California Court of Appeal

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LSREF2 Clover Property 4 v. Festival Retail Fund, 259937

In an action to enforce a guarantee on a loan made by defendant in connection with the purchase of a retail property, the trial court's findings that defendant was protected by antideficiency laws because it was, in reality, the primary obligor on the loan and the loan guaranty was effectively a sham, are reversed where: 1) substantial evidence does not support a conclusion that defendant was a principal obligor on the loan; 2) rather, defendant itself structured the transaction and determined that its affiliate--a separate legal entity--would take out the loan and take title to the property; and thus 3) the trial court therefore erred in applying a sham guaranty defense and entering judgment in favor of defendant.

Appellate Information

  • Decided
  • Published 2016/10/04




  • California Court of Appeal