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June 11, 1980


The opinion of the court was delivered by: LUONGO


Beginning in 1975, plaintiff Bennett Levin and defendant Howard Garfinkle participated in a series of complicated real estate ventures involving substantial amounts of money. Levin at first held a minority interest in a variety of properties owned by corporations controlled by Garfinkle, but later purchased Garfinkle's interest in seven large apartment complexes in Charlotte, North Carolina, giving, as part of the purchase price, a sizeable blanket mortgage (deed of trust) to Garfinkle. In October, 1976, Garfinkle alleged that Levin was in default on the mortgage. Rather than risk foreclosure, Levin authorized Garfinkle to sell the properties, both to satisfy Levin's debt as well as to realize a profit for Levin from appreciation of the properties. When the last property had been sold, the Garfinkle interests asserted that Levin still owed them a sizeable sum on his indebtedness to them, while Levin asserted that the defendants had conspired to defraud him in both the purchase and sale of the Charlotte properties, and in several other real estate ventures.

 In this suit plaintiff seeks to recover compensatory and punitive damages for fraud, misrepresentation, conversion, and breach of fiduciary duty. He also seeks an accounting for the proceeds from various transactions which he alleges the Garfinkle interests diverted to their use without giving him credit against his indebtedness.

 The matter was tried over several days from January 7-22, 1980. Testimony comprising over 2,000 pages of transcript was heard, and the parties submitted close to 400 exhibits. Thereafter, the parties submitted requests for findings of fact and conclusions of law, together with briefs on the legal issues. On pleadings, proof, and the written submissions of the parties, I make the following


 A. The Parties

 1. Plaintiff Bennett Levin is a professional engineer whose practice is conducted through several corporations. He has performed engineering services in a variety of real estate projects for major builders, although prior to his ventures with defendants he had never invested in real estate.

 2. Defendant Howard Garfinkle's principal occupation is investing in real estate, which he pursues by investing his own capital through corporations which he controls, and by creating partnerships and syndications in which he participates.

 3. Defendant Barbara Garfinkle is Howard Garfinkle's wife.

 4. Defendant Asher Fensterheim is a member of the New York Bar, and in effect serves as Garfinkle's in-house attorney. He acts as an officer and director of various corporations controlled by Garfinkle, and generally receives a share in the ownership of Garfinkle ventures.

 5. Defendant Cyrus West is a Garfinkle employee who handled disbursements and kept financial records for a number of Garfinkle corporations.

 6. Defendant K. B. Weissman is a New York financier who has a long-standing business relationship with Howard Garfinkle, and who lent money to both Garfinkle and Levin to finance their various investments.

 7. Defendant Edward Breger is a member of the New York Bar in private practice, whose specialty is real estate closings. He represented both Howard Garfinkle and Bennett Levin in connection with some of the properties they owned.

 8. Defendant Norman Septimus is an accountant who performed services for one of Levin and Garfinkle's joint ventures.

 9. Defendant Jack Deutschmann was a Garfinkle employee and investor in several Garfinkle real estate ventures.

 10. Defendant Huckleberry Farm, Inc. is Garfinkle's horse farm and personal residence in Albany, New York.

 11. Defendants HAW Corporation, TAFU Corporation, and Czar Realty Corporation are all corporations which the parties have stipulated are controlled by Howard Garfinkle (P-364).

 12. Defendant Rondi River Realty Corporation is a corporation formed by Howard Garfinkle to hold title to a New York property which he owned jointly with Bennett Levin. The parties have stipulated that this corporation is under the control of Howard Garfinkle. *fn1"

 B. Initial Dealings Between Levin and Garfinkle

 13. Levin met Garfinkle in June, 1973, (T. 442) and performed professional engineering services for him in 1973 and 1974. (T. 34). He visited Garfinkle at his home in Florida, at which time he learned that Garfinkle was involved in some controversy over his business dealings, and had previously been convicted of criminal charges in connection with one of his ventures. (T. 442-446).

 14. In February, 1975, Garfinkle filed for bankruptcy, at which time Levin entered a claim for approximately $ 700,000 for engineering services he had performed for Garfinkle. (T. 448-449).

