A legal battle between two of Orange County’s most influential equestrian sport sponsors, Joan Irvine Smith and R.J. Brandes, came to a close with the Oct. 3 ruling of an arbitration process.
Brandes was cleared of Smith’s charges that he cheated her out of profits from their joint venture, Oaks/Blenheim Exhibitions, LLC. Smith was cleared of Brandes’ cross-claims, including breach of contract and defamation. No monetary awards were made. The arbitration concluded that Brandes was owed approximately $2.7 million in payback for advances made to OBE, but with the company showing a net loss of $1.4 million from 1999 to 2004, there were no funds to be drawn on.
Sadly, the two Orange County philanthropists had been friends with a shared a vision for raising the profile of horse sports. Equestrians throughout the state and beyond benefited from that vision in the form of a wonderful place to compete. Independent of these legal proceedings, the equestrian venue was set to close at the end of this year because the property’s lease was due to expire. On Oct. 22, Blenheim EquiSports announced that its 2009 season would continue at the San Juan Capistrano site, along with the Del Mar Horsepark, where the show management company also stages hunter/jumper shows.
Brandes and Smith were partners in Oaks/Blenheim Exhibitions, the company responsible for developing and operating the Oaks/Rancho Mission Viejo Riding Park in San Juan Capistrano. The beautiful venue first staged equestrian events under Smith’s auspices in 1996 and 1997. It was her intent then to stage world-class show jumping competitions. To that end, she and the Rancho Mission Viejo Company invested about $2 million into the park, says Smith. This included using Olympic course designer Robert Jolicoeur to design the site and applying to host Olympic selection trials.
Smith’s dream seemed nicely on track when she and Brandes formed OBE in 1998. Brandes, too, believed that equestrian sports and show jumping, in particular, deserved a spectacular stage. With his investments in the venue, and in his partnership with Robert Ridland’s show management company, Blenheim EquiSports, Brandes invested huge sums into promoting competitions at the site. OBE hosted everything from benefit shows for the Shea Therapeutic Riding Center to the jumping selection trials for the 2000 and 2004 Olympics and 2006 WEG show jumping team and the 2008 dressage squad. The property was also home to the annual Rancho Mission Viejo Rodeo and thousands of youth soccer games.
However, the Brandes-Smith friendship went awry. In mid-2007 Smith filed a lawsuit charging that Brandes fraudulently diverted $6 million from their venture. She further alleged that he had not abided by an oral agreement to be partners managing horse shows at the location, as distinct from their partnership as venue operators. The arbitration ruling, by retired and prominent judge Gary L. Taylor, found insufficient evidence to support the existence of such an agreement.
In determining the recovery of attorneys’ fees and other costs, Taylor found that “there is no prevailing party in this litigation.” Smith described the results as “a wash,” and a Brandes spokesperson described it a clear victory.
“I am gratified to be vindicated by this ruling,” Brandes said in a prepared statement. “I am thrilled the system worked and that it was shown that I did nothing wrong. I did this project for my family, for my love of the sport and for the community.” Taylor noted that, had the parties predicted the souring of their friendship, they would have been wise to maintain the company’s books with more “corporate formality.”
Taylor praised Brandes’ professional efforts and integrity but commented that both parties could have addressed their issues through non-litigious means.
“At the time the (accounting) format used was understandable and appropriate,” Taylor wrote. “The parties were close friends; their interest in the venture was more as a sport and hobby, rather than a business. Mr. Brandes was putting in all the money and taking all the financial risk. There was a climate of mutual cooperation to freely lend employees and equipment to get the job done. It was a start-up effort with little OBE staff or formalities.”
When contacted for comment on the ruling, Smith referred this reporter to accounts in local newspapers and made a point of detailing her role in the Riding Park’s development. “The Rancho Mission Viejo Company and I built The Oaks/Rancho Mission Viejo Riding Park in the first place and I held world class equestrian events there years before my partnership with Mr. Brandes.” The end result of the arbitration is dissolution of OBE, as requested by both parties.