Edmunds

A minority partner sued to recover his share of the proceeds of a sale of partnership property which occurred after he withdrew from the partnership, claiming he had relied on the majority partner’s representation that he intended to develop the property and would not sell it in bulk to third persons. The issue on this appeal is whether the representation supports appellants’ claim of constructive fraud. We hold that it does not.

Statement of Facts

Arthur E. Edmunds and Edward K. Zuckerman were lawyers, builders, and first cousins. In 1963, Edmunds and Zuckerman formed a partnership to acquire a large piece of acreage in the West San Fernando Valley for residential development. Edmunds owned one-third and Zuckerman owned two-thirds of the partnership and they called it Valley Circle Estates (VCE). Over the years, the partners subdivided the property into several tracts and built homes on the improved lots. In 1985 and 1986, VCE sold approximately 200 finished lots to Urban West for $17 million. Before the sale to Urban West, there were only two other bulk “lots only” sales. In the middle 1960’s, approximately 125 lots were sold to Liberty Building. Later, 20 lots were…