Longtime friends, partners are breaking up; what will be Gunner, Andros legacy?

The longtime partnership of Fresno mega developers Richard Gunner and George Andros is breaking up, according to a lawsuit filed this month in Fresno County Superior Court.

At the root of dissolution is money – lots of it.

Gunner wants to liquidate the partnership by selling all of its assets, including its crown jewel – the Fig Garden Financial Center in northwest Fresno, which has been assessed at $51.5 million, but likely is worth more.

Andros, however, is putting up roadblocks, Gunner and his lawyer say.

In Fresno County Superior Court, Gunner, 77, has sued Andros, 79, for breach of fiduciary duty, breach of contract and to dissolve their partnership that dates back to the late 1960s.

It will be a public legal fight that has never been seen in Fresno before.

The two men, who grew up in the Fresno High area, have known each other since childhood. Over the decades their partnership is known best for building the Fig Garden Financial Center and various office buildings along Shaw Avenue.

In 1990, Gunner made headlines when he donated land for Valley Children’s Hospital in southeastern Madera County.

Both men were in the spotlight in April 2015 when they donated office complexes on the north side of Shaw Avenue – on both sides of the Old Spaghetti Factory restaurant – to Community Medical Centers, a gift of at least $11 million.

But behind the scenes, the lawsuit says, Andros has been strapped for cash, prompting him to take money out of the partnership’s treasury at a tune of $50,000 per month since late 2011.

Both men have a long history of development and philanthropy in the area – and of remaining largely behind the scenes. Andros and his lawyer, James Wilkins, of Fresno, declined to comment about the lawsuit. Gunner also declined to comment. His attorney, Walt Whelan of Fresno, would only say: “The goal is to effectuate an orderly and timely disposition of the partnership assets.”

Loan comes due

The partnership is at a critical junction because a $38.5 million loan that is secured by the Fig Garden Financial Center comes due on June 15. Gunner’s lawsuit says that given Andros’ “feeble financial condition,” refinancing the loan is not possible.

In the lawsuit, Gunner contends Andros hasn’t come to terms with his own financial condition and that of the partnership. Gunner says selling the Fig Garden Financial Center would be in their best interest. Andros has resisted efforts to sell the Fresno landmark, the lawsuit says.

But in court papers, Whelan says: “The longstanding Gunner Andros Investments Partnership has run aground.” Several financial difficulties encountered by Andros have “caused the partners’ goals to diverge irreconcilably,” he says.

In a declaration, Gunner said he believes multiple creditors are pursing lawsuits against Andros and liens have been recorded against the partnership. Gunner also said Andros has unpaid income taxes. In addition, a $1.9 million lien has been recorded against the partnership by Andros’ ex-wife, Alysa Andros, the declaration says.

“I have tried repeatedly for six months to communicate with George Andros to discuss how the liens are to be cleared from the partnership and to strategize concerning the liquidation of the partnership,” Gunner says. “Mr. Andros, however, does not return my calls.”

To help settle the dispute, Whelan has asked the court to appoint a receiver, a person who will protect the assets until the legal dispute is resolved. A hearing on the receivership is scheduled for March 7 in Judge Jeffrey Hamilton’s courtroom.

Surprise to friends

News of the breakup caught the developers’ friends off guard.

“They have done a hell of a lot for Fresno and have left quite a legacy,” said Fresno attorney Roger Nuttall, who has known Gunner since kindergarten at Daily Elementary School. Nuttall is not involved in the lawsuit.

Nuttall, Andros and Gunner all attended Fresno High School, where Gunner stood out because he was the varsity quarterback, a great swimmer, and the most popular student, Nuttall said. “Richard is a very fine guy, a straight shooter. You can’t ask for a better friend,” Nuttall said.“To that extent, so is George.”

Fresno County Assessor-Recorder Paul Dictos also weighed in.

“They were a perfect marriage,” Dictos said, describing Gunner as “the brains” of the partnership and Andros as the “man who made things happen.”

“They were the envy of the development community because they built buildings in Fresno that could match anything you would see in San Francisco,” Dictos said.

Gunner’s’ mother, Mary Diana Gunner, died in November 1952, when her only son, Richard, was in junior high school. His father, Vas Gunner, was a rancher and businessman who was active in the San Joaquin Valley wine industry. He was owner of Argun Wine Co. in Tulare. When he died in September 1963, he left an estate valued at nearly $650,000 and named his then 23-year-old son Richard as the executor.

Andros’ family also owned a business. His late father, Dan Andros, owned The Broadway Lunch in downtown Fresno. His late mother, Fay Pappas Andros, came from a family that owned the Fresno grocery chain Booras & Pappas.

George Andros first married Ann Bouskos, whose family owned the Fresno grocery chain Continental Markets. Court records say Andros is divorcing his second wife, Alysa Andros, 59, which has caused him financial problems.

Gunner and Andros Investments

The lawsuit filed Feb. 10 in Fresno County Superior Court says in October 2011 Gunner and Andros memorialized their business relationship with a general partnership agreement that gave each of them one-half interest in the capital and equal shares of the profits and losses.

