## Facts

- Michael Crandall (plaintiff), Fluvio Babich (defendant), and Giunta orally agreed to work together to build modular homes for profit.
- The parties agreed that each participant would receive **one-third** of the profits.
- Babich, acting through his company Summit Builders, Inc. (Summit) (defendant), handled the administrative and financial aspects of the projects.
- Giunta performed most of the painting, some carpentry, and other construction-related tasks.
- Crandall served as the project manager for each job.
- The parties completed the first five houses without dispute.
- The relationship deteriorated during a project for Norma Bradley, where the parties agreed to build a “model” modular home on Bradley’s property **at cost**, expecting Bradley would allow them to rent the home at a favorable rate for three years.
- Babich and Giunta contended Crandall charged management fees to Bradley that they did not want charged on the at-cost model-home project.
- After the home was built, Bradley refused to allow the parties to rent the home as expected.
- Babich and Giunta cited the Bradley dispute, alleged workmanship problems, and an asserted conflict of interest (Crandall working for a competing firm) as reasons to end the arrangement.
- At the time of termination, Babich and Giunta had substantially completed two additional projects to which Crandall had not materially contributed.
- Crandall sued Babich and Summit, alleging he had not been paid his one-third share of venture profits and had not been reimbursed for certain expenses.

## Issues

1. Whether the parties’ oral agreement to build modular homes for profit, with a one-third profit split and divided responsibilities, created a joint venture under Virginia law.
2. If a joint venture existed, whether Crandall was entitled to a one-third share of profits from projects connected to the venture despite the parties’ termination of their relationship.
3. Whether Crandall could recover profits (and/or expenses) relating to projects Babich and Giunta substantially completed without Crandall’s material contribution.

## Decision

- The court determined that Crandall, Babich, and Giunta entered into a “combination and business undertaking to build modular homes for a profit,” amounting to a joint venture under Virginia law.
- The court treated the venture’s profit-sharing term as **one-third to each participant**.
- The court addressed Crandall’s claims for unpaid profits and expense reimbursement by applying joint-venture/partnership-style accounting concepts to the parties’ dealings.
- In resolving what Crandall could recover, the court distinguished between work performed as part of the joint venture while the relationship continued and later projects that Babich and Giunta substantially completed after Crandall stopped materially contributing.

## Legal Principles

- A joint venture can be formed by an oral agreement when parties combine efforts in a business undertaking for profit and agree on profit sharing, even without a written contract.
- Courts look to the parties’ conduct (division of roles, course of dealing, and profit-splitting practice) to determine whether a joint venture existed.
- Joint ventures are commonly treated like partnerships for purposes of duties between venturers, including the need to account for profits and proven venture expenses.
- A venturer’s right to share in profits depends on the scope and timing of the venture relationship and the parties’ agreement; where the relationship ends, later work performed independently by remaining participants may be treated differently from venture work already underway.
- A claim for expense reimbursement requires proof that the expenses were incurred for venture purposes and are properly chargeable to the venture.

## Conclusion

In *Crandall v. Babich*, the Nelson County Circuit Court held that the parties’ oral modular-home arrangement—featuring a one-third profit split and divided responsibilities—constituted a joint venture, and it evaluated Crandall’s demands for profits and expenses by applying joint-venture accounting principles while distinguishing venture work from projects substantially completed without his material participation after the relationship ended.


Crandall v. Babich, 81 Va. Cir. 486 (2008)