Casden decision considered rare. (Up Front).

Last week's $184 million decision against real estate developer Alan Casden is one not likely to be repeated.

A combination of factors makes the class action suit and resulting decision against the former officers of one-time Casden-owned National Partnerships Investments Corp. (NAPICO) a rare one, according to Gary Kaplan, partner at L.A.-based Greenberg Glusker Fields Claman Machtinger & Kinsella LLP, who handled about 30-such partnerships in the 1980s.

Approximately 18,000 individuals who invested in eight NAPICO-run partnerships lost more than 80 percent of their investments in the 1998 sale of 98 properties to Casden Properties, resulting in the lawsuit. Though both companies have since been bought out by Denver-based REIT Apartment Investment & Management Co., Casden and NAPICO officers Henry Casden (Man's brother), Bruce Nelson and Charles Boxenbaum are ultimately liable, according to Nicholas E. Chimicles, senior partner at Haverford, Pa.-based Chimicles & Tikellis LLP and lead trial counsel for the plaintiffs.

The properties were part of an estimated $500 million tax shelter investment in more than 200 apartment complexes ranging from 50 to 350 units. Such tax-driven partnerships were Reagan-era relics; incentives like shortened depreciation schedules and passive loss write-offs were quashed by the 1986 tax reform act, according to Kaplan.

"There haven't been many of them since then," Kaplan said. "Losses from a passive activity (like a real estate investment) cannot be used against your income."

Also unusual is a general partner selling properties to his own wholly owned firm. The sale to Casden Properties netted $20 million, or about $1,100 per shareholder, for investors that had put in between $10,000 and $15,000 each upon the partnerships' formation.

"The (partnership shares) were sold at that time with four objectives--a tax shelter, featuring a finite life of 15 to 20 years, preservation of capital, appreciation of assets and cash distribution," said Chimicles, who estimated that Casden underpaid $77 million for the properties and that the limited partners were stuck with a $46 million tax bill due to the properties' appreciation. "The limited partners assumed that (the sales were) an exit strategy, but all of the appreciation went into the defendant's pockets."

The properties were sold at a fair price and with the blessing of most of the investors, countered Barbara Casey, a spokeswoman for Casden.

"The limited partnership interests were acquired with substantial due diligence and backed up with fairness opinions," said Casey in a statement.

The $184 million verdict, made up of a $92 million award in general damages as well as $92 million in punitive damages, will be appealed. "We intend to vigorously pursue our case in all possible ways, starting immediately with post-judgment motions, and believe that ultimately we will prevail," said Casey.