 15. To compensate Levin for his services, Garfinkle offered Levin the opportunity to invest $ 60,000 in a limited partnership, in which Levin would be given a participating share sufficient to cover Garfinkle's pre-bankruptcy debt to him. (T. 37-38).

 16. The limited partnership was never formed, so Garfinkle then offered Levin the opportunity to invest in various real estate ventures. Levin accepted and invested in various properties in which he received an equity share of twenty to fifty percent. (T. 40).

 C. Purchase and Operation of the Charlotte Properties by Levin and Garfinkle Jointly

 17. Between late 1975 and early 1976, Levin and Garfinkle purchased seven large garden-apartment complexes in Charlotte, North Carolina (the Charlotte Properties), in which Garfinkle interests held a seventy-five percent share, and Levin held a twenty-five percent share. Levin paid more than $ 100,000 to purchase his share. (T. 455).

 18. Each of the seven properties had a development name, which in every case but one was changed by the Garfinkle interests when they bought the properties:


 19. At the time the properties were purchased, both parties knew that existing mortgages on all of the properties were seriously in default. (T. 459). The purchase seemed advisable, however, because the price per apartment was substantially below the prevailing market replacement cost for similar units. (T. 460).

 20. After purchasing the properties, both Levin and Garfinkle received detailed reports about problems with the physical condition of some of the units and the vacancy rate. (T. 475-495).

 22. In January, 1976, vendors began receiving bad checks from the Garfinkle office. (T. 1474-75). Greenberg kept a ledger of these checks. (P-70). In late January and early February, mortgage holders began to call Greenberg in North Carolina to complain about failures to meet mortgage payments. (T. 1479).

 23. In March, 1976, Greenberg sought Levin's help in securing payment for vendors and mortgage lenders, and Levin was successful in making arrangements with them for paying the bills. (T. 1482-85).

 24. In April, 1976, it was agreed by the parties that Levin should assume management of the Charlotte properties. He borrowed $ 350,000 from Continental Bank (T. 496), and upgraded computer facilities in his Philadelphia office to facilitate rent collection. (T. 426). During April, 1976, Estelle (Sue) Manin, a Garfinkle employee, worked in Levin's Philadelphia office, to which rent receipts were directed, and from which disbursements were made.

 25. Levin also opened two accounts for his signature with Continental Bank, in the names of Charlotte Acquisition Corporation, and Acquisition Management Corporation (T. 108-09), both of which were Garfinkle corporations. (P-364, P 1).

 26. To induce Continental to lend the $ 350,000 to Levin and to service the accounts, Garfinkle persuaded defendant K. B. Weissman to deposit $ 240,000 in time accounts at the bank.

 27. For a period of time, all of the rents were flown directly to Levin's office in Philadelphia. Thereafter, Garfinkle directed that the rents be flown to his office in New York, ostensibly so that his office could make duplicate rent records. (T. 872). Garfinkle employees then deducted a portion of the rent, instructed the Garfinkle employee in Levin's office, Sue Manin, to record a lower rent figure than was actually received, and forwarded the balance to Levin's office. (T. 872-874).

 28. In May, 1976, Garfinkle forged Levin's name to certain checks on the Continental accounts, overdrawing them in the amount of approximately $ 136,000. (T. 109; 875); (P-66). Subsequently, collection of the rents was transferred back to Garfinkle's New York office.

 29. Shortly after Garfinkle overdrew Levin's account, K. B. Weissman withdrew the $ 240,000 he had deposited in Continental Bank and closed his account. (T. 110-111); (P-62).

 30. By the end of June, 1976, Levin owed Continental Bank approximately $ 526,000 as a result of his borrowings and overdrafts. (T. 111).

 31. In late spring, 1976, because of the bad checks issued to vendors, and because of complaints by tenants about fraudulent promotions and misapplied security deposits, the Charlotte properties came under investigation by local newspapers and television, as well as the Fraud Division of the Charlotte Police Department. (T. 111-112). In May, 1976, Levin read an article which had been published the previous November in Florida Trend magazine, revealing in detail Garfinkle's prior criminal record, his history of issuing bad checks, and a fraud investigation of him by the Securities and Exchange Commission. (T. 467-470).

