Blinder, Robinson & Co., Inc. v. Alzado, 82CA1503
| Decision Date | 03 July 1985 |
| Docket Number | No. 82CA1503,82CA1503 |
| Citation | 713 P.2d 1314 |
| Parties | BLINDER, ROBINSON & CO., INC., a Colorado corporation, Plaintiff-Appellant and Cross-Appellee, v. Lyle ALZADO, Defendant-Appellee, Cross-Appellant, and Third-Party Plaintiff-Appellee, v. Ronald KAUFFMAN and Arnold Tinter, Third-Party Defendants-Appellants. . I |
| Court | Colorado Court of Appeals |
Philip E. Lowery, P.C., Philip E. Lowery, Denver, for plaintiff-appellant and cross-appellee.
Davis, Graham & Stubbs, Charles L. Casteel, John F. Knoeckel, Denver, for defendant-appellee, cross-appellant, and third-party plaintiff-appellee.
Ronald Kauffman, pro se.
Breit, Best, Richman & Bosch, John L. Breit, Susan Smith Fisher, Denver, for third-party defendant-appellant Arnold Tinter.
This action arose as the aftermath to a 1979 exhibition boxing match between defendant, Lyle Alzado, a professional football player, and Muhammed Ali, the then heavyweight boxing champion. Following a jury trial, judgments were entered (1) against Alzado and in favor of plaintiff, Blinder, Robinson & Co., Inc. (Blinder-Robinson), on the complaint, (2) in favor of Alzado and against Blinder-Robinson on two counterclaims, (3) in favor of Alzado and against third-party defendant Ronald Kauffman on two third-party claims and third-party defendant Arnold Tinter on one third-party claim. All parties appeal. We affirm in part and reverse in part.
Alzado, together with his agent, Kauffman, and his accountant, Tinter, formed Combat Promotions, Inc., to promote the bout. Muhammed Ali demanded a $250,000 letter of credit to secure his compensation. In order to obtain this commitment and to bring to fruition the exhibition boxing match, Combat Associates, a limited partnership, was formed with Combat Promotions, Inc., as general partner and Blinder-Robinson as limited partner. The general partner's contribution was its assignment of all its contracts pertaining to the match; Blinder-Robinson's contribution was obtaining the letter of credit to deliver to Ali.
A separate agreement between Alzado and the limited partnership provided that Alzado would be paid $100,000 for engaging in the match, but also provided that Alzado's right to receive this money was subordinated to the payment of the expenses of the match and the reimbursement of Blinder-Robinson. Also, Alzado, by a written guaranty agreement, secured by an assignment of investment accounts, a deed to his home, and a confession of judgment, guaranteed that Blinder-Robinson would be reimbursed for any amount it had to pay pursuant to its letter of credit in the event the proceeds of the match were insufficient. This agreement also provided that all existing or future indebtedness of the limited partnership to Alzado was subordinated to the amounts he owed to Blinder-Robinson.
A week before the fight, Alzado threatened not to participate because he feared he could lose all his assets. A meeting was held at the Blinder-Robinson office, with Alzado, Tinter, Kauffman, Meyer Blinder (president of Blinder-Robinson), and Greg Campbell (Ali's manager) all present. As a result of the meeting, Alzado agreed to fight.
The proceeds of the match were insufficient to meet all of the obligations. Blinder-Robinson was repaid $65,000 from the proceeds, and subsequently initiated this civil action to recover the remaining $185,000 from Alzado based on his guaranty.
Alzado pled affirmative defenses of waiver, estoppel, release, and fraud in the inducement, and, additionally, asserted two counterclaims. He first claimed that Blinder-Robinson took an active role in the control and management of Combat Associates and thereby became a general partner liable for the obligations of Combat Associates, including the $100,000 to Alzado for engaging in the boxing match. In his second counterclaim, Alzado alleged that Blinder-Robinson had breached an oral agreement with him not to enforce its rights under the guaranty and to indemnify him against any financial losses in connection with the guaranty and related documents.
Alzado also asserted third-party claims against Kauffman and Tinter. First, he alleged that both Kauffman and Tinter had misrepresented that the guaranty and related documents would not create legal liabilities or financial risk for Alzado, and that the ticket sales for the boxing match were sufficient to cover all the expenses, including the obligation to Blinder-Robinson. For these alleged misrepresentations, he prayed for judgment against Kauffman and Tinter for any amount he might be found to owe to Blinder-Robinson. As to Kauffman alone, Alzado also claimed that, as his agent, Kauffman owed a fiduciary duty to protect him from financial loss, and that Kauffman breached this duty by inducing him to sign the guaranty and related documents.
The jury was instructed as to all of these claims and defenses. It returned a verdict in favor of Blinder-Robinson on its guaranty claim, and judgment was entered for $185,000 plus $36,388 in attorney fees against Alzado. On the counterclaims of Alzado against Blinder-Robinson, the jury held for Alzado and awarded damages to him and against Blinder-Robinson on the first counterclaim in the amount of $92,500 based on its liability as a general partner of Combat Associates for compensation to Alzado for participating in the fight and on the second counterclaim in the amount of $100,000 for its breach of the oral agreement not to enforce the guaranty and to indemnify. On the third-party claims, the jury held for Alzado and against Kauffman on the deceit and breach of fiduciary duty claims and set damages at $100,000 on each count, and against Tinter on the deceit claim with $100,000 as damages on that count. Judgments were entered accordingly.
Claiming that the guaranty violated § 7-61-117, C.R.S., Alzado contends that the judgment for $185,000 plus attorney fees in favor of Blinder-Robinson on its claim for enforcement of the guaranty must be reversed and that judgment notwithstanding the verdict should be entered in his favor. We disagree.
Section 7-61-117, C.R.S., states in pertinent part:
"A limited partner shall not receive from a general partner or out of partnership property any part of its contribution until ... all liabilities of the partnership, except liabilities to general partners and limited partners on account of their contribution, have been paid or there remains property of the partnership sufficient to pay them."
There was no violation of the statute here because Blinder-Robinson's contribution to the limited partnership was not secured by partnership funds or guaranteed by a general partner. See Kramer v. McDonald's System, Inc., 77 Ill.2d 323, 33 Ill.Dec. 115, 396 N.E.2d 504 (1979). Alzado was not a partner of Combat Associates, and the guaranty he signed pledged his own and not partnership assets. The guaranty was totally unrelated to the partnership assets available for payment to creditors.
As to the repayment of the $65,000 out of partnership assets, there was no showing that the partnership lacked sufficient other assets to pay the liabilities of the partnership other than the amount owing to Alzado. And, Alzado had agreed that Blinder-Robinson was to be repaid its contribution before payment of his fee or any distribution of net profits.
Therefore, the trial court properly denied Alzado's motion for judgment notwithstanding the verdict on Blinder-Robinson's complaint.
By its verdict for Blinder-Robinson, we must assume that the jury held against Alzado on his affirmative defenses of waiver, estoppel, release, and fraud, and, in effect, decided that Blinder-Robinson had not waived or released its rights under the guaranty or agreed to indemnify Alzado. (Also, see IIB below.)
Blinder-Robinson contends the trial court erred in denying its motion for judgment notwithstanding the verdict on this counterclaim. It asserts that the assistance it provided did not cause it to lose its status as a limited partner and to become liable, as a general partner, to pay Alzado's $100,000 fee for participating in the fight. We agree.
There was no conflict in the evidence regarding the acts of Blinder-Robinson. As agreed, it put up the $250,000 letter of credit to secure Ali's commitment to fight Alzado. Meyer Blinder, its president, was interviewed at several press conferences, both before and after the limited partnership agreement was signed, and he participated in a promotional rally...
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