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To be a Joint Venture? or Not to Be a Joint Venture – That is the Question

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  • Posted on: Apr 19 2023

By: Jeffrey M. Haber

When is a joint venture a joint venture under the law? The easy answer to this question can be found when the parties enter into an express joint-venture arrangement or an express partnership arrangement. The hard answer, however, must be found in the facts and circumstances of the dispute between the parties. 

In Capstone Capital Group, LLC v. DCK Worldwide Holdings, Inc., 2023 N.Y. Slip Op. 01953 (1st Dept. Apr. 18, 2023) (here), the answer to the question turned on the interplay of financial documents between the parties, and whether those documents and the parties’ conduct established an “unequivocal collective design” (i.e., a joint venture) that precluded any of them from pursuing independent action.1 As discussed below, the Court found that there was no joint venture between the defendants.

What is a Joint Venture?

A joint venture is a special combination of two or more parties for their mutual benefit and profit in a particular transaction.2 In the absence of a specific agreement between the parties memorializing their joint venture status, courts look to a number of factors, including: (a) acts manifesting the intent of the parties to be associated as joint venturers, (b) mutual contribution to the joint undertaking through a combination of property, financial resources, effort, skill or knowledge, (c) a measure of joint proprietorship and control over the enterprise, and (d) a provision for the sharing of profits and losses.3 “The ultimate inquiry is whether the parties have so joined their property, interests, skills and risks that for the purpose of the particular adventure their respective contributions have become as one and the commingled property and interests of the parties have thereby been made subject to each of the associates on the trust and inducement that each would act for their joint benefit.”4 

Notably, if a joint venture exists, “plaintiff’s status as an alleged partner in a joint venture gives rise to a fiduciary relationship which allows the imposition of a constructive trust.”5 

Capstone Capital Group, LLC v. DCK Worldwide Holdings, Inc.

[Ed. Note: the factual discussion below comes from the complaint, the parties’ briefing on appeal, and the transcript of the argument on the motion before the trial court.]

Capstone arose from a co-lending arrangement that began in 2017 between Arena and Capstone, on the one hand, and various borrowers on the other, all of which were affiliated construction companies operating under the “DCK” brand. Together, Arena and Capstone provided millions of dollars in financing to the DCK companies (the “DCK Borrowers”) in order to fund the companies’ working capital costs and allow their construction projects to operate. Pursuant to a series of financing agreements, Arena and Capstone each provided funding to the DCK Borrowers through “purchase money advances”. 

In mid-2020, the DCK Borrowers began missing their monthly debt service payments. In early 2012, after months of missed payments, the DCK Borrowers defaulted on their repayment obligations.

Thereafter, Arena tried to ascertain the DCK Borrowers true financial condition but was thwarted at every turn. Fearing that Arena’s investment was at serious risk, Arena moved to secure the collateral underlying its financing. Arena initiated separate enforcement proceedings against the DCK Borrowers in February and March 2021, respectively, seeking the repayment of the amounts owed.

Capstone did not join Arena in these enforcement proceedings. Instead, Capstone initiated its own action against the DCK Borrowers. In doing so, Capstone also named Arena, the individual defendants, and various principals and senior executives of the company as defendants. Capstone alleged, among other things, that the defendants created a joint venture pursuant to which they were liable.

Arena moved to dismiss. The motion court found that there was no joint venture sufficient to support Capstone’s claims.

Capstone appealed. The Appellate Division, First Department affirmed.

The Court held that the motion court “correctly dismissed the seventeenth (breach of the implied covenant of good faith and fair dealing), eighteenth (breach of fiduciary duty), nineteenth (aiding and abetting breach of fiduciary duty), and twentieth (permanent injunction) causes of action, asserted against Arena”.6 The Court reasoned that these claims required a fiduciary duty (via a joint venture) which Capstone failed to demonstrate: “As a necessary predicate for the claims, plaintiffs must allege that the parties entered into an agreement or engaged in conduct evincing an intent to operate as a joint venture in connection with their financing of the construction project.”7 

The Court found that “[o]ther than the terms of the loan guaranties …, nothing in the record gave rise to an inference of a joint venture arrangement”.8 “Rather,” said the Court, “the record clearly establishe[d] that the parties were merely coordinated lenders, with distinct rights to enforce payment of the debt and to secure the collateral, and without the reciprocal duties and obligations of joint venturers”.9 

In conclusion, the Court opined that: 

While a joint-lender relationship may properly be construed as a joint venture where the parties’ agreements or conduct establishes an “unequivocal collective design” that precludes any lenders from pursuing independent action …, the express language of the financing agreements, the nature of the parties’ relationship, and the parties’ conduct here do not support a finding that the parties intended to act collectively.[10


The Court’s conclusion, quoted above, best describes the takeaway of Capstone. To establish whether there is a joint venture arrangement, the courts should examine the parties’ agreements and the parties’ conduct to determine whether they can act independently of one another. If they can act independently, then there is no joint venture. If, however, they cannot act independently, then there is a joint venture.


  1. See, e.g., Beal Sav. Bank v. Sommer, 8 N.Y.3d 318, 326-332 (2007); Credit Francais Intl. v. Sociedad Fin. de Comercio, 128 Misc. 2d 564, 577-582 (Sup. Ct., N.Y. County 1985).
  2. Forman v. Lumm, 214 A.D. 579 (1st Dept. 1925).
  3. Richbell Info. Servs., Inc. v. Jupiter Partners, L.P., 309 A.D.2d 288, 298 (1st Dept 2003).
  4. Hamlet at Willow Creek Dev. Co. v. N.E. Land Dev. Corp., 64 A.D.3d 85, 104 (2d Dept. 2009) (quoting, Steinbeck v. Gerosa, 4 N.Y.2d 302, 317 (1958)).
  5. Plumitallo v. Hudson Atl. Land Co., 74 AD3d 1038, 1039 (2d Dept 2010).
  6. Slip Op. at *1.
  7. Id. (citation omitted).
  8. Id. (citation omitted).
  9. Id.
  10. Id. (citing, Beal Sav. Bank, 8 N.Y.3d at 326-332; Credit Francais Intl., 128 Misc. 2d at 577-582).

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

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