A Georgia intermediate appellate court held that the buyer had not breached the purchase agreement after the closing for wanting to unwind the deal.
July 26, 2023
In a recent case, an Atlanta nightclub buyer faced a lawsuit from the seller after seeking a refund due to the seller’s fraudulent actions.
The case involved the acquisition of an Atlanta nightclub’s assets. After some time, a patron claimed to have been sexually assaulted on the club’s dance floor before a sold-out show. The buyer then discovered that the seller had not disclosed the nightclub’s history of violent and criminal incidents. As a result, the buyer requested the seller to take back the nightclub and refund the purchase amount.
In response, the seller filed a lawsuit against the buyer for breach of the purchase agreement in an Atlanta state trial court.
The jury initially ruled in favor of the seller, granting damages and attorney fees. However, the appellate court later reversed this decision and ordered a new trial. The appeals court concluded that the buyer did not breach the purchase agreement by demanding a refund since they had already paid the purchase price.
See Grae Hospitality, LLC v. LL Atlanta, LLC, A23A0460, Court of Appeals of Georgia, Fourth Division (Decided: June 22, 2023).
Comment: It is unfortunate that a new trial is necessary despite the appellate court’s finding that the buyer did not breach the purchase agreement. This situation could have been avoided if the buyer had requested a directed verdict after the seller presented their case in the initial trial.
By John McCauley: I write about recent legal problems of buyers and sellers of small businesses.
Telephone: 714 273-6291
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