Judge orders $13 million judgment in favor of real estate tycoon in suit against business partner

(CN) — A California judge on Monday issued a tentative ruling in favor of real estate tycoon Stanley Black in his lawsuit against his business partner of more than 35 years, Robert Barth. After a two-week bench trial, the judge ordered Barth pay Black $13.4 million, half of which is for punitive damages.

Black's lawyer, Howard E. King, said that Barth "took a $7 million corporate opportunity that should have gone to his investors and put it in his own pocket." He added: "His very good lawyers turned what should have been a one-day trial into a two-week trial, with zillions of defenses."

Robert Klieger, Barth's lawyer, said he and his client were disappointed with the ruling, which Klieger called "flawed both factually and legally."

"The ruling is only tentative and we remain hopeful the court will recognize both the efforts that Mr. Barth took to advance his investors’ interests over his own, and the plaintiff’s lack of standing to pursue his claims in the first instance," Klieger added. "Failing that, Mr. Barth is confident that his position will be vindicated on appeal."

Black, 90, is the founder and chairman of Black Equities Group, which owns 18 million square feet of property in the country. Along with his late wife Joyce Black, he is a prominent philanthropist in Southern California, having given millions of dollars to Jewish and health care-related causes. Barth, meanwhile, served as CEO of Black Equities; he and Black collaborated on other ventures, including a property management company.

The two were close. According to the judge's ruling, "Until the fall of 2019, Barth and Black had offices in the same suite, separated by about 20 feet with a shared wall. Barth and Black spoke face-to-face, typically a couple of times a day."

Black and some other investors sued Barth in 2019, accusing Black of bilking them out of close to $7 million in a Beverly Hills real estate deal.

The lawsuit revolves around an 8,000-square foot mansion at 840 Greenway Drive on the western edge of Beverly Hills, a stone's throw from the Los Angeles Country Club and less than a mile from the Playboy Mansion. According to the complaint, the house was bought for $17 million by a pair of limited liability companies managed by Barth, with money invested by Black and others, in December 2017.

Less than a year later, Barth received an offer to sell the property for the princely sum of $21.2 million, which would have made investors a tidy profit. But Barth, without telling his investors, made a bold counteroffer: $25 million. The buyer, Eric Barker, agreed.

Barth then sold the property to himself for $16.9 million, a slight loss for the LLCs, signing both the purchase and sale agreements himself. He subsequently sold the house to Barker's LLC, Cobra Kai Holdings for $25 million, pocketing the profit. He also tacked on various fees, according to the suit.

In his defense, Barth claimed that he had told Black about the scheme beforehand, and Black had agreed to it. But Judge Monica Bachner wrote in her tentative ruling, "Barth’s claim is not credible. In fact, Barth did not disclose his purchase and sale of the Greenway property to any of the investors." She called Barth's actions "willful misconduct, intended to advance Barth’s own interests."

The judge awarded Black and the other investors $6,692,740 in damages, based on the amount they would have made had they sold the house to Barker. She also awarded another $6,692,740 in punitive damages, reasoning: "Barth maliciously and fraudulently diverted the profits of the Greenway property sale, using a double escrow where he signed the documents for both parties."

Technically, Black and Barth are still business partners, according to King. They also have another lawsuit pending, over allegations that Barth fraudulently took "millions of dollars in fees" out of a company they jointly held. A trial setting hearing in that case is scheduled for Friday.

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