They named the partnership Gunner and Andros Investments, which operated at 555 W. Shaw Ave.

Gunner says in his lawsuit that to help the partnership’s diminishing cash flow, he suspended his monthly draw from the profits in late 2011. But Andros continued to take his $50,000 monthly draws, the lawsuit says. By August 2015, as cash flow became a growing problem, Gunner objected to Andros taking his monthly draw. By then, the imbalance in the capital accounts had grown to about $4.3 million in favor of Andros, the lawsuit says.

Within the past few years, the lawsuit says, Gunner and his wife, Margaret, known as the Gunner Trust, have been required to contribute money to fund the partnership’s ongoing capital needs. In the lawsuit, Andros is referred to as the Andros Trust.

“In most instances, the Andros Trust has been unable to make equal contributions, if any at all,” the lawsuit says. For Andros to rectify the imbalance, he would have to contribute about $3.16 million to the partnership.

Because Andros is reluctant to sell the Fig Garden Financial Center, the two developers are at impasse. The lawsuit says Andros has refused to pay Gunner and the partnership what he owes. Andros also refuses to sign a revised partnership agreement that acknowledges his debts.

In May 2016, Judge Jeffrey Hamilton ordered Andros to pay Bank of America $559,383 for an unpaid loan. In doing so, Hamilton ruled that Andros’ $8.5 million home on Crespi Lane in Pebble Beach could be seized as an asset until the loan was repaid. Andros also owed Wells Fargo Bank about $4.7 million, so the bank had a first deed of trust on Andros’ Pebble beach property, according to Gunner’s declaration.

Court records say Andros has had trouble refinancing the loan or selling any of his assets because he was going through a divorce. (George and Alysa Andros filed for divorce in Monterey County in August 2014). Andros ended up selling their Pebble Beach home in December 2016 for $6.23 million. According to Gunner’s declaration, the proceeds from the sale of the home were “barely enough to pay off the Wells Fargo and Bank of America loans.”

In Gunner’s corner is Clinton Howe, president of Howe Electric, Inc., in Fresno, who said in a declaration that Andros “owes me and companies I am affiliated with over $600,000.”

Ready buyer?

But at the crux of the dispute is Gunner’s goal to sell the partnership’s assets and liquidate the partnership. In court papers, Whelan says Gunner and Andros agreed last year to sell the Fig Garden Financial Center and other properties the partnership owns. “Such a buyer has been identified,” Whelan says, identifying the buyer only as “local Fresno developer.”

But Gunner says in his declaration that Andros has balked at selling the partnership’s assets, likely because Andros will have “substantial personal tax obligations.” Instead, Andros is looking for someone to buy out Gunner and his wife, but there have been no firm commitments, Gunner says.

Waiting to sell the assets will hurt the partnership financially, Gunner says, especially since the $38.5 million loan comes due on June 15. Andros’ dire financial situation would make it difficult to refinance the loan or have the deadline extended, Gunner says.

“Time is of the essence,” Gunner says. “A receiver must be appointed to take control of the partnership assets and to manage and complete the winding up of the partnership in a timely and fair manner to avoid irreparable harm to the Gunner Trust.”

Former Fresno County Supervisor Doug Vagim said he was surprised Gunner is in a public legal battle with his friend because they have a history of staying out of the spotlight. “Unlike other developers, they didn’t toot their horn,” Vagim said.

But some of their public projects have caused controversy, Vagim said.

When the Fig Garden Financial Center on Palm Avenue, north of Shaw Avenue, was proposed, it prompted heavy opposition from neighborhood residents, who were concerned about increased traffic and size of the project. The City Council approved the project on a near unanimous vote in October 1982.

The center is actually three complexes. Today, according to the Fresno County assessor, it has a total property tax assessment of about $51.5 million, but the actual market value is likely much higher.

‘Going beyond what’s required’

In 1990, Gunner donated 50 acres north of the San Joaquin River and west of Highway 41 for Valley Children’s Hospital to relocate from the old site it had occupied since 1952 on Shields Avenue near Millbrook Avenue in central Fresno.

When groundbreaking took place in September 1995, Gunner declined to be interviewed. “I think today is Valley Children’s day, and I think it’s appropriate to leave it at that, “ he said.

At the time, Gunner planned to develop nearby property as the Gunner Ranch project with homes, apartments, offices, a school and a community shopping center. The hospital opened in 1998, but Gunner’s surrounding residential and commercial development haven’t materialized.

Another Gunner and Andros project, Old Armenian Town at Ventura and O streets, also drew opposition – from preservationists who waged a long legal fight to save five historic homes.

“The city missed a real opportunity,” former Council Member Tom Boyajian said, saying Gunner and Andros had a long history of building top-notched office complexes.

Vagim agreed, saying Gunner and Andros would have built something special.

“They are known for going beyond what’s required to build,” Vagim said. “They never cut corners when it came to building in Fresno.”

This story was originally published February 21, 2017 at 4:40 PM with the headline "Longtime friends, partners are breaking up; what will be Gunner, Andros legacy?."