Jackson v. Radtke

• Decision Date: 27 March 1984
• Docket Number: No. WD,WD
• Citation: 673 S.W.2d 40
• Parties: Robert W. JACKSON, Appellant, v. Jerald L. RADTKE, et al., Respondents. 32952.
• Court: Missouri Court of Appeals

Page 40

673 S.W.2d 40

Robert W. JACKSON, Appellant, v. Jerald L. RADTKE, et al., Respondents.

No. WD 32952.

Missouri Court of Appeals Western District.

March 27, 1984.

Motion for Rehearing and/or Transfer to

Supreme Court Overruled and Denied

May 29, 1984.

Application to Transfer Denied

July 17, 1984.

Donald E. Raymond, Kansas City, for appellant.

James M. Ramsey, Kansas City, for respondents.

Before PRITCHARD, P.J., and MANFORD and NUGENT, JJ.

NUGENT, Judge.

Robert W. Jackson brought this action for compensation due under a contract of employment with Condelco, Inc. Jackson also joined as defendants Jerald L. Radtke, Brush Creek Town Homes Development Corporation, Brush Creek Town Homes I, Ltd., Brush Creek Town Homes II, and Simon Company, Inc., on the theory that the parties were liable as joint venturers. At the close of the evidence, the trial court directed a verdict in favor of all defendants except Condelco, Inc. Thereafter, in accordance with the jury verdict in favor of Condelco, the court entered judgment against the plaintiff. We affirm the judgment.

On this appeal, plaintiff complains that the trial court erred in directing verdicts against him, in excluding certain evidence of a partnership between the defendants and in excluding evidence of negotiations leading up to the contract.

This case rises out of a plan devised by Housing Development Corporation and Information Center (HDCIC) to use block grant money received by the City of Kansas City to apply to housing in that city. The plan was to rehabilitate deteriorated and vandalized houses owned by the Department of Housing and Urban Development (HUD) which could not be sold. The plan contemplated placing a number of houses under a multi-family mortgage guarantied by HUD, the purchase and rehabilitation of the houses with the proceeds of the guarantied loans, and the ultimate repayment of the loans from rentals received from tenants under a program in which HUD subsidized that part of the rent which the qualified needy tenants could not pay.

At first, HDCIC was to have participated in the program as a joint venturer with defendant Radtke, the president and major stockholder of Condelco. Because of its relationship with the city, however, HDCIC was required to sell its interest in the project. Defendants Radtke and Condelco acquired that interest.

Defendant Radtke organized a limited dividend corporation under the provisions of § 215.070, ¹ known as Brush Creek Town Homes Development Corporation to serve as the sponsor of the project. Originally, the project contemplated rehabilitation of 108 houses. It later was reduced to 107. Two limited partnerships were formed to serve as owners of those houses: Brush Creek Town Homes I, Ltd., became the owner of the first forty-nine houses, and Brush Creek Town Homes II, acquired an additional fifty-eight houses. In those limited partnerships, defendants Radtke, Condelco and the development company were the general partners while limited partnership interests were sold to investors interested in income tax write-offs.

The two limited partnerships then contracted with Condelco to do the construction work to rehabilitate the houses. The entire project was financed by mortgage loans from the Missouri Housing Development Commission (MHDC) and HDCIC. These loans were secured by the HUD's guaranty.

Plaintiff Robert W. Jackson was an experienced builder who had in the past supervised such rehabilitation work. While the plans for the project were being developed, Jackson was employed by HDCIC where he became familiar with the project. In April, 1978, Condelco wrote Mr. Jackson the following letter:

Dear Mr. Jackson:

CONDELCO, INC. is pleased to make the following offer as it relates to its Brush Creek Town Homes development in Kansas City and to yourself as its proposed general supervisor.

On or about May 10, 1970 you would become a full time employee of CONDELCO, INC. and would be responsible for the management of the mini general contractors as well as any other subcontractors employed by the corporation in connection with the completion of the development.

The monthly salary for this position will be Two Thousand Dollars, ($2,000.00) plus a truck allowance of One Hundred Fifty Dollars, ($150.00). The corporation will also make medical insurance available to you through our group program which includes a term life insurance policy of $5,000.

Since time is of the esence [sic] as it relates to the completion of the development, the corporation will cause Jerald L. Radtke to pay to you out of the proceeds from syndication 10% of his net fee as an additional consultant fee. This fee will be paid if the development is completed and finally closed according to the time restraints imposed by the Department of Housing and Urban Development and the Missouri Housing Development Commission.

