Kazerouni v. De Satnick

Opinion

ASHBY, J.

In this action on a promissory note, the court by nonjury trial gave judgment for plaintiff and respondent Akbar Kazerouni against defendants and appellants Steve and Mary De Satnick. The judgment further provides that appellants take nothing by their cross-complaint for breach of warranty.

Respondent sold his business (Photo Run Inc., a photo-developing store) to appellants for $310,000, taking back a promissory note for $101,000 payable at $1,500 per month. After four payments appellants defaulted on the note. The issue at trial was whether appellants’ performance was excused, or appellants were entitled to damages, for a misrepresentation in the sale documents as to the approximate monthly receipts and approximate monthly net profits of the business. The trial court found against appellants because, although the listing agreement misstated the monthly receipts and net profits, appellants did not rely upon such misstatement; prior to the close of escrow appellants received accurate financial records from respondent including corporate tax returns for two years and three financial

[873]

statements, and personally observed the operation of the business for a two-week period.

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Appellants do not dispute the court’s factual finding that appellants did not rely upon the misstatement. They contend on appeal that as a matter of law reliance was not required. They contend that the representation in the sale documents was an “express warranty” and that under a provision of the California Uniform Commercial Code involving express warranties by a seller of goods, reliance by the buyer is not required. (Cal. U. Com. Code, §

2313-,

2

Keith

v.

Buchanan

(1985) 173 Cal.App.3d 13, 22-24 [220 Cal.Rptr. 392].

3

)