 32. Because of growing unfavorable publicity due to Garfinkle's reputation, irregularities in property management, and the series of bad checks issued to vendors, Garfinkle and Levin feared the collapse of the properties. (T. 1175). They were particularly concerned about a report that the Charlotte Observer was preparing a major expose on the properties. (T. 1487-1488).

 33. Garfinkle warned Levin that there was a threat that the senior lienholders would foreclose because of various defaults and the unfavorable publicity, and proposed that Levin become the sole owner of the properties, thus removing the taint of Garfinkle's involvement. (T. 112). Levin agreed to purchase the properties.

 34. Levin bought all seven Charlotte properties from Garfinkle in a series of transactions during June, 1976. (T. 113).

 35. Levin paid approximately $ 50,000 in cash; transferred to Garfinkle ownership of his stock in various joint ventures with Garfinkle (worth an undetermined amount); and executed a note and purchase money mortgage *fn2" in the amount of $ 3,050,000 to a Garfinkle corporation. (T. 113); (D-3; D-8; D-9; D-10). Levin had no personal liability under the note. (T. 551).

 36. The $ 3,050,000 figure for the purchase money mortgage was calculated by Garfinkle, based upon projected rental income from the properties. (T. 115).

 37. In addition to the basic documents necessary to transfer title to the property, the parties executed a series of collateral agreements and instruments at the time of Levin's purchase of the Charlotte properties.

 38. Levin and Garfinkle executed mutual releases, whereby each released, with some limited exceptions, any claim he might have against the other up to that time. (T. 579-581); (D-6; D-7).

 39. Levin agreed to pay delinquent mortgage payments on some of the properties. (P-77). Garfinkle made oral representations to Levin from a sheet in Garfinkle's handwriting, (P-78), about the amounts past due on the various mortgages. (T. 119). Levin subsequently learned that Garfinkle understated the amounts overdue. See Findings 114, 220, infra.

 40. Garfinkle agreed, subject to certain conditions, to indemnify Levin for any losses arising out of two real estate ventures known as Sutton at Collingswood, and Bromley Estates. (T. 575); (D-4).

 41. Garfinkle agreed to give Levin a share of the proceeds from the sale of a Garfinkle property known as Tiffany Apartments, if Garfinkle consummated a pending sale of the property to Newton Heller, a prospective buyer. (T. 576); (D-5).

 42. Garfinkle agreed to lend to Levin, or cause to be lent, by August 15, 1976, the sum of $ 100,000, repayable without interest one year after the date of making the loan. (T. 575); (D-5).

 43. Levin executed a letter, dated June 29, 1976, to Czar Realty Corporation, a Garfinkle corporation, and Asher Fensterheim, in which he acknowledged that he was aware of Garfinkle's criminal record, and of certain improprieties in connection with the management of the Charlotte properties. These included: commingling of assets; improper record-keeping and accounting procedures; the issuance of bad checks; the draining of funds from the properties, without repayment, for the personal use of Garfinkle and his associates; the forging of Levin's name to checks by Garfinkle; substantial defaults on senior liens on the property; and litigation against the properties brought by creditors. Levin also acknowledged that he had investigated the purchase before taking title, and was represented by counsel throughout. (D-2).

 44. Levin and his personal attorney, Howard Creskoff, discussed the June 29, 1976 letter *fn3" for almost one hour before Levin signed it. (T. 559). Levin was advised that the letter might work against his interests if a dispute arose with Garfinkle. (T. 1168). Levin signed the letter because he wanted to help Garfinkle, who was being investigated by the SEC; because Levin had already wired $ 115,000 to senior lienholders on the properties to forestall threatened foreclosures; and because he was physically tired and wanted to bring the deal to a close. (T. 147).

 E. Garfinkle's Oral Representations to Levin With Respect to the Sale

 46. Garfinkle made a series of oral representations and promises to Levin at the time Levin purchased the Charlotte properties in June, 1976.

 47. Garfinkle promised that he would assist Levin in syndicating one of the Charlotte properties immediately after Levin's purchase of them. (T. 142).