Further, you will share in any profits generated to the corporation as a result of partnerships or joint ventures arising out of the general contractors construction contract in an amount equal to 40% of the net profits.

Welcome aboard,

CONDELCO, INC. Accepted by:

By /s/ Jerald L. Radtke /s/ R. W. Jackson

-------------------- -----------------

Jerald L. Radke Effective 7/15/78

Jackson accepted the offer, effective July 15, 1978, at which time he left HDCIC and went to work for Condelco. At trial, the testimony indicated that defendant Radtke, who lived in Detroit, did not want to move to Kansas City for the project and employed Jackson to coordinate all of the rehabilitation and to supervise the contractors hired by Condelco to perform the actual construction needed to rehabilitate the houses.

During the ensuing months plaintiff Jackson became dissatisfied with his work at Condelco. He claimed that Radtke's brother James was given his position and that he could not perform the work he was hired to do. He testified that Condelco treated small contractors unfairly and that he had also refused to "juggle" the mortgage money (as Radtke directed) to complete the houses. He said that he resigned rather than risk liability for misapplication of funds. He resigned on March 15, 1979.

Plaintiff sued all defendants on the theory that each defendant was a partner in the rehabilitation project. He alleged that, "following the original entering of their relationship" the defendants had agreed to compensate him for certain services by paying him

a sum derived from ten percent (10%) of the net syndication fees due said defendants, amounting to at least $24,212.90, and also the net profit on construction work and repair work done on at least 108 houses, the net profit amounting to at least $1,000 per house, of which plaintiff was to receive forty percent (40%) or at least $132,604.00, that the total due plaintiff from defendants was at least $156,816.00 [sic]; that said amount is due, demanded and unpaid.

At trial, the plaintiff's counsel in his opening statement and by his questions to plaintiff and other witnesses showed the jury that, in counsel's view of the lawsuit, plaintiff's theory was that Condelco and the other defendants in partnership had contracted to pay plaintiff certain percentages of the syndication proceeds and net profits of their entire enterprise. Plaintiff, in his testimony, however, testified that he was entitled to forty percent of the profits Condelco's joint ventures produced. Plaintiff explained that one of HUD's purposes in guarantying the loans on the Brush Creek Town Homes projects was "to provide an opportunity for small disadvantaged contractors to be taught how, through joint ventures, to do these houses ...." He testified that "Condelco had a joint venture or a partnership on each one of the one hundred and eight houses ...." Referring to his own contract with Condelco, plaintiff then asserted, "That's the only way that can be construed, and it doesn't take a lawyer to construe it." He further testified that he was not concerned with partnerships such as any partnership arrangements Condelco entered into in constructing Brush Creek Town Homes I and II. Those agreements, he said, were executed before he went to work, and he was never "given those agreements."

Mr. Jackson also testified that defendant Radtke expected plaintiff to work with the contractors who were doing the rehabilitation work as joint venturers with Condelco. Mr. Radtke induced plaintiff to join Condelco as general supervisor with the promise of a ten percent share of the syndication fee and a forty percent share of the net profits on the Condelco's construction contract. Defendant Radtke estimated that Jackson's share "would be somewhere in the realm of one thousand dollars" per house under Condelco's joint venturers with the mini-contractors. The plaintiff also testified that at sometime in February, 1979, at plaintiff's request, defendant Radtke sent him a "clarification" of the syndication fee in the form of a handwritten note. The note set out the formula for calculating the net syndication fee and estimated that ten percent of it would be $7,630. The note concluded with, "This is predicated upon finishing on time." On February 22, 1979, Mr. Jackson sent Condelco his resignation to be effective on March 15.

Plaintiff's witness Karl Arterberry described "syndication proceeds" as the "out-of-pocket money" of the owner, his investment above what he borrows to construct the project. Those funds are used to pay costs of construction and other expenses and obligations incurred in the course of the project. The maximum an owner could borrow from MHDC or HUD on such projects was ninety percent of the estimated cost of the project. The owner had to invest his own monies or an outside investor's to cover the difference.

In his turn, defendant Radtke testified that he had originally planned to find some twenty-five skilled, minority contractors (mini-contractors) to enter into the joint ventures with Condelco in the rehabilitation...