Apr 22, 2008 , Robin Meadow
Court of Appeal reverses judgment and fee award against GMSR’s clients

The buyers of a business sued the sellers, GMSR’s clients. The jury found that the sellers had committed fraud (both concealment and misrepresentation), for which it awarded compensatory and punitive damages. It also found that the buyers had breached the promissory note that represented part of the purchase price for the business. The buyers were named the prevailing parties and were awarded over a half-million dollars in attorney fees. On appeal, GMSR challenged only the concealment award. In a unanimous opinion, the Court of Appeal agreed with GMSR that there was no substantial evidence to support the award—whether as lost profits (the trial court’s theory) or lost goodwill (the buyers’ theory on appeal). The appellate court ordered the trial court to strike the concealment and fee awards and to make a new determination regarding prevailing-party status.