 48. Garfinkle represented that he was about to close a deal for the sale of Rondi River, a Levin-Garfinkle venture in New York, from which Levin would obtain substantial working capital.

 49. Levin also testified that Garfinkle promised to forbear collecting interest on the deed of trust for a period of time, (T-142), but there is insufficient evidence to establish that Garfinkle did anything more than give Levin general assurances not to worry about timely payments or possible default. In either case, Levin paid the interest when it came due without protest or request for forbearance. (T. 646-648).

 50. None of these promises were put in writing, (T. 656), even though the agreement of sale for the properties contained an integration clause stating that no agreements between the parties existed outside of the written contract, (D-8, P 25), and Levin's attorney Howard Creskoff was aware of the existence of the clause and its legal effect. (T. 1199-1200).

 51. Levin admitted at trial that Garfinkle's oral promises to him at the time of the sale were not an important inducement leading him to purchase the properties. (T. 655).

 F. Performance of Garfinkle's Promise to Syndicate one of the Properties

 52. When Levin sought Garfinkle's assistance in syndicating the Hope Valley property, (later known as Sheffield Farms), Garfinkle and Fensterheim demanded a $ 150,000 fee for separating the mortgage on this property from the overall $ 3,050,000 deed of trust. Levin paid $ 75,000 in cash, and the aggregate indebtedness under the overall deed of trust was increased to $ 3,125,000. (T. 152-153); (P-205).

 53. Garfinkle and Fensterheim also required Levin to prepay one full year's interest on the deed of trust, approximately $ 56,000. (T. 153).

 54. Garfinkle performed all of the mathematical calculations as to the price at which the syndication was to be offered, projected rates of return, and the like. (T. 150-151); (P-100; P-101).

 55. Based upon Garfinkle's calculations, Levin offered shares in the syndication to potential investors. When he discovered that Garfinkle had seriously misrepresented rental income in the offering, he withdrew it and refunded the money to those who had already invested. (T. 151-152).

 56. In spite of the failure of the syndication, Levin never received back from Garfinkle and Fensterheim the consideration he had paid for separating the mortgage on the property, or the amount he had paid as prepaid interest. (T. 153).

 G. The Predicted Sale of the Rondi River Property

 57. Levin did not inquire of Garfinkle as to the likelihood that the Rondi River sale would occur immediately after his purchase of the Charlotte properties. (T. 652-653).

 58. In fact, Rondi River was sold in September, 1976, (T. 111), although Levin did not learn of the sale until late October, at which time he was informed by a Garfinkle employee who knew that Levin was a part owner of the property. (T. 98-99). See Findings 276 to 281, infra.

 H. Garfinkle's Misrepresentation of Rental Income from the Properties

 60. Rent rolls from the properties show that at the time Garfinkle was making these representations to Levin, the rents were in fact much lower. Gross collections for June, 1976, including advance rental and security deposits, amounted to $ 264,231.82. (P-76 D); (T. 1495; 1498). Collections for current rentals only totalled $ 240,085.21. (Id.)

 61. According to Daryl Greenberg, manager of the Charlotte properties during the ownership of both Levin and Garfinkle, collections for current rentals in July, 1976, Levin's first month as owner, totalled approximately $ 243,000. (T. 1497).

 62. Upon learning that July collections were not keeping pace with Garfinkle's projections, Levin telephoned Garfinkle in New York for an explanation. Garfinkle consulted his rent records on the properties, but a Garfinkle employee observed that the purported rent figures which he read to Levin over the phone were higher than the actual rent figures in the records before him. (T. 881-882).

 63. Garfinkle made it a practice to keep duplicate records, one set of which accurately reflected the income and expenses of a property, and one set which presented the property in a more favorable light, used to attract investors. (T. 859-862).

 I. Dealings Between Levin and Garfinkle after Levin's Purchase of the Charlotte Properties

 64. Levin had the Charlotte properties appraised after he purchased them. (T. 600-601). On the basis of the appraisal, Levin concluded that he had made a good investment, (T. 597-598), and he caused a financial statement to be prepared showing his equity in the Charlotte properties to be $ 7,766,000. (D-63B).

