Kazanjian

Background

Gary J. Kazanjian (Kazanjian) owned a parcel of undeveloped property in Rancho Santa Fe. He experienced financial difficulty in servicing the encumbrances on the property, and determined he would be required either to sell or find some means of developing the property in order to avoid foreclosure by the lienholders. Kazanjian contacted Herbert Hops of the Hops Development Corporation (Hops) for assistance in resolving his problem.

Hops advised that construction of a high-value residence on the Kazanjian property would be profitable. The plan was to utilize Kazanjian’s equity in the property to obtain the necessary financing for construction. Hops could add nothing to the financial credibility of the project, however, because he had recently suffered foreclosures on two properties he owned, resulting in impairment of his credit. It was concluded that the parties would need additional financial guarantees to make the project work.

The added guarantor was found in the person of Lawrence Haber (Haber). Haber agreed to lend his financial credit to the venture in return for an interest in profits. Upon the advice of Hops, who had had experience in such structures…

—I concur with the majority’s result, but not its reasoning, insofar as it determines that general partner Haber is not directly liable to limited partner Kazanjian because of the misappropriation of hinds by general partner Hops. I part company with the majority, however, on the question of whether Haber, despite his lack of “primary” liability under any of several theories argued below, should nonetheless be liable to Kazanjian on the “secondary” theory of contribution.

The majority errs in three respects. First, it reverses the trial court on a theory never advanced below or on this appeal, which is improper, while ignoring the admitted fact that Kazanjian elected to pay the improper claim, which estops him from now asserting payment of the lien was improper. Next, apart from the lack of objection below and estoppel, the result reached by the majority is erroneous as a matter of law, resulting in the judicial creation of a heretofore-unknown entity, a “guaranteed” limited partnership. Last, the result reached (including the award of costs to appellant) is inequitable on the facts of the case before us. Because this result is improper, erroneous, and inequitable, I dissent from…

Gary J. Kazanjian (Kazanjian) owned a parcel of undeveloped property in Rancho Santa Fe. He experienced financial difficulty in servicing the encumbrances on the property, and determined he would be required either to sell or find some means of developing the property in order to avoid foreclosure by the lienholders. Kazanjian contacted Herbert Hops of the Hops Development Corporation (Hops) for assistance in resolving his problem.

Hops advised that construction of a high-value residence on the Kazanjian property would be profitable. The plan was to utilize Kazanjian's equity in the property to obtain the necessary financing for construction. Hops could add nothing to the financial credibility of the project, however, because he had recently suffered foreclosures on two properties he owned, resulting in impairment of his credit. It was concluded that the parties would need additional financial guarantees to make the project work.

The added guarantor was found in the person of Lawrence Haber (Haber). Haber agreed to lend his financial credit to the venture in return for an interest in profits. Upon the advice of Hops, who had had experience in such…