Colangelo, et al. v. Ray Morgan, Mega Sand Incorporated, Taiki Corporation USA, Yasunori Umeno and Dr. Yoshiji Ayusawa
Published: Dec. 19, 1998 | Result Date: Nov. 4, 1998 | Filing Date: Jan. 1, 1900 |Case number: L001781 Verdict – $80,088,500
Judge
Court
Solano Superior
Attorneys
Plaintiff
Defendant
Experts
Plaintiff
Jay M. Winokur
(technical)
Richard L. Schmittel
(technical)
Eric M. Selten
(technical)
Anne W. Silver
(technical)
Defendant
Cameron Adams
(technical)
Facts
Defendant Ray Morgan had atttempted, for over 20 years, to launch a sand and gold reclamation project in the Sacramento River, but did not have access to sufficient funds to make it a reality. In 1991, Morgan entered into an agreement with plaintiffs under which he agreed that the business to be formed, which ultimately became defendant Mega Sand, would pay plaintiffs a fee if they located an investor. Morgan also agreed that plaintiffs would own 10 percent of the project and be provided with minimum yearly payments against anticipated profits from the reclamation operations. In October 1991, plaintiff Junho Hyon went to Japan, presented the project to numerous people, including to a friend of defendant Yasunori Umeno, who then presented it to Umeno. Shortly thereafter, Umeno came to California and met with Morgan. Even though Hyon set up the meeting, he was not invited to attend. After the meeting, Umeno, as owner of an Oregon corporation, defendant Taiki Corporation USA, instructed its operations manager, Wilson Choy, to investigate the project as an investment opportunity for Taiki. Choy did so, and among other things, reported to Umeno that Hyon was demanding a fee for the services he provided in bringing Umeno to Morgan. Plaintiffs made 12 written demands for compensation through the Spring of 1992, by which time Taiki had begun providing funding to the project which was now incoporated under the name of Mega Sand. In May 1992, Umeno's fellow Taiki officer, defendant Dr. Yoshiji Ayusawa, arranged a meeting with Hyon which Umeno had suggested. At that meeting, Ayusawa allegedly told Hyon that neither he, Umeno or Taiki had any involvement in Morgan's project. The plaintiffs alleged that in June 1992, Morgan Choy and Ayusawa met and discussed a scheme to defeat plaintiffs' claims, including making sure Umeno's company, Taiki, would not be used as the name for the project, presumably a move to facially sever the link between Taiki, the investor Hyon was responsible for finding, and Mega Sand. The plaintiffs further alleged that during this time, Umeno set about to squeeze Morgan out of Mega Sand and assume full ownership of Mega Sand for himself. Umeno and Taiki allegedly promised monies to Morgan and Mega Sand, but failed to keep them. In February 1994, Umeno, Taiki and Ayusawa seized complete control of Mega Sand. The plaintiffs also alleged that the other defendants ultimately put that business on hold, failing to expend the energies needed to produce sand and gold, so long as this case was pending. The plaintiffs brought this action against the defendants principally based on breach of contract, interference with contract and intentional interference with prospective economic damages theories of recovery.
Settlement Discussions
Plaintiffs made a C.C.P. º998 offer for $18.3 million. Defendants' countered with their own º998 offer totalling $50,000. In settlement discussions, plaintiffs offered to settle for $1.3 million with a right to a graduating percentage of the proceeds from the sale of Mega Sand. Defendants offered plaintiffs a different graduating percentage of the proceeds from the sale of Mega Sand, and no up front money.
Damages
Plaintiffs claimed that had Mega Sand been actively operating, it would have had a fair market value of $420 million.
Other Information
The verdict was reached approximately five years after the case was filed. The case was dismissed in its entirety in 1995 because the court believed the unauthorized practice of real estate was involved. In late 1996, with the assistance of appellate specialist Norman Pine of Encino, the Court of Appeal reversed the lower court order and reinstated the case. The plaintiff's current trial counsel took over the case at that time. The jury rejected the two written contract claims.
Deliberation
3½ days
Poll
Inter. w/Pros. Econo. Adv.: 9-3 (v. Mega Sand); 12-0 (v. Umeno); 12-0 (v. Ayusawa); 9-3 (v. Taiki) - Inter. w/Contract: 4-8 (v. Mega Sand); 11-1 (v. Umeno); 11-1 (v. Ayusawa); 9-3 (v. Taiki) - Breach of Contract: 11-1 (v. Morgan); 9-3 (v. Mega Sand) - Breach of Implied Covenant: 11-1 (v. Morgan); 11-1 (v. Mega Sand); Quantum Meruit: 12-0 (v. Morgan); 4-8 (v. Mega Sand)
Length
13½ days
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