 65. During the month of July, 1976, Levin paid to Garfinkle or his interests a total of $ 80,496.44, (P-365, P 1), an amount far in excess of his obligations under the deed of trust.

 66. Levin and Fensterheim agreed that Levin owed the Garfinkle interests a total of $ 88,687.50 for the month of August, 1976, (P-103), and Levin paid to Garfinkle or his interests a total of $ 146,093. (P-365, P 1); (P-346 A); (T. 165-174).

 67. During August, Levin made the September payment on the deed of trust in advance, in order to help Garfinkle with a cash shortage. (T. 182-183). This payment created a cash shortage for Levin in mid-August, (T. 183), and Levin then turned to Garfinkle for a loan. Garfinkle sent Levin a check for $ 50,000, but the check was returned to Levin's bank unpaid, (P-108), (T. 186), resulting in a temporary freeze on all of Levin's accounts at Continental Bank (T. 187).

 68. In September, to ease his continuing cash shortage, Levin sought a loan from defendant K. B. Weissman in the amount of $ 305,000 secured by the Charlotte properties. Weissman refused to close the loan when he learned that Levin had permitted back taxes and liens on the properties to accumulate. (T. 1047-1049).

 69. Garfinkle offered to borrow $ 100,000 from Weissman, by pledging the mortgage on the Hope Valley property, and to use the proceeds of the loan to make mortgage payments to senior lienholders on the Charlotte properties on Levin's behalf, (T. 192-193), thus fulfilling Garfinkle's promise to lend Levin $ 100,000. (D-5). See Finding 42, supra.

 70. Garfinkle also suggested that Levin travel to North Carolina to meet with the senior lienholders directly, and to negotiate payment schedules. (T. 193).

 72. On September 15, 1976, Garfinkle borrowed $ 125,000 from K. B. Weissman. He used all of the proceeds for his benefit. (P-123); (T. 201-202).

 73. Levin proceeded to arrange accommodations with the senior lienholders in North Carolina, (T. 132), and to assure them that payment was forthcoming. Five days after Levin left for North Carolina, Garfinkle employees forwarded checks to the lienholders, drawn on a bank account which had been closed for over six months. (T. 201-203). See (P-160). There was no agreement between Levin and Garfinkle that Garfinkle was to forward bad checks in order to "buy time" with the senior lienholders. See (T. 1890).

 74. On September 28, 1976, Levin executed an affidavit stating that he had extensive knowledge of Garfinkle's criminal record before investing with him, and that he had purchased the Charlotte properties because they were a good business investment. (D-25). At trial, Levin testified that he lied when he swore to this affidavit. (T. 667).

 75. In October, 1976, Garfinkle was admitted to a hospital with purported heart ailments. (T. 207-208). While he was in the hospital, Levin sent Barbara Garfinkle a total of $ 9,000 so that she could meet living expenses. (T. 208); (P-365, P 1).

 J. Levin's Alleged Default

 76. In late October, 1976, Levin, at Garfinkle's urging, went to Europe for a vacation. (T. 212; 1063-1064). On October 26, 1976, while Levin was out of the country, his attorney, Howard Creskoff, received letters signed by Cyrus West, on behalf of TAFU Corporation, declaring the deed of trust in default, and accelerating the entire indebtedness. (T. 1062-1064).

  77. Creskoff telephoned Garfinkle, who asserted that Levin had not made payments on the mortgage. (T. 1604). Shortly thereafter, Garfinkle sent Creskoff a letter detailing a series of defaults on Levin's part, such as failure to keep senior mortgages current, and changing payment schedules without TAFU Corporation's consent. (P-173).

  78. Most of the defaults which Garfinkle identified in his letter to Creskoff involved problems with the property which had carried over from Garfinkle's ownership, which he had assured Levin he would assist in resolving, or defaults such as alterations in payment schedules for the senior mortgages, which had occurred with Garfinkle's knowledge and consent. (T. 1064-1065; 1069-1070).

  79. When Creskoff threatened to fight the proposed foreclosure in the North Carolina courts, Garfinkle agreed to stop legal proceedings and meet with Levin and Creskoff in New York. (T. 1070-1071).

