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proceeds, however, were not used to construct a new restaurant
and bar because by the time the insurance company paid Benavidez
the liquor license would have possibly lapsed due to inoperation
of the bar.
Benavidez purchased a tract of real property located in Dona
Ana County, New Mexico, from Rodolfo Saenz (Saenz) to be the site
for a new restaurant and bar. Under the contract dated July 31,
1990, Benavidez was to pay Saenz $35,000 for the land. This
payment was structured to require a $10,000 downpayment, with the
$25,000 balance payable in equal annual installments of $6,594.94
for a period of 5 years, the first payment being due on July 15,
1991. Saenz deeded the land to Benavidez on July 31, 1990.
After obtaining the land from Saenz in July 1990, Benavidez
attempted to obtain financing through banks to build a new
restaurant but was turned down by two or three different banks.
The banks would not provide financing to Benavidez because they
were unwilling to accept the only asset he had--his liquor
license--as collateral. Benavidez had purchased his liquor
license in 1985 for approximately $45,000. The availability of
alcoholic beverages, in general, attracts more business to a
restaurant, and a liquor license can cost as much as $100,000 to
$200,000 in Dona Ana County, New Mexico.
Consequently, Benavidez entered into negotiations with Lauro
Guaderrama (Guaderrama), a farmer in New Mexico during the years
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