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note was recourse as to GSD.
On November 30, 1984, Western Savings lent GSD $38 million.
Western Savings structured the loan as an $88 million wraparound
mortgage that included the outstanding balance of Sunbelt’s $50
million note.
GSD conducted development activities and made sales from the
Encino Park project from 1984 to 1987.
3. GSD Ownership–-1987 to 1991
In December 1987, Smith and Davis assigned their limited
partnership interests in GSD to petitioner and Schlesinger. From
December 1987 to January 1991, petitioner owned a 66.67-percent
general partnership interest and Schlesinger owned a 33.33-
percent limited partnership interest in GSD.
4. Encino Park Foreclosure and Sunbelt Note Litigation
The Sunbelt note matured on December 1, 1987. GSD did not
repay the note at that time. Sunbelt treated the note as being
in default, and, in January 1988, sued GSD, petitioner, and
Schlesinger in Dallas County, Texas, district court. GSD,
petitioner, and Schlesinger filed a counterclaim alleging that
the foreclosure was wrongful on the grounds that the Sunbelt note
was not a loan and that Sunbelt was a joint venturer in the
project.
On February 2, 1988, Sunbelt foreclosed on Encino Park. On
March 1, 1988, Sunbelt bought Encino Park for $30.4 million in
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Last modified: May 25, 2011