O'Reilly, Collins & Danko: Los Gatos Country Club Judgement Against Barry Swenson Affirmed on Appeal

Jan 25, 2005, 00:00 ET from O'Reilly, Collins & Danko

    SAN MATEO, Calif., Jan. 25 /PRNewswire/ -- The California Court of Appeals
 for the 6th District has upheld the 2001 finding of liability against San Jose
 developer Barry Swenson and Green Valley Corporation in a ruling issued on
 January 21, 2005.  The court affirmed the lower court's decision in Pietro G.
 Denevi v. Green Valley Corporation et al, in a case involving a failed project
 to build the Los Gatos Golf Course and Country Club on 210 acres of land near
 Lexington Reservoir in Santa Clara County.
     In November 2001, Judge Frank Cliff of Santa Clara County Superior Court
 ruled that Pietro Denevi did, in fact, lose his chance to buy the property in
 order to build a country club, because Barry Swenson and Green Valley had
 failed to make a critical payment of $750,000 to Arlie Land and Cattle
 Company, owner of the property, as they had promised.  At the time, the judge
 awarded a judgment of $10 million to Pete Denevi, former Los Gatos high school
 football coach.  The Court of Appeals has upheld the finding that Swenson and
 Green Valley breached their fiduciary obligations, but sent the case back to
 the lower court for a retrial on the issue of the amount of damages only.
     "This opinion is justice for my client," says Mike Danko of the San Mateo
 law firm of O'Reilly, Collins & Danko, who represented Denevi.  "Pete Denevi's
 heart was broken and his dream lost because of Swenson's failure to follow
 through on his commitments.  Swenson thought he was big enough to get away
 with cheating my client.  He is learning differently."
     In its 37-page opinion, the Court of Appeals ruled that Swenson's conduct
 amounted to a breach of his fiduciary obligations.  It ruled however, that the
 method the trial court used to determine the award of damages was unclear and
 therefore ordered a retrial as to damages.  At the new trial, Swenson will not
 be able to dispute the established fact that he breached his fiduciary duties
 and that he caused the property to be lost to another buyer.
     Denevi was "saddened" at the turn of events leading to the judgment.  "I
 hoped the completion of the project would have benefited the community," said
 Denevi.  But for Swenson's breach of contract, he said, "we would be playing
 golf out there right now."  The Arlie property was eventually sold to
 Midpeninsula Regional Open Space District and the Peninsula Open Space Trust
 and will remain undeveloped land.
     San Jose developer Barry Swenson was the managing partner of the Los Gatos
 Country Club, LLC, a limited liability corporation formed to help Denevi buy
 the uniquely beautiful piece of land for the golf course and country club.
 Denevi held the original purchase option on the valuable property.  The
 deadline for payment to Arlie had been extended several times during
 negotiations and finally a cash payment of $750,000 was due to the seller on
 September 30, 1998.  Swenson promised Denevi that he would make the payment,
 then decided not to.  The seller terminated the deal and sold the property to
 the Open Space District.

SOURCE O'Reilly, Collins & Danko