Ousley v. Fideltiy National Financial
Owners of a family business sold their company to a financial services corporation. The purchase price, as originally negotiated, was for $6.5 million in cash and $6.5 million in the buyers stock. The buyer later proposed an all-cash sale, which was accepted. Soon after the sale, the buyers stock increased in value when the buyers corporate parent bought all outstanding stock at a premium. Sellers accused the buyer of knowing about the pending stock transaction, and fraudulently concealing its knowledge when it proposed the change from a half stock to an all cash deal. Sellers later sued buyer for its alleged fraud in the purchase of the company. Buyer moved for summary judgment and imposition of sanctions for filing a frivolous lawsuit. (Code Civ. Proc., 128.7, 437c.) Among its arguments, buyer asserted that sellers impliedly waived any fraudulent concealment in the purchase of the company by entering a new agreement with buyer regarding the same subject matter after the fraud was discovered. (Oakland Raiders v. Oakland-Alameda County Coliseum, Inc. (2006) 144 Cal.App.4th 1175, 1185-1194 (Oakland Raiders).) The trial court accepted this argument and granted summary judgment but denied sanctions. We reverse the judgment upon concluding that there are disputed issues of fact as to whether the new agreement waived the allegedly fraudulent procurement of the original purchase agreement, or was a limited settlement agreement addressing the distinct matter of employment termination. Sanctions were properly denied.
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