Steve Elie Prevails in Breach of Contract Case03.04.2010
Litigation partner Steve Elie represented the Defendant, the seller of two tanning salons. Plaintiff purchased the salons in 2008 for $260,000, after having received financial information from the defendant, as well as performing her own due diligence as to the two businesses to be purchased. After eight months in business, plaintiff was forced to close and filed suit for breach of contract, fraud and rescission. Defendants corss-complained for damages due to Plaintiff's failure to pay the lessors and personal guarantees on the store leases by Defendant.
Plaintiff contended that seller misrepresented the financial condition of the businesses and that he gave her "stale" financial information which induced her to purchase the tanning salons. She also contended that seller hid these facts prior to escrow closing. Plaintiff sought reimbursement of the purchase price plus lost profits for the operation of the business which she contended never had the income "promised."
Defendants contended that all financial information was accurate as presented, that Plaintiff conducted her own independent analysis of the financials, that Plaintiff had a degree in finance and if she wanted more information, she knew or should have known how to ask for that information. Defendants also contended that Plaintiff did not do her research and was ill prepared for running this people friendly niche business and that was reflected in the way she ran the business into the ground after taking over. Plaintifff wanted to be an absentee owner without doing anything to ensure the business would continue to run as it had under prior ownership and ultimately she failed. The cross-complaint attempted to recover the liability potentially owed to the two landlords based on personal guarantees of the assigned leases.
The court found that Plaintiff had a case of buyer's remorse, that this was a case where the Plaintifff had failed to do her research about this niche business, that there were no misrepresentations in the financial documents. The Court ruled for the defense and ordered that costs of suit be paid to Defendants. The Court further held that since there was no judgment from the lessors, the cross complaint could not prevail and ordered that costs for the cross complaint only were awarded to Plaintiff/Cross Defendant.