$10.7 Million Awarded in Carlsbad Land Case

An Orange County Superior Court jury Thursday awarded $10.7 million to a group of investors who accused a Costa Mesa developer of fraud and breach of contract stemming from a land deal in North San Diego County.

The investors--who included four doctors and their wives, a computer industry executive and a dentist--won the judgment against Richard Browne and his company, Carlton Browne and Co. Inc. The jury deliberated for two days after a trial that lasted more than eight weeks.

R. Richard Farnell, one of the attorneys for the plaintiffs, said his clients bought 333 acres next to Palomar Airport near Carlsbad in 1978 and hired Browne a year later to prepare the land to the point where eventual construction could begin.

Farnell said the investors agreed that Browne would be a general partner in the group, would invest $200,000 and would spend one or two years dealing with zoning issues and other red tape in the land-preparation process. Then another developer would be brought in to complete the project.

But court testimony showed that Browne contacted the Signal Landmark development company two months after he joined the investors’ group and transferred to Signal Landmark 50% of the investors’ interest in the property, the attorney said.

Farnell said the investors learned of Signal Landmark’s entry into the agreement soon afterward, but did not find out for more than a year that the company had also been given an option to purchase all of the land.

“The effect of (Browne’s actions) was he had no money in the project and he got out hundreds of thousands of dollars cash and still had 25% interest in the property,” Farnell said.

The property was eventually sold against the wishes of his clients, Farnell said. The investors, who paid $2.7 million for it, wound up sharing 25% of the $18.2-million sale price, with Signal Landmark--which was not a defendant in the trial--receiving 50%. The attorney said Browne’s 25% of the sale was frozen by the court after the lawsuit was filed in February, 1981.

Farnell said that, had the investors been able to hang on to the land, “which they wanted,” they could have gotten far more for it.

The investors “contemplated (the property) would be quite similar to the (John Wayne) Orange County Airport area as time went by,” the attorney said. The area already has some light industry and research and development businesses, Farnell said.

The jury awarded $2,378,400 in general damages for breach of contract; $2,081,250 in general damages for fraud, and punitive damages of $6,243,750 for fraud.

Browne and his attorneys could not be reached for comment, but Farnell said Browne told one of the plaintiffs during the trial that he would appeal the verdict if it went against him.

The plaintiffs were Robert and Estelle Beiner; Armando and Mirta Hernandez; Jaime and Charne Dora Borovinsky; Barton J. and Roberta Blinder; Robert Hinnenkamp, and John Burhoe. Farnell said Hinnenkamp is a dentist, Burhoe is in the computer business, and the other plaintiffs are doctors and their wives.