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Purchased business, seller not delivering on contract

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blakesgst

Junior Member
Well this is all new to me and i apologize in advance if this is the wrