SW Legal Educational Publishing

Abandoning Effort to Form Joint Venture Not Breach of Fiduciary Duty
Description Appeals court upheld a verdict in favor of a partner in a proposed joint venture who abandoned efforts to build a shopping center with a partner when zoning permission to build on a certain piece of land was not given. The partner then had the right to move on to other similar deals not involving the original partner.
Topic Business Organization
Key Words Joint Venture; Abandonment; Breach
C A S E   S U M M A R Y
Facts Petricca entered into an agreement that gave Pioneer a one-year option to buy land owned by Petricca. Pioneer intended to build a shopping center on the land. Pioneer paid Petricca $11,300 per month in option fees and had the right to buy the land or not. The contract also allowed Petricca an option to form a joint venture with Pioneer to develop the shopping center. A month later, Petricca notified Pioneer it would participate in the joint venture. Pioneer moved forward, but could not get zoning permission for the construction. Pioneer dropped this effort and bought another piece of land to build on. Petricca sued Pioneer for breach of fiduciary duty arising under the existence of a joint venture. The district court held that no joint venture ever existed, so Pioneer did not breach any duty to Petricca. Petricca appealed.
Decision Affirmed. The parties intended to create a joint venture, but it did not come into existence when Petricca said it was willing to participate in the venture. No joint venture was ever formed. Under the option agreement, Pioneer had a year to withdraw from the agreement to buy the land from Petricca for construction purposes. Obviously, unless the land could be zoned for this construction, Pioneer was not going to build the shopping center with or without Petricca. Petricca contributed nothing to the venture other than its indication of a willingness to form a venture, so no damages are owed.
Citation Petricca Development Limited Partnership v. Pioneer Development Co., F.3d (2000 WL 726235, 1st Cir., 2000)

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