The plaintiff purchased a spa business from the defendant for $85,000.
Shortly after closing, the municipality ordered the business to shut down for operating as an unlicensed body-rub establishment.
The plaintiff sued for rescission or damages, alleging breach of contract and negligent misrepresentation.
The court found that the defendant breached the contractual representation that the business was operating in compliance with zoning and governmental regulations.
However, the court dismissed the negligent misrepresentation claims due to lack of reliance and failure of proof.
The court awarded the plaintiff $35,000 in damages, applying a 50% reduction for contributory fault because the plaintiff failed to make reasonable inquiries about licensing prior to closing.