Denevi accuses Barry Swenson of a 'failure to carry out duties'
Meanwhile, Swenson, Denevi sue Arlie
By Nathan R. Huff
Lots of money seems to lead to lots of lawsuits, as the multitude of cases involving Arlie Land and Cattle Co., Barry Swenson, Pete Denevi and Midpeninsula Regional Open Space District attest.
After years of battling Arlie Land and Cattle and its land aquisition manager, John Musumeci, over control of 210 acres near Lexington Reservoir, Denevi and Musumeci now find themselves sharing information over two lawsuits--one in which Denevi is part of a lawsuit against Arlie, and another in which Denevi is suing San Jose developer Barry Swenson, managing partner of Los Gatos Country Club's limited liability corporation (LLC).
Denevi, the former Los Gatos High School football coach who held the original purchase option on the 210 acres that was part of the property Arlie recently sold to the open-space district, helped form the Los Gatos Country LLC when it became apparent he would be unable to bankroll his long-held dream of building a golf course. At that time, Swenson became the controlling partner and entered purchase negotioations with Arlie.
Following Arlie's sale to the open-space district, Denevi and the LLC filed a suit accusing Arlie and the open-space district of wrongfully negotiating a deal while litigation regarding the LLC's purchase option was ongoing. Denevi was forced to drop his name from the suit because he was no longer the controlling partner.
Denevi, as a 20-percent partner, remains part of the LLC's suit against Arlie and the open-space district over Arlie's sale of the 1,100 acres that were once were home to Alma College. The property is now owned by the open-space district and Peninsula Open Space Trust, which purchased it for a total $25 million.
However, Denevi is also suing Swenson, who, Denevi claims, failed to carry out his duties as managing partner, resulting in the loss of the purchase option.
Finally, Arlie, which is representing the open-space district in the suit addressing the land sale, has been taking depositions, including Denevi's. Denevi's lawyer, Michael Danko, said all attorneys involved in the litigation had been "very cordial." The matter goes to court Jan. 20, but a trial probably won't occur until next summer.
Denevi's own suit maintains that Swenson failed to execute his duties as managing partner, and because of that, lost the partnership's purchase option on the land shortly before the property was sold to the open-space district.
Danko said his client's suit, commonly referred to as a derivative action, involves suing a corporation in the name of the corporation. This occurs when plaintiffs--in most cases stockholders--believe the controlling partner is hurting the business through poor management.
"Denevi's claim is that the LLC did not do what it told Denevi it would do and should have done," Danko said. Although Danko would not give a concrete figure, he said Denevi's damages "exceed $14 million."
The LLC also has asked the court to require that Denevi post a $50,000 bond. Danko said the bond, which Denevi intends to fight, can only be required if the court believes the plaintiff is acting solely for his or her own benefit, rather than the corporation's. Although it is intended to protect corporations from insider lawsuits for personal gain, the bond is sometimes used as a means to financially discourage the suing party.
Swenson's representative, Mike Lauritzen, declined to comment on the case.
The LLC partners, including Denevi, continue to argue that Arlie unlawfully terminated the purchase option it had on 210 acres of the property when it sold the land to the open-space district. As part of the suit, the LLC has also named the open-space district for allegedly entering into purchase negotiations with Arlie during litigation between Arlie and the LLC.
Denevi said that, despite his suit against managing partner Swenson and the sharing of some information with the Arlie camp, he remains part of the LLC's legal actions. "I am definitely a member of the LLC, and we are pursuing our lawsuit against Arlie and Mid-pen," Denevi said.
John Musumeci, Arlie's land acquisition manager, said that the superior court's previous ruling that the LLC, not Arlie, violated the purchase agreement, would support Arlie's and the open-space district's defense.
Craig Britton, district manager for the open-space district, previously stated that the district has no place in the lawsuit because Denevi's option was not in place at the time of purchase.
Los Gatos, California Since 1881
