- 30 -
having received a credit, which was included in the amount
realized by Pecaris (but was not itself the receipt by Pecaris of
a partnership interest in Coastal in consideration of a
contribution of property by Pecaris to Coastal), that enabled and
entitled petitioner to receive a 90-percent partnership interest
in Coastal.
B. Petitioner's Share of Pecaris Gain
We now consider petitioner's share of the Pecaris gain
as computed above. Under the Pecaris partnership agreement,
petitioner has a 25-percent interest in profits and losses.
Petitioner did not disclose to Messrs. Boyas and Spillas,
prior to consummation of the Mall transaction between Pecaris and
Coastal, that he was on the Coastal side of the transaction as
its dominant partner.14 Although petitioner testified that he
participated in the negotiations on both sides of the
transaction, along with Mr. Spillas and Mr. Giorgi, Mr. Spillas
testified that the three Pecaris partners agreed on the purchase
price. We don't believe that there were actual arm's-length
negotiations between Pecaris and Coastal to fix the purchase
price. If petitioner had made Messrs. Spillas and Boyas aware
14Petitioner's nondisclosures to Messrs. Boyas and Spillas
may well have violated his fiduciary duty to them as his
partners, but that's another story. See Meinhard v. Salmon, 164
N.E. 545 (N.Y. 1928), cited with approval by In re Binder's
Estate, 27 N.E. 2d 939, 949 (Ohio 1940), and Restatement (First)
of Restitution, sec. 190-191, 781-789 (App. 1988); see also infra
text at 37.
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