August Income/Growth Fund 81 v. First West Companies
Published: Jan. 22, 1994 | Result Date: Dec. 15, 1993 | Filing Date: Jan. 1, 1900 |Case number: 614550 – $10,400,000
Facts
In 1989 the real estate portfolio of Plaintiff August partnerships was in financial distress. The partnerships entered into a set of contracts with Defendant First West to take over the portfolio from the primary lender. An asset-management agreement was drafted involving the two parties. Omni, a European-based conglomerate became the new capital lender and Defendant First West took operating control with a mandate to improve the value of the properties. The agreement called for First West and Omni to receive substantial compensation upon sales, amounting to 50 percent of the increased equity in the properties above an agreed level of equity reserved to the partnerships. An issue was whether or not the contract provisions guaranteed payment of equity to First West if it was terminated with cause. Several months later, the general partner and Omni concluded First West was taking improper fees and expenses not authorized by the contracts. This led Omni and August managing general partner John Provine to withhold fees and reimbursements allegedly taken by First West. First West alleged that it urged arbitration, but that John Provine resisted. In January 1990 the partnerships, alleging misconduct, terminated First West and filed a breach of contract suit. First West countersued, alleging breach of contract and breach of the covenant of good faith and fair dealing. (Nine of the 16 partnerships settled before trial.)
Settlement Discussions
Cross-defendants contend they offered $3,750,000 and Cross-complainant demanded $10,000,000. Cross-complainants contend their demand was $7,500,000.
Damages
Contract damages of $10,400,000.
Deliberation
4 days
Poll
9-3
Length
27 days
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