Opinion ID: 1304454
Heading Depth: 3
Heading Rank: 1

Heading: Joint Ventures or Loans

Text: (2a) Petitioner and amicus claim the agreements were characterized as joint ventures to conceal the fact that Bernie L. and John T. were loaning petitioner money at usurious rates of interest. In his brief, petitioner characterizes the Bernie L. contract as a sham agreement. Even if we were persuaded by his factual claim, petitioner could not escape discipline. Such sham agreements involve deception, which would warrant substantial sanction by the State Bar. Moreover, we find implausible the claim that petitioner was forced to sign the agreements because he had no other source of funds for escrows on the properties which were about to close. After the escrows closed, he was able to obtain many bank loans encumbering the properties. Indeed, petitioner, who successfully developed numerous other parcels in the Malibu area, testified that he had an excellent credit rating with local banking institutions. Furthermore, petitioner drafted the John T. agreement, and he negotiated for two months with Richard L. before entering into the contract with Bernie L. These facts significantly undermine his assertion that he was forced into signing the agreements due to his inability to garner financing before the impending escrow closings. Conflicting testimony was elicited at the hearing as to whether the parties intended their agreements to be joint ventures or mere loans. As we have often stated, however, we are reluctant to disturb the panel's resolution of conflicting testimony, because it has the opportunity to observe first-hand the demeanor of the witnesses and can better evaluate the veracity of their testimony. [Citation.] ( Baranowski v. State Bar (1979) 24 Cal.3d 153, 162 [154 Cal. Rptr. 752, 593 P.2d 613].) This principle is especially applicable in a case where, as here, the documentary evidence does not support petitioner's version of the facts. The written contracts  both signed by petitioner  repeatedly characterize the agreements as joint ventures. The contracts provide for a sharing of net profits between petitioner and his coventurers. Nowhere in the documents are the payments from John T. and Bernie L. characterized as loans. Furthermore, petitioner admitted that he had written the following notation on a check: 6112 Bonsall Joint Venture  Galardi/[L.]. Petitioner and amicus point to the many bankruptcy proceedings in this case for support for the proposition that petitioner merely borrowed money and did not enter into joint venture agreements with Bernie L. and John T. (3) The State Bar, however, was not a party to the bankruptcy actions, and as such is not bound by the findings or conclusions of the bankruptcy courts. (See 7 Witkin, Cal. Procedure (3d ed. 1985) Judgment, § 299, pp. 737-738 and cases cited.) Furthermore, various bankruptcy courts in this matter have arrived at conflicting interpretations of the agreements signed by petitioner and his coventurers, making reliance on the conclusions of any one bankruptcy judge problematic. (2b) We also conclude that the panel's finding that a joint venture existed between Bernie L. and petitioner is not seriously undermined by the fact that Bernie L. declared to the bankruptcy court that he had agreed to lend petitioner $101,000 and that he was not petitioner's partner. Reviewing the record as a whole, we conclude that the panel correctly discounted the probative value of the bankruptcy declaration. Given the vast amount of evidence that the parties intended a joint venture, the panel properly might have concluded that Bernie L. was not being candid when he made the declaration. [2] Petitioner suggests that, as a matter of law, no joint ventures existed because: (1) he held sole title to the two properties; (2) the agreements contained no express provision for sharing losses; and (3) he did the entire development work while John T. and Bernie L. only contributed money to the enterprise. His argument is groundless. (4) A joint venture may exist although the property forming the capital of the adventure is not jointly owned by the parties [citation] and although one of the parties contributed money, another property and another skill to the enterprise. [Citation.] ... In addition, the omission of a provision for the sharing of losses in a joint venture is immaterial.... ( Stilwell v. Trutanich (1960) 178 Cal. App.2d 614, 619 [3 Cal. Rptr. 285].)