  K. The November 8, 1976, Agreement to Sell the Properties to Satisfy the Deed of Trust

  80. On November 5, 1976, Levin, Creskoff, Garfinkle, Fensterheim, and Edward Breger met at Garfinkle's New York apartment.

  81. Garfinkle outlined a plan whereby he would become Levin's agent to sell the properties, and, through a series of complicated agreements, split the proceeds with Levin, with Levin's share to be applied to reducing his indebtedness under the deed of trust.

  82. Creskoff protested his inexperience in negotiating complex real estate transactions, (T. 1080), and Garfinkle suggested that Breger represent Levin. (Id.)

  83. Levin, Creskoff, and Breger had lunch together, during which they discussed the details of Garfinkle's proposal. Neither Levin nor Creskoff knew that Garfinkle had given Breger an $ 88,000 interest in the deed of trust earlier that week. (P-176); (T. 225).

  85. The agreement reached at the November 5, 1976 meeting, was set forth in the form of a letter agreement dated November 8, 1976. (P-178). Under the agreement, Garfinkle was to become Levin's agent, with absolute discretion to sell the properties on Levin's behalf. (P-178, p. 2, P 1). Cash proceeds from the sales were to be split according to a formula set forth in the agreement, with Garfinkle entitled to priority to cash in some sales, and Levin in others. (P-178, p. 3). Purchase money mortgages received were to be held by Garfinkle or his interests, with Levin holding a forty percent junior interest in the mortgages. (Id.) Garfinkle was to hold Levin's junior share in the mortgages as collateral for Levin's indebtedness under the deed of trust. (P-178, p. 4).

  86. Breger explained that it was necessary to have a junior/senior relationship in order to allow Garfinkle to foreclose speedily if one of the purchasers defaulted. He also explained the pledge of Levin's share in the mortgages as collateral as necessary for Garfinkle's protection against Levin's stripping the properties of rents during the period of the sale, and allowing senior lienholders to foreclose, thereby wiping out Garfinkle's interest. (T. 222-224; 1080-1081).

  87. Garfinkle represented to Levin that he would earn a profit of one million dollars through the sales. The possibility that there might be a shortfall, such that Levin would remain indebted to Garfinkle under the deed of trust, was dismissed by Garfinkle as totally improbable. (T. 226). Garfinkle's "promise" of a large profit was not reduced to writing. (T. 1328).

  88. All cash and deposits received by Garfinkle, as well as his share of the purchase money mortgages, were to be credited against Levin's indebtedness under the deed of trust. (P-178, p. 3, P 1H, I, J).

  89. As part of the November 8 agreement, Levin was given a credit of $ 150,000 against the deed of trust indebtedness for Garfinkle's misrepresentation of the rental income to Levin at the time he purchased the properties. (P-178, p. 6, P C). See Findings 59-63, supra.

  90. Levin and Garfinkle reserved the right to have an accounting between TAFU Corporation and Levin for payments up to that time, provided, however, that neither party would be entitled to more than $ 150,000 in credit. (P-178, p. 6, P 4B).

  91. Levin also acknowledged in the November 8 agreement that, during negotiations for his purchase of the Charlotte properties, during the unsuccessful syndication attempt, and during the negotiation of the November 8 agreement itself, he was represented by Howard Creskoff, and was not subjected to fraud, misrepresentation, or duress of any kind. (P-178, pp. 8-9).

  92. In addition to the main agreement of November 8, 1976, the parties also executed three collateral documents.

  93. Creskoff executed a letter acknowledging that he represented Levin at the time of the purchase of the Charlotte properties and during negotiation of the November 8 agreement. (D-31).

  94. Levin executed a release relieving Garfinkle of his obligation to lend Levin $ 100,000. (D-29). See Finding 42, supra ; (D-5).

  95. Garfinkle executed a letter acknowledging that Levin owned a twenty-five percent interest in the New York Rondi River venture, notwithstanding that stock certificates had never been issued to Levin for his share. (D-32).

