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The following is a summary of the relevant facts that do not
appear to be in dispute. They are stated solely for purposes of
deciding the pending motions and are not findings of fact for
this case. Fed. R. Civ. P. 52(a); Rule 1(a); Sundstrand Corp. v.
Commissioner, supra.
Background
During the years in issue, petitioner was a 50-percent
partner in a partnership known as Lowry Wells Investments (the
partnership). The partnership owned a building located at 17862
Fitch Street, Irvine, California (Fitch Property), that was
subject to a mortgage reflecting a loan from Aid Association of
Lutherans (AAL).
On December 15, 1993, the partnership as borrower and AAL as
lender entered into a “Covenant Not to Sue”. The covenant stated
in pertinent part:
In consideration of the hereinafter granted
release from [the partnership] * * *, the conveyance of
the real property located at 17862 Fitch Street, and
other good and valuable consideration, * * * [AAL]
hereby covenants not to sue Borrower * * * in
connection with * * * those mortgage loans made by
Lender to Borrower * * *. [Emphasis added.]
The release referred to above was contained within the covenant
and stated that the partnership released all claims it might have
had against AAL in connection with the loans. On May 27, 1994,
escrow closed on the Fitch property, and title to the Fitch
property passed from the partnership to AAL.
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