Palm Restaurant of Georgia, Inc. v. Prakas

• Citation: 366 S.E.2d 826,186 Ga.App. 223
• Decision Date: 04 March 1988
• Docket Number: No. 75147,75147
• Parties: PALM RESTAURANT OF GEORGIA, INC. et al. v. PRAKAS et al.
• Court: Georgia Court of Appeals

Page 826

366 S.E.2d 826

186 Ga.App. 223

PALM RESTAURANT OF GEORGIA, INC. et al. v. PRAKAS et al.

No. 75147.

Court of Appeals of Georgia.

March 4, 1988.

Jeffrey C. Hamling, Roswell, Robert O. Fleming, Jr., Atlanta, for appellants.

Richard W. Gerakitis, Atlanta, for appellees.

CARLEY, Judge.

Appellant-plaintiffs entered into a contract to sell the assets of a restaurant business to appellee-defendants. At the closing, appellee Athan Prakas executed two promissory notes in favor of appellant Palm Restaurant of Georgia, Inc. (Palm Restaurant). When payment on the notes was not forthcoming, appellants brought this suit. Appellees answered, denying the material allegations of appellants' complaint, and filed a counterclaim. The case was tried before the trial court sitting without a jury. After making findings of facts and conclusions of law, the trial court entered judgment for $720 in favor of appellants. Appellants filed a motion for new trial on the general grounds. After their motion for new trial was denied, appellants instituted this appeal.

1. Appellants enumerate as error the trial court's finding that the purchase price of the assets sold to appellees was $125,000 and its finding that, after the closing, appellees' remaining obligation to appellants was only $55,000.

The undisputed evidence showed that the parties agreed to a purchase price of $135,000 for the assets. The evidence also would authorize only a finding that appellants had received $35,000 as earnest money prior to closing. The record is devoid of any evidence as to the exact amount of additional money, if any, that appellants had received at closing. Accordingly, the trial court's findings clearly are not supported by the evidence.

It would appear that, in making these findings, the trial court gave consideration to evidence as to all amounts which appellees may have paid to appellants in connection with the underlying transaction. However, the relevant issue was the amount of the purchase price of the assets and the extent to which that agreed upon purchase price remained unpaid after the closing. The undisputed evidence is that appellees agreed to a purchase price of $135,000 for the business assets. There is no evidence that all payments made by appellees to appellants were to be credited against that amount.

2. Appellants enumerate as error the trial court's finding that, after the closing, "substantial assets" had been taken from the premises by appellant Nick Jordan and its finding that, as the result of this loss of assets, appellees were entitled to a $10,000 offset against their obligation to appellants.

Appellant Jordan is the sole shareholder of appellant Palm Restaurant. Appellant Palm Restaurant contracted to sell to appellees "every item of furniture, furnishings, trade fixtures, goods, supplies, equipment and machinery" that it owned. The evidence showed that, after the closing, appellant Jordan had entered the premises, purportedly in order to collect items of his own personal property which consisted of a desk, a neon sign, and a cash register. Only appellant Jordan testified as to the total value of this property. His testimony was that its value was approximately $190. Although there was testimony that other items were missing from the premises after the closing, there was no probative testimony as to the value of any such items. Assuming without deciding that the evidence authorized the trial court to find that all of the missing items had been taken by appellant Jordan and were the business assets of appellant Palm Restaurant and that appellant Jordan's removal of that property violated the terms of the purchase agreement or bill of sale, there is no evidence to support the trial court's finding that the value of the property removed was in excess of $190. Accordingly, the trial court's finding that appellant Jordan took substantial assets entitling appellees to a $10,000 set-off is erroneous.

3. The trial court found that appellees were entitled a $15,000 offset for the cost of repairs to defective equipment which appellants had warranted to be in working order. This finding is enumerated as error.

There is no evidence which would show that appellant Palm Restaurant had made any warranty as to the condition of the assets that it sold to appellees or which would authorize a finding that such a warranty had been breached. What the evidence does show is that, in addition to purchasing the assets of appellant Palm Restaurant, appellees subleased from appellants' former landlord the premises where the restaurant had been located. Appellees took possession of the premises in November of 1984. In December of 1984, appellees were forced to close their business because the defective condition of the heating system caused the gas company to refuse to supply gas to the premises. As the result of the gas shut-off, the heating system was not in operation when a hard freeze occurred in January of 1985. The water pipes located in the rented premises froze and burst, causing considerable water damage. Appellees undertook to make the necessary repairs and, as a result of this equipment failure and the subsequent repairs, appellees' business remained closed from December of 1984 until June of 1985. It is clear that complaints concerning the condition of the heating, plumbing and electric systems on the premises should have been directed to the landlord from whom they were being leased. No evidence was presented which would authorize the trial court to find that a breach of warranty by appellants entitled appellees to a $15,000 set-off as against the purchase price of appellant Palm Restaurant's assets.

4. Appellants enumerate as error the trial court's finding that appellees had been prevented from commencing business operations for six months as the result of appellant Jordan's conduct and its finding that appellees were entitled to an offset in the amount of $20,280 for rent paid during that six-month period.

The evidence showed that, in April of 1985, appellant Jordan had written a letter to the Bureau of Police. In that letter, appellant Jordan stated that he had closed his business, that the business assets had been sold to appellees, and that appellees had failed to fulfill CERTAIN of their obligations under the purchase agreement. Appellant sent copies of this letter to the ...