.
¶24 More specifically, we did not address the five-year lookback
period provision in Kay, nor did the parties advance an argument
about its significance in interpreting the statute. Here, we are faced
with a more specific problem. We are asked to decide, even if a
pattern of unlawful activity charge is not a continuing offense,
whether individual crimes that are outside of the relevant statute of
limitations can form the basis of the charge. Here, the parties placed
this argument squarely before us, and after considering conflicting
9
STATE v. STEWART
Opinion of the Court
interpretations, we conclude that the reading that gives meaning to
the five-year lookback provision is the better reading. Accordingly,
we disavow the sentence in Kay that could be read to prohibit the
use of untimely predicate acts to establish a pattern of unlawful
activity.
CONCLUSION
¶25 We conclude that the best reading of the Pattern of
Unlawful Activity Act permits the State to base a pattern of unlawful
activity on crimes on which the statute of limitations has expired. We
reverse the district court’s decision and remand.
10