SAN JUAN CAPISTRANO, Calif., Oct. 9, 2008 (GLOBE NEWSWIRE) -- Orange County businessman R.J. Brandes of Blenheim EquiSports and developer of the country's premier equestrian facility in San Juan Capistrano, did not cheat heiress Joan Irvine Smith and in fact is owed money from their partnership, an arbitrator has ruled.

The ruling by arbitrator Gary L. Taylor, a retired United States Federal Court judge, rejected all claims brought by Smith in a lawsuit against Brandes, alleging he bilked her out of money in their partnership to build Oaks/Blenheim Exhibitions. Instead, Taylor ruled, the partnership owes Brandes $2.7 million for funds he advanced the partnership.

``I am gratified to be vindicated by this ruling,'' Brandes said. ``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.''

Smith filed the lawsuit in mid-2007, claiming that Brandes mismanaged the partnership and falsified financial records. The matter later was submitted to arbitration.

``The accounting records used by OBE are substantially reliable,'' Taylor wrote. ``The finding makes moot many of the other issues presented in this arbitration, and compels the conclusion that no distribution is due (Smith).''

The partnership began in 1998 with both parties contributing $100,000. Only Brandes contributed cash, however. Smith contributed only the value of a lease allowing use of the property along Ortega Highway, at that point a polo field, for an equestrian facility.

Brandes then advanced the partnership nearly $3 million to develop the facility as well as for operating costs.

Smith's claim that the parties had an enforceable oral contract also was rejected by Taylor.

``After reaching an understanding, they set their lawyer to work drafting a fully detailed written agreement, carefully spelling out the parties' rights, and insulating the individuals from personal liability by using corporate entities,'' Taylor wrote.

Smith had also claimed that Brandes had no right to individually present horse shows at the facility, but Taylor rejected that as well. He noted that their agreement covered building the facility and did not restrict Brandes's right to form a separate company to present shows.

Brandes created Blenheim EquiSports and presented numerous shows, including Olympics trials for show jumping in 2000 and 2004. In addition, the facility became a venue for thousands of soccer games. Over 10 years, more than 2,000 youths who played there received educational scholarships, said Gary Sparks, chairman of Coast Soccer League Premier.

In her allegations, Smith claimed that she should receive an interest in any profits made by Brandes's separate company, Blenheim EquiSports.

``Mrs. Smith had no interest in putting money into the venture, and she knew Mr. Brandes had acquired EquiSports and was running the shows,'' Taylor noted. ``EquiSports paid rent to OBE. It would be unreasonable to conclude that Mrs. Smith did not know Mr. Brandes was separately operating EquiSports.

``The parties' agreement was to create a top-rated riding events center, which they did,'' the arbitrator wrote. ``They did not agree to joint ownership of horseshow production efforts.''

Despite Smith's claims that Brandes had mismanaged the accounting of the partnership, Taylor found the accounting to be reliable. ``Expenses were correctly allocated,'' he ruled. ``Revenue was treated correctly. The data was segregated.''

His ruling came after Smith had engaged Deloitte, a national accounting firm, to find errors. Despite using 22 different staff members at a cost of around $700,000, the accountants could not convince the arbitrator that Brandes had done anything wrong.

Taylor commented on both parties for their conduct in the dispute over the partnership. Of Smith, he wrote:

``Mrs. Smith should not have gotten so upset about perceived slights, and approached her friend and partner in a non-litigious way for an explanation of misunderstood transactions.''

Taylor also wrote of Brandes's credibility:

``Mr. Brandes is an honest, intelligent, highly-skilled businessman who honorably participated in this venture, performing his duties beyond all requirements, and achieving the goals of the partnership far beyond the hopes and expectations of the parties. He made it possible for Mrs. Smith's horseshow venue dream to come true.''

``Mr. Brandes deserved these fair and impartial findings,'' said Matthew A. Hodel of Hodel Briggs Winter, the Irvine firm that represented Brandes. ``It is not every day that a judge comments on a litigant's character in such a positive fashion. This case called out for that, and we are very pleased with the result.''

Taylor also ordered the dissolution of the partnership, as requested by both parties. Citing Brandes's management abilities, Taylor ruled that Brandes will oversee the winding down of the company by December 31.

          N. Christian Anderson for R. J. Brandes
          949-400-1833
          chrisanderson@cox.net