Were the two corporations involved in a joint venture?

Case B: Chapter 35 (4 and 5), Chapter 36 (7 and 8) in Dynamic Business Law

For each assigned case, write an analysis of the issue based on the following criteria:

Identify the parties involved in the case dispute (who is the plaintiff and who is the defendant).

Identify the facts associated with the case and fact patterns.

Develop the appropriate legal issue(s) in question (i.e., the specific legal issue between the two parties). Provide a judgment on who should win the case – be clear.

Support your decision with an appropriate rule of law.

Be prepared to defend your decision and to objectively evaluate the other points of view.

Ch35

4-Joe Orosco, an employee of Sun-Maid Growers, Inc., lost his arm in an industrial accident with a raisin elevator in 1991. Sun-Maid was one of four members of a marketing cooperative called the Sun-Diamond Corporation. According to the cooperative agreement, Sun-Diamond was authorized to provide certain management services to Sun-Maid. Orosco sued Sun-Maid and Sun-Diamond, arguing that both corporations were liable because they were involved in a joint venture to design, manufacture, construct, repair, maintain, install, and test the processing line on which Orosco lost his arm.

[Orosco v. Sun-Diamond Corp., 51 Cal. App. 4th 1659 (1997).]

Q1.Were the two corporations involved in a joint venture?

Q2.What additional facts would you want to know before forming your answer?

Q3.If they were involved in a joint venture, should Sun-Diamond be held liable for Orosco’s injuries? Why or why not?

5-YOU AND 1 was a thoroughbred racehorse owned by a syndicate composed of 40 equal ownership shares. The syndicate agreement stated that if an acceptable offer was made to purchase the horse from the syndicate, each syndicate member had a “first right to purchase” under which he could sell his interest in the horse or buy the interests of the other syndicate members who had elected

to sell their interests in the horse. The syndicate agreement, however, required that if a syndicate member planned to exercise his first right to pur-chase, he had to notify the syndicate manager of his intent within 10 days of his receiving notification of the acceptable offer. In September 2003, Brereton Jones, a syndicate member and the syndicate man-ager, received an offer from Blooming Hills Farms to buy YOU AND I for $500,000. Jones sent a memo to all the syndicate members notifying them that Blooming Hills Farms had made the offer, that he believed the offer to be fair, and that he planned to sell his interest. Jones received word from 39 of the 40 syndicate members that they planned to sell their interests in YOU AND I. The following day, Never Tell Farm, a syndicate member, notified Jones that it planned to exercise its first right to pur-chase. Jones and Never Tell proceeded to negotiate over whether Never Tell would exercise its first right to purchase, and the 10-day window elapsed.When the negotiations fell through, Never Tell notified Jones of its intent to exercise its first right to purchase. Jones told Never Tell that it had not timely asserted its right and thus the horse had been sold to Blooming Hills Farms. Never Tell sued Jones, claiming that under the syndicate agreement it should have had the right to purchase the other syndicate members’ interests in YOU AND I.

[Never Tell Farm, LLC v. Airdrie Stud, Inc., 123 Fed. Appx. 194 (2005).]

Q1.With whom do you think the court sided in this case? Why?

…………………………..

Ch36

7-The Vancouver Group is made up of five investors, Pietz, Wynne, Fordham, Indermuehle, and Smith. The group entered into a partnership with Robert Berry for the joint purchase of the Sundance Hotel and Casino. The group and Berry made an offer to purchase the hotel. Pietz agreed to supply $500,000 to the deal and post a $285,000 letter of credit. However, after receiving information that caused him to doubt Berry, Pietz withdrew his interests from the partnership. Berry threatened to sue Pietz for breach of contract, fraud, and tortious breach of the covenant of good faith. Pietz and Berry settled, and Pietz subsequently sued the group for the cost of the settlement. The trial court rejected Pietz’s claim of breach of fiduciary duty. He appealed the decision.

[Pietz v. Inderm-uehle, 949 P.2d 449 (1998).]

Q1.How do you think the court decided?

Q2.Was there a breach of fiduciary duty?

8-David Byker was an accountant working for Tom Mannes. The two talked about going into business together because they had complementary business skills-

-Mannes (defendant) could locate certain properties because of his real estate background and Byker (plaintiff) could raise money for the property purchases. Subsequently, the two agreed to engage in an ongoing business enterprise, to furnish capital, labor, and/or skill to the enterprise, to raise investment funds, and to share equally in the profits, losses, and expenses of the enterprise. To facilitate the investment of limited partners, Byker and Mannes created separate entities wherein they were general partners or shareholders for the purposes of operating each separate entity. After the two men encountered some financial difficulties with a venture, Byker approached Mannes with

regard to equalizing payments as a result of the losses incurred with the failed business opportunity. Mannes claims that this was the first time he ever received notice about any outstanding payments. After unsuccessfully seeking reimbursement from Mannes, Byker filed suit for the recovery of the money on the basis that the two men had entered into a partnership. Specifically, Byker asserted that the obligations between him and the defendant were not limited to their formal business relationships established by the individual partnerships and corporate entities but that there was a “general” partnership underlying all their business affairs. In response, Mannes asserted that he merely invested in separate business ventures with the plaintiff and that there were no other understandings between them.

[Byker v. Mannes, 465 Mich.637; 641 N.W.2d 210 (2002).]

Q1.Did the two businessmen form a partnership, or were their business deals all separate ventures?

Q2.Was there intent to make a consensual business relationship even though Mannes argues there was not?