Sampson v. Richins

• Citation: 770 P.2d 998
• Decision Date: 22 February 1989
• Docket Number: No. 880257-CA,880257-CA
• Parties: John P. SAMPSON and Milton R. Goff, individually, and as trustee of Milton R. Goff Trust, an unincorporated association, Plaintiffs, Appellants, and Cross-Respondents, v. Paul H. RICHINS; Richtron, Inc., a Utah corporation; Richtron Financial Corporation, a Utah corporation; Richtron General, a Utah corporation, and Frontier Investments, a Utah corporation, Defendants, Respondents, and Cross-Appellants.
• Court: Court of Appeals of Utah

Page 998

770 P.2d 998

John P. SAMPSON and Milton R. Goff, individually, and as trustee of Milton R. Goff Trust, an unincorporated association, Plaintiffs, Appellants, and Cross-Respondents, v. Paul H. RICHINS; Richtron, Inc., a Utah corporation Richtron Financial Corporation, a Utah corporation Richtron General, a Utah corporation, and Frontier Investments, a Utah corporation, Defendants, Respondents and Cross-Appellants.

No. 880257-CA.

Court of Appeals of Utah.

Feb. 22, 1989.

Craig S. Cook, Salt Lake City, for plaintiffs, appellants, and cross-respondents.

John T. Anderson, Salt Lake City, for defendants, respondents, and cross-appellants.

Before BILLINGS, JACKSON and ORME, JJ.

OPINION

BILLINGS, Judge:

Plaintiff-appellant, John P. Sampson, appeals the money judgment entered against him in favor of defendants-respondents, Richtron, Inc., Richtron Financial Corporation, and Richtron General (referred to collectively throughout this opinion as "Richtron"). The trial court found Sampson intentionally interfered with Richtron's economic relations and awarded judgment to 1) Richtron Financial Corporation, as a limited partner, in the amount of $30,974.50, 2) Richtron, Inc., as a limited partner, in the amount of $4,222.50, and 3) Richtron, Inc. and Richtron General, as general partners, in the amount of $250,000. Richtron cross- appeals the trial court's refusal to award additional compensatory and punitive damages. We affirm.

PROCEDURAL POSTURE

Sampson filed the original complaint in this case to enforce an Oregon judgment previously obtained by Robert Osborn against Richtron which Sampson subsequently purchased from Osborn. Richtron answered the complaint alleging a variety of defenses to the Oregon judgment, and counterclaimed seeking six affirmative claims for relief against Sampson.

The case was tried without a jury before Senior Judge Bryant Croft. During the eleven-day trial, the court heard twenty-three witnesses and received approximately 398 exhibits. Judge Croft drafted a 177 page "memorandum and summation of evidence" and entered "findings of fact and conclusions of law and verdict" consisting of 234 pages. Both counsel in their briefs and this court commend Judge Croft for his extraordinary efforts.

In bringing this appeal, Sampson ordered only a portion of the transcript of the proceedings below. Subsequent motions to supplement the record were denied. Richtron did not order additional portions for purposes of its cross-appeal. Consequently, both parties concede they are bound by Judge Croft's voluminous findings of fact, and only contend on appeal that the trial court's findings of fact do not support its conclusions of law and judgment. Specifically, Sampson claims the trial court's findings do not support the elements of intentional interference with Richtron's economic relations nor the corresponding damages awarded to Richtron. Richtron cross-appeals claiming the trial court erred 1) in refusing to award additional compensatory damages for partnership funds diverted by Sampson and for loans Richtron advanced to the partnerships, and 2) in refusing to award Richtron punitive damages.

FACTS

We set out only those facts found by the trial court that are relevant to the issues on appeal. Between October 15, 1973, and March 1, 1980, Paul Richins created twenty-five limited partnerships in which either Richtron, Inc., or Richtron General, its subsidiary, acted as the sole general partner. Both Richtron, Inc. and Richtron General were owned and controlled by Richins. The limited partnerships were created for the purpose of acquiring, operating, and holding for resale farm properties located in the states of Utah, Idaho, and Oregon.

Substantially identical limited partnership agreements were prepared for each of the twenty-five partnerships providing, in relevant part, that the general partner had the exclusive authority to conduct the affairs of the limited partnerships, and that the limited partners were required to make annual cash contributions to meet partnership expenses. The agreements disclosed that the agricultural properties previously purchased on contract by one of the Richtron companies were being resold to the limited partnerships at a profit.

