By Jerry Carter. The Washoe County Business Court entered an Order Dated July 18, 2012 allowing the purchaser of a business to go to trial on a misrepresentation claim against the sellers of the business. The purchase was structured as an asset purchase. After the sellers sued the purchaser for breach of the agreement, the purchaser counterclaimed for misrepresentation. Specifically, the purchaser alleged that the sellers made misrepresentations about the value of certain customer accounts, which caused the purchaser to pay $526,012 more for the assets than they were actually worth.
The sellers sought summary judgment dismissing the purchaser’s misrepresentation claim. The sellers’ argued that the purchaser acquired the sellers’ good will for $0 and subsequently sold the good will to a third party for $524,000. The purchaser opposed the summary judgment motion by arguing that the asset purchase agreement’s assignment of value to certain assets, including good will, were made only for tax purposes and did not limit the purchaser’s ability to claim damages.
The Business Court denied the sellers’ motion because the sellers’ motion was focused on the value of the business’s good will while the purchaser’s lawsuit and opposition to the motion were focused on the value of the business’s customer accounts. Implicitly, the Business Court appears to have accepted the purchaser’s argument that the assignments of value for the assets listed in the asset purchase agreement were not binding on the parties for purposes of future litigation.