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
Introduction:
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.
Background:
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.
Lawsuit:
In response, the seller filed a lawsuit against the buyer for breach of the purchase agreement in an Atlanta state trial court.
Outcome:
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.
Case Reference:
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.
Email: jmccauley@mk-law.com
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