Opinion ID: 1432148
Heading Depth: 1
Heading Rank: 8

Heading: Fraud and Mismanagement

Text: As the court has noted supra, the appellant charges his father with fraud and mismanagement. This is the underlying cause of action  fraud  and it is a resolution of this appeal. Specifically, Terry Zanetti charges error in not finding that his father was guilty of fraud and mismanagement in that the: (1) Said plaintiff commingled joint venture funds with his own personal funds. (2) Said plaintiff commenced a development in his own name, not in the name of the joint venture and as sole owner. (3) Said plaintiff expended his personal money and conducted the development activities after being informed by all members of the joint venture that they wanted no part of any development. (4) Said plaintiff failed to inform the members of the joint venture of his activities. (5) Said plaintiff accumulated a list of prospective buyers for lots in the development he was working on. (6) Said plaintiff drilled a water well on adjoining land belonging to said plaintiff personally but assessed each member of the joint venture one-sixth of the cost thereof. (7) Said plaintiff `bought out' the 1/7th share of G. Gordon James with joint venture moneys and then conveyed that 1/7th share to his wife, Donna Zanetti. (8) Said plaintiff, when he found he could not buy defendants' shares of the joint venture upon his own terms, stopped all further development. (9) Said plaintiff expended the large part of the `development' costs to construct a roadway from the highway access across his own lands (other than joint venture lands) and lands of third parties to which he had no easement or rights-of-way. The trial court said the following about these fraudulent-mismanagement contentions in its Findings of Facts and Conclusions of Law: Finally, Defendants contend that Pete Zanetti mismanaged the joint venture property and accounts. While Pete Zanetti commingled joint venture funds with his own, followed imperfect accounting procedures and in general, was by no means the model upon which to base a management school curriculum, nevertheless, the Court finds and concludes that Mr. Zanetti did not fraudulently, intentionally or negligently mismanage the property. The evidence is to the contrary. The Court carefully observed the demeanor of the parties and from the totality of the circumstances, concludes that Pete Zanetti was acting in good faith. Among other things, Pete Zanetti effectively purchased the property from the Rock Springs Grazing Association, made a deal with Texasgulf, Inc. for resale at a handsome profit and upon the default of Texasgulf, Inc. successfully negotiated a very beneficial settlement without the necessity of protracted litigation. The Court finds and concludes that Pete Zanetti was effectively and efficiently proceeding with the development of the property and that he would have resolved all remaining problems, including, among other things, those involving easements and rights-of-way, had the dispute with his sons not developed. The Court finds and concludes there is no evidence to indicate that any of the moneys received by the joint venture or paid to the joint venture by its members were fraudulently misappropriated by Pete Zanetti. Kevin Heybourne, who performed the audit of the books and accounts of the joint venture, testified that in his opinion the audit was correct and complete and that all the money that went into the joint venture has been accounted for and not misappropriated by Pete Zanetti. The Court accepts the testimony of Mr. Heybourne and concludes that the claim of Defendants founded on mismanagement should be denied.