During 1979 and early 1980, many of the limited partners refused to pay the partnership expense assessments made by Richtron. By May 1980, the limited partnerships were confronted with substantial and increasing financial difficulties due, in part, to the failure of many limited partners to pay their agreed assessments and, in part, to overall management problems. As a result, Richtron loaned substantial amounts of money to the limited partnerships to meet delinquent and current land contract installment obligations, well-drilling expenses, as well as other operating expenses. By June 1980, the aggregate amount of Richtron's loans, all of which were required by the partnership agreements to be repaid, exceeded $300,000.

Sampson first became involved with the limited partnerships in May 1980, when he was retained as an attorney by two limited partners to attend a meeting of the Catlow Valley limited partners. Richins called the meeting to discuss, among other financial concerns, the existence of the "Osborn judgment" and that Osborn was willing to settle the dispute upon payment of a stipulated sum. The trial court made the following findings concerning Sampson's participation in the May 1980 meeting:

[Sampson's] actions there were a bit more than just privately counseling his two clients, for he not only orally recommended to those at the meeting and got started the movement to have Richtron Financial file for bankruptcy under Chapter 11 proceedings, but he also expressed the legal opinion to all present that he did not think Richtron Financial could keep the mark-up equity arising from Richtron Financial's resale of the farm property to the Catlow Valley partnerships for an amount in excess of what it paid for it, which was a theme which Sampson repeatedly expressed in the months and years ahead.

It was at this meeting that Sampson began his concentrated efforts to take control of the twenty-five limited partnerships. Sampson never invested in any of the partnerships, and from all indications, throughout his efforts, represented only two of approximately 130 limited partners.

In June 1980, as a result of ongoing pressure from Sampson, Richins purported to cause the withdrawal of Richtron, Inc. and Richtron General as general partners of the limited partnerships. Richins informed the limited partners that he would proceed to wind up and terminate partnership affairs, but none of the partnerships were ever terminated. Following his announcement, Richins agreed to permit Sampson to receive partnership assessments. Under this agreement, Sampson was required to forward funds to Richtron to pay pressing partnership obligations. Sampson did not comply with the agreement, and instead placed partnership contributions in his trust accounts.

At the Catlow Valley partnership meeting, Sampson suggested to his clients that they purchase all of Richtron's interests in the limited partnerships. Thereafter, Sampson and Richins attempted to negotiate a buy-out of Richtron's interests for $700,000. The buy-out agreement provided that Richtron would be reimbursed for the loans it had made to the limited partnerships. Despite the negotiations between Sampson and Richins, Sampson informed a number of limited partners that Richtron was not entitled to repayment. Sampson expressed this opinion frequently both orally and through letters sent to all investors. As a result of Sampson's statements, many of the limited partners objected to the buy-out agreement, and no sale of Richtron's interest occurred. Soon after the buy-out agreement failed, Sampson resumed his efforts to take control of the partnerships and exclude Richins.

Sampson first attempted to gain control by requesting the limited partners to execute powers of attorney. Sampson told the partners that such action was necessary to remove Richins and his companies as general partners and to commence legal action against them.

After obtaining powers of attorney from an unknown number of limited partners, Sampson incorporated the John P. Sampson Professional Corporation. Relying on the powers of attorney, Sampson attempted to elect his professional corporation as the successor general partner of each of the limited partnerships, in violation of the Utah Professional Corporation Act, Utah Code Ann. §§ 16-11-1 to -15 (1987).

Sampson was notified by court order that his corporation was not authorized to become a general partner in an agricultural enterprise. Thereafter, Sampson incorporated Ag Management, and attempted to substitute it as general partner of the limited partnerships. On November 24, 1982, a district court ruled that Sampson's efforts to substitute Ag Management as the general partner were legally invalid, and that Richtron was and always had been the only authorized general partner to act on behalf of the limited partnerships.

Within seven months of Sampson's attendance at the Catlow Valley partnership meeting, Sampson had assumed actual but not legal control of the twenty-five partnerships through a variety of means and was receiving and disbursing all partnership funds at his discretion. He continued his unauthorized control for over four years acting both in his individual capacity and as an attorney representing the interests of two limited partners. During this same period, Sampson also acted as legal counsel for Richtron, and on several occasions defended Richtron in lawsuits. In at least five instances, however, Sampson neglected the lawsuits against Richtron and allowed them to go to default. Sampson, on other occasions, revealed to third parties confidential information he had obtained in the course of his representation of Richtron.

During the summer of 1982,...