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Appellants sought review of the order of the Superior Court of San Mateo County (California), which entered judgment on the pleadings in favor of respondent in appellant's fraud action against respondent.
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Overview
Appellants sold their label printing business to a corporation, which agreed to pay appellants a specified percentage of the net sales to appellant's existing clientele accounts during a five-year period in exchange for appellants' covenants not to compete with the corporation. After sales to the clientele accounts declined by 87 percent, appellants brought an action against respondent for promissory fraud in the sale of the business. The trial court entered judgment on the pleadings in favor of respondent, citing appellants' concession that they were not seeking the difference between the actual value of their business and the sales price as alleged in their complaint. The court reversed, holding that appellants' concession did not preclude them from pursuing their fraud action against respondent, but only stated that they were not seeking damages under the particular standard framed by the interrogatory. The court held that respondent was not a party to the contract and could not be sued for recission, but remained liable under other legal or equitable remedies to which appellants might be entitled pursuant to Cal. Civ. Code § 3343.
Outcome
Judgment on the pleadings in favor of respondent was reversed. Appellants' concession in an interrogatory that they were not seeking damages measured by the difference between the value of their business and the amounts they received under the terms of the sale agreements as alleged in their complaint did not preclude them from seeking damages under some other standard or measure.