Oates still must pay $7 million, judge decides He declines to reduce the jury award in a fraud suit filed by former partners of the Sacramento developer.

January 4, 2003
Section: METRO
Page: B1

By Ramon Coronado
Bee Staff Writer

--Describing the behavior of Sacramento developer Marvin "Buzz" Oates as "reprehensible," a Sacramento Superior Court judge has refused to reduce a $7 million jury award.

"The evidence does demonstrate without question that defendants breached their fiduciary duties to plaintiffs in order to obtain a financial advantage to which they were not entitled," Judge Lloyd A. Phillips Jr. said.

In a written opinion sent out this week, Phillips refused to toss out an Oct. 31 jury verdict finding that the 79-year-old Oates had committed fraud with "malice and oppression" in a business partnership with Christo Bardis, Lloyd and Nancy Arnold, and Frank C. Ramos.

"I am deeply disappointed that the court would let the jury findings stand," Oates said Friday in a prepared statement.

"All of the partners involved in this project made very substantial profits. Some took very little risk and none took the risks my companies took in making this project a success," Oates said.

Attorney M. Max Steinheimer, whom Oates hired after the jury verdict, said he will appeal the verdict and judge's opinion.

"This is wrong. This is out of line with California courts," Steinheimer said. "These were sophisticated business partners. Mr. Oates' wealth was unfairly targeted."

Grounds for the appeal will include the disparity between the $130,000 plus interest Oates was accused of mishandling and the jury's $7 million punitive damage award, Steinheimer said.

"Mr. Oates has been the premier commercial real estate developer going back 57 years. He is extremely well thought of and has been involved in hundreds of projects with many partners who have been enormously supportive of him since this jury verdict," Steinheimer said.

Edward Freidberg, who represented Bardis and the Arnolds, said the victory involved more than money.

"I have heard from numerous people that have said that finally someone has brought Buzz Oates to justice. No one was brave enough to go after him. Chris Bardis deserves credit for this," Freidberg said of Bardis, who initiated the suit and financed it.

Freidberg said Bardis intends to donate to charity whatever he receives from the judgment.

In court two weeks ago, Steinheimer told Phillips that the judgment was excessive and that jurors were motivated by "passion and prejudice." The lawyer said jurors assessed punitive damages against Oates for being the "richest man in Sacramento."

Freidberg countered that there was overwhelming evidence to sustain the jury's judgment.

In September, Oates was listed among the 400 wealthiest Americans in Forbes magazine. His estimated wealth was about $800 million, making him No. 288 on the list.

In his 13-page opinion, Phillips upheld the jury's findings and denied Oates' request for a new trial. "Every partner is bound to act in the highest good faith to his co-partner and may not obtain any advantage over him," the judge wrote.

The partnership was formed in 1989 to purchase 298 acres of prime real estate for $71 million that included a golf course and Los Alamitos Race Course in Orange County. Oates, who later became the managing partner, was found liable for breaching the agreements he had with the other partners in the sale of two separate parcels totaling 20 acres.

Oates "obtained a financial advantage over plaintiffs in the form of undisclosed fees, markups and real estate commission kickbacks," Phillips wrote.

"Particularly in the context of today's heightened awareness of the dangers of unethical business practices," Oates' conduct was "strongly reprehensible," the judge wrote.

According to court records, the partners offered to settle the suit before trial for $2 million. Oates' offer was for $350,000.

In the ruling, the judge also awarded Freidberg $348,667 in attorney fees for trial work, plus an additional $40,000 for the lawyer's work for the last court hearing challenging the jury's judgment. The Sacramento attorney is expected to receive an additional $39,000 in court costs.

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The Bee's Ramon Coronado can be reached at (916) 321-1191 or rcoronado@sacbee.com.