Casey v. Chapman

98 P.3d 1246 (2004)

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Nature of the Case

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Facts

P and D and others formed a general partnership known as the South 320th Federal Way Partnership. They formed it for the purpose of acquiring, developing, and managing commercial real property. By early 1993, their names and percentages of interest in the partnership were then: P (40 percent), D (20 percent), Charles Binford (10 percent), Charles Eggener (20 percent), and QCI, Inc. (10 percent). P purchased D's 'entire Partnership Interest' for $200,000. P made a down payment of $15,000 and delivered a nonrecourse promissory note to D for $185,000. P pledged to D the partnership interest that was the subject of the purchase as collateral for his obligation to pay the note. By January 1995, P ceased paying the obligation evidenced by the note. D commenced foreclosure proceedings by giving notice of default. P commenced this action and obtained a temporary restraining order and preliminary injunction prohibiting the sale from going forward. A settlement agreement required P to pay D $400,000 in exchange for additional time to make payments on the original note. If he failed to make the required payment, a foreclosure sale of the collateral under the UCC was to occur on October 15, 1999. P failed to make the required payment, and D conducted the sale. Bruno Investments, L.L.C. was the successful bidder at the sale, purchasing for $200,000 the partnership interest that P pledged as collateral. D moved for entry of a declaratory judgment regarding the effect and validity of the UCC sale. D sought a judgment determining that the sale was valid and that the purchaser acquired the partnership interest P pledged, including 'all voting rights, equity interests, and economic interests.' P asked the court to set an upset price of $400,000 as a condition to confirming the sale. The court granted D's motion and denied P's. P appealed. P argues that Bruno Investments acquired only the rights to profits, not voting and management rights, at the sale.