This Letter is response to your Dispute Letter dated XXXX. In the letter, you allege that we owe your client $86,921.94, which you state is the sum total of unpaid principal balance and the interest thereof.

When we agreed to purchase the business, your client signed a Disclosure Statement on December 22, 2018. In the statement, your client affirmed that there was no pending or threatened litigation. Your client further affirmed that there was no other undisclosed facts or conditions that would affect the operation of the business, our decision to purchase the business, or the price of the business.

Therefore, having agreed to purchase the business, we paid $200,000 upfront and made timely installment payments of the pending balance for the first nine months. However, the court appointed Fiduciary Trustee showed up at the business and stated that there has been an on-going dispute between the Trust of Linda B. XXXX. The Trustee further informed us that she was not sure if your client had the authority to sell the business or if our business property lease was valid.

The Trustee further told us to make the subsequent lease payments to CCCC Trust and not to your client. We then made said payments to the Trust, and eventually stopped. On XXX, we wrote your client a letter expressing our concerns over your client’s failure to disclose the material fact as required in the Disclosure Statement.

Your client’s conduct amounts to a misrepresentation. “The elements of fraud that will give rise to a tort action for deceit are: “‘(a)misrepresentation (false representation, concealment, or nondisclosure); (b)knowledge of falsity (or ‘scienter’); (c) intent to defraud, i.e., to induce reliance;(d) justifiable reliance; and (e) resulting damage.’” See Engalla v. PermanenteMedical Group, Inc. (1997) 15 Cal.4th 951, 974 [64 Cal.Rptr.2d 843, 938 P.2d903]. Here, your client misrepresented in the Disclosure Statement, that there was no pending action that would affect the business or the purchase thereof. Your client was aware of the presence of the ongoing case that involved the business. It follows; the failure to disclose the said material fact was made intentionally with the aim of obtaining our reliance on the representation. Accordingly, we relied on the representation to enter the Agreement to purchase the business. However, we have ended up paying money for business that had a cloud over it. Besides, it is now unclear whether we are the bona fide owners of the business or whether we were going to be caught up the dispute.

It follows; your client is not entitled to any amount from us. Instead, your client is liable for misrepresentation for failure to make a disclosure of the pertinent fact, which disclosure would affect our agreement to purchase the business.

Please be notified that we intend to pursue legal action against your client based on the foregoing.




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