  96. Levin signed the November 8 agreement to avoid foreclosure by Garfinkle. However, other options were available to him. Through counsel retained in North Carolina, Levin and Creskoff learned that Levin could assert various defenses at any foreclosure proceeding instituted by Garfinkle; could seek an injunction against the foreclosure; and seek forebearance from senior lienholders while he litigated with Garfinkle. (T. 1311-1314).

  L. The January 14, 1977, Modification of the November 8 Agreement

  98. The Charlotte properties were not sold immediately, with the result that Levin was once again facing a cash flow crisis. (T. 233-234; 240).

  99. In accordance with the terms of the November 8 agreement, see Finding 90, supra, Levin sought an accounting from Garfinkle for payments Levin had made to TAFU Corporation or for Garfinkle's benefit in excess of Levin's obligations under the deed of trust. Levin estimated that he was entitled to $ 105,000 from the Garfinkle interests. (T. 240-241).

  100. Garfinkle met with Levin in early January, 1977. He informed Levin that he was not in a position to make a cash settlement with him at that time, but that he would adjust the terms of the November 8 agreement in Levin's favor. (T. 241).

  101. The parties executed a letter agreement dated January 14, 1977, whereby Garfinkle waived his right of priority to cash proceeds from the sales of the Charlotte properties, and Levin's share in any purchase money mortgages received was increased from forty to fifty percent. (P-294).

  102. The January 14, 1977 agreement also states that an accounting between the parties had occurred and that as of December 31, 1976, by virtue of the agreement they had reached, no balance was due from Levin to TAFU Corporation, or from TAFU Corporation to Levin. (Id.)

  103. Howard Creskoff represented Levin in the negotiation of the January 14 agreement, and understood that it ratified the November 8 agreement between the parties. (T. 1344-1345).

  M. The Sale of the Charlotte Properties

  104. The seven apartment complexes were sold at various times between March 1, 1977, and July 29, 1977.

  105. At each sale, in accordance with the November 8 and January 14 agreements, see Findings 80-102, supra, Garfinkle and Levin split the cash proceeds, and Levin assigned to HAW Corporation the purchase money mortgages received, with HAW Corporation in turn granting Levin a fifty percent junior participation in the mortgages.

  106. Garfinkle agreed with Levin to assume fifty percent of the legal fees and brokerage commissions incurred in the sale of the properties. (T. 1664-1665; 1677).

  107. At some of the closings, Levin and Garfinkle had serious disputes because of the amount of unpaid taxes or other liens on the properties. (T. 728).

  108. Howard Creskoff attended six out of the seven closings, although Edward Breger was Levin's counsel of record in most of the transactions.

  109. At each of the closings, Levin executed an account stated letter, acknowledging the amounts credited to him and to the Garfinkle interests respectively, and setting forth the balance of his indebtedness to Garfinkle under the deed of trust. Each letter also reconfirmed the November 8 and January 14 agreements. (P-206, pp. 1-7).

  110. Levin was present at each closing when the proceeds of the sale were being distributed. Obligations of Levin such as liens and back taxes were satisfied out of the proceeds of the sale. Levin and Garfinkle then negotiated the figure to be inserted in the account stated letters as Levin's outstanding indebtedness under the deed of trust.

  111. Because of the adjustments negotiated by Levin and Garfinkle, the amount of credit against his indebtedness Levin was given in the account stated letters is not consistent with the actual amounts received at the closings.

  112. The first property sold was Southgate, on March 1, 1977.

  113. At the time of the first sale, Levin's indebtedness under the deed of trust was $ 2,975,000.

  114. During preparation for the transfer of title, the parties learned that a payment to one of the senior mortgage holders on the property, City Federal Savings and Loan, was past due. (T. 128). The bank had failed to discover the delinquency until the time of sale. Levin paid approximately $ 24,000 to the bank to satisfy the lien. See Finding 39, supra ; (P-77).

  115. At the time of the closing, K. B. Weissman was owed $ 165,705.61 on a second mortgage he held on the property. To satisfy this mortgage, Weissman was paid $ 45,705.61 in cash from the proceeds of the sale. In addition, a new note in the amount of $ 120,000 was ...

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