Facts

This was a breach of contract and fraud action initiated by claimant Ronald Schwartz, a real estate broker and land developer against respondent Stradella Investments Inc. arising out of a breach of a written Finder's Fee Agreement involving the sale of 384 unimproved acres of real property located in Rancho Mirage.

Specifically, Schwartz alleged that Stradella Investments Inc., the owner of the subject real property, breached a written Finder's Fee Agreement the parties had entered into involving the sale of the unimproved real property known as "The Eagle." The Eagle is one of the largest parcels of unimproved real estate in the city of Rancho Mirage and is considered the "crown jewel" for future development of commercial and residential properties in Rancho Mirage.

Stradella and its principals including President Rashid Boroumand promised to pay Schwartz a Finder's Fee commission of 1.5 percent if he was able to assist in finding a qualified investor/buyer for The Eagle property. Schwartz was instrumental in introducing Sunrise Company, the ultimate buyer of The Eagle property to Stradella. However, Stradella through Boroumand failed and refused to pay the agreed upon commission to Schwartz.

Sunrise Company paid $68 million to Stradella Investments Inc. as an initial down payment for The Eagle Property, which has an estimated market value of $160 million. The Eagle property is located adjacent to the Annenberg Estate known as "Sunnylands." Stradella and its principals, including Boroumand purchased The Eagle property in 1977 from Ambassador Annenberg for $25 million. Since that time, Stradella and its principals have continuously owned The Eagle property and have refused to sell or develop the 384 acres until recently.

As a result of Stradella's failure and refusal to pay Schwartz' commission, Schwartz initiated the instant lawsuit as per the terms of the written Finder's Fee Agreement entered into between the parties. Judge David D. Perez, retired at Judicial Arbitration & Mediation Services ("JAMS") was appointed as the Arbitrator in the binding arbitration action.

CLAIMANT'S CONTENTIONS:
The claimant alleged breach of contract; anticipatory breach and fraud claims against Stradella Investments Inc. Schwartz sued to recover a Finder's Fee commission related to the sale of The Eagle property. Furthermore, the claimant sought to recover punitive damages against Stradella by its actions in concealing the sale of The Eagle property with the intent to defraud claimant and engaging in a pattern and practice of fraudulent behavior.

RESPONDENT'S CONTENTIONS:
Stradella denied any liability and argued that Schwartz was not entitled to receive a Finder's Fee commission because Stradella's President Rashid Boroumand had participated in prior negotiations and discussions to sell The Eagle property with Sunrise Company a year before Schwartz actively assisted Stradella in finding a buyer/investor for The Eagle property. Stradella denied that the earlier negotiations with Sunrise Company were "dead" and challenged Schwartz's contention that he "revived" the dormant relationship between Stradella and
Sunrise Company, who ultimately purchased The Eagle property.

Settlement Discussions

Schwartz offered to settle the case for $750,000. Stradella Investments Inc. denied any liability, and refused and failed to make any offer of settlement to Schwartz.

Result

$1,176,081 total award ($997,500 for compensatory damages; $159,055 for prejudgment interest; $19,526 costs and expenses).

Other Information

Following the arbitrator's decision, Stradella Investments Inc. filed a Motion to Correct the final award. On April 2, 2008, Arbitrator David D. Perez, Judge of the Superior Court, retired denied Stradella's Motion to Correct the Final Award. Claimant's expert Alan D. Wallace testified as to the custom and practice related to real estate agents and brokers as well as the real estate industry standards related to payment of Finder's Fees and broker's commissions with respect to real property transactions.