Boyd v. Bevilacqua

• Court: California Court of Appeals
• Citation: 55 Cal.Rptr. 610,247 Cal.App.2d 272
• Decision Date: 16 December 1966
• Parties: James BOYD III and Sterling B. Doughty, Plaintiffs, Cross-Defendants and Respondents, v. Edward U. BEVILACQUA and Thomas H. Bevilacqua, individually and as copartners doing business under the name and style of the Glen Company, Defendants, Cross-Complainants and Appellants, and Bevit Enterprises, Inc., and August J. Marra, Defendants and Appellants. Civ. 22538.

Page 610

55 Cal.Rptr. 610

247 Cal.App.2d 272

James BOYD III and Sterling B. Doughty, Plaintiffs, Cross-Defendants and Respondents, v. Edward U. BEVILACQUA and Thomas H. Bevilacqua, individually and as copartners doing business under the name and style of the Glen Company, Defendants, Cross-Complainants and Appellants, and Bevit Enterprises, Inc., and August J. Marra, Defendants and Appellants.

Civ. 22538.

Court of Appeal, First District, Division 1, California.

Dec. 16, 1966.

As Amended Jan. 26, 1967.

Hearing Denied Feb. 8, 1967.

Joseph L. Alioto, Gerhard Stoll, San Francisco, Allen H. Trant, Bowman & Trant, Oakland, for appellants.

Webster V. Clark, Ricardo J. Hecht, Rogers, Clark & Jordan, San Francisco, for respondents.

SULLIVAN, Presiding Justice.

Defendants ¹ and cross-complainants ² appeal from an adverse judgment awarding plaintiffs compensatory and punitive damages against defendants and denying cross-complainants the Bevilacquas all recovery on their cross-complaint. As to the complaint, the judgment was entered on a jury verdict awarding plaintiffs compensatory damages in the sum of $65,750 and punitive damages in the sum of $34,250, subsequently ordered reduced to $50,000 compensatory and $20,000 punitive damages, pursuant to a remission filed by plaintiffs as a condition for the denial of defendants' motion for a new trial. ³ As to the cross-complaint, the judgment was entered after a trial before the court sitting without a jury. Defendants and cross-complainants also appeal from the court's order denying their motions for a new trial ⁴ and for a judgment notwithstanding the verdict.

The present controversy arises out of an oral joint venture agreement entered into by the parties for the purpose of purchasing and developing real property near Lemoore in Kings County. Initially, as it will appear, the members of the joint venture were plaintiff Boyd, R. E. Blake and defendants Bevilacquas, Marra and Cullom. ⁵ Later on plaintiff Doughty replaced Blake. The land development was inspired by the construction of a U.S. Naval Air Base at Lemoore in the expectation that an influx of civilian and service personnel would create a demand for housing and commercial establishments. Such hopes were not to materialize.

The subject property owned by the Kate Beaver Trust first came to the attention of Blake in the early part of 1960. It consisted of approximately 60 acres of undeveloped land located outside but close to the Lemoore city limits, on the main highway to Fresno and about six miles from the Naval Air Base. Blake was a land developer, had been in the general contracting business, and had been employed by a corporation specializing in building banks and developing motels. He proceeded to investigate the potential of the area for subdivision development, inquired as to the feasibility of having the property annexed by the City of Lemoore (City), and entered into discussions with one of the trustees and with the attorney for the trust.

On April 1, 1960 Blake obtained and became part owner of an option ⁶ to purchase the property for $150,000 payable as follows: $35,000 at the time of the exercise of the option and the balance of $115,000 to be represented by a promissory note of the buyers secured by a first deed of trust on the property. By its terms the option was to expire initially at 10 a.m. Pacific Standard Time on August 1, 1960; however, it was subsequently extended. At the time of the option there were no other subdivisions, apartment houses or other multiple dwellings, or commercial developments between the subject property and the Naval Air Base.

Controversy followed by litigation arose between Homchick and Paul on the one side and Blake on the other. In the early part of September 1960 Blake bought out his two associates for $15,000 pursuant to a so-called 'buy-out' agreement entered into by all three parties and their respective wives on September 2, 1960. This money was obtained by Blake from James H. Cullom (see fn. 5, Ante) who had borrowed it from his father and as a result Cullom obtained a ten per cent interest in the option. Under a written agreement entered into by them on September 8, 1960, ⁷ the so-called 'option group' consisted of Blake and his wife (80%), Longacre and Watson ⁸ (10%) and Cullom (10%).

However the parties were in need of financing in order to exercise the option. In their agreement of September 8 they listed these requirements as follows: $35,000 on or before October 14, 1960 under the terms of the option; $15,000 at that time to reimburse Cullom and $10,000 for operating expenses in connection with the development of the property. It was therefore at this point, in response to efforts by the option group to obtain financing, that the remaining parties to this action entered the picture. Cullom, plaintiff Boyd and defendant Marra were all employed by the same insurance company and, through Cullom, the last two persons became interested in the undertaking. It was through Boyd, reputed to have 'some good contacts for finance money' that arrangements were made with defendants, the Bevilacquas. The parties agree that the first meeting with the Bevilacquas took place on September 23, 1960.

Defendants Edward and Thomas Bevilacqua, who were cousins, had been builders and tract developers for many years, engaged not only in constructing homes but in developing land, selling real estate, promoting commercial areas and building commercial structures and shopping centers. As previously mentioned (see fn. 2, Ante), they were partners in the Glen Company. They also operated through the Bevilacqua Development Company (Development Co.), a corporation of which all of the stock was owned by said defendants and other members of their family. Edward and Thomas also owned a majority of the stock of Bevit Enterprises, Inc. (Bevit) a corporation used by them to handle real estate sales, general insurance and property management. The record reflects that their operations were extensive and diversified.

At the first meeting held by Blake, Cullom and Marra with the Bevilacquas on September 23, 1960, Blake outlined the project presenting a tentative subdivision map prepared by his engineers and cost estimates. The parties also discussed financing, money advances by the Bevilacquas, the necessity of returning the $15,000 to Cullom, the urgency of reaching some decision before October 14, 1960, the date to which the option had just been extended, and the basis of their participation. On the last point, according to Blake, discussion ensued 'about a fifty-fifty situation all the way through for our option group, and fifty per cent for them, * * *.' Under this arrangement, the Bevilacquas were to obtain the financing while Blake and his associates were to attempt to effectuate an annexation of the property by the City. The Bevilacquas indicated that they were interested in the project but that they first desired to inspect the property with Blake's engineers, to review the data pertinent to its development, and generally to determine whether the undertaking was practicable. Arrangements were made for all of the parties to go to Lemoore and inspect the property.

The trip was made during the following week. At this time they inspected the subject property, visited the Naval Base, and discussed the project with city officials and with various officers at the Base. Shortly after their return the parties met with Navy officials at the Alameda Naval Air Station for the purpose of obtaining information as to increased personnel in Lemoore.

On October 10, 1960 the Bevilacquas and the option group entered into an oral joint venture agreement to develop between 14 and 18 acres of the subject property for commercial and multiple dwelling purposes. According to the agreement, the option group was to have a 50 per cent interest in only the 14 to 18 acres with the remaining 50 per cent in the Bevilacquas; and the balance of the property was to belong to the Bevilacquas to do with as they wished, all profits realized from such balance to be theirs exclusively. ⁹

At this point we pause in the narrative to note two events which had occurred in the meantime and a third shortly after the joint venture agreement. The first was the change in the composition of the option group. By an agreement entered into on September 30, 1960 this group had become Blake (70%), Cullom (10%), Boyd (10%) and Marra (10%), the attorneys Longacre and Watson having been bought out for $1,500 apparently upon the insistence of the Bevilacquas. ¹⁰ The second event was the extension of the option period. On October 5, 1960 the Bevilacquas, through their partnership Glen as buyer, had deposited $10,000 in escrow with a title insurance company at Hanford, under conditions giving said buyer 90 days to arrange for satisfactory financing and for annexation of the land by the City of Lemoore. Actually the effect of these provisions was to extend the option for 90 days from October 5, 1960. The third event involved defendant Marra who terminated his employment with the insurance company and eventually became an employee of the Bevilacquas about October 15, 1960. ¹¹ However he remained a member of the option group until the altercation leading to the instant action arose.

During October and November Blake proceeded with his efforts to obtain an annexation of the property to the City of Lemoore. In this he was assisted by Marra who by this time was acting on behalf of the Bevilacquas and Glen, the buyer. Finally on December 20, 1960 an agreement was entered into between Glen, as the developer of the property, and the City under which the latter consented to the annexation and undertook to effectuate it promptly and the former agreed to install at its own expense certain specified subdivision improvements. It was at about this time that the Bevilacquas requested that Blake be eliminated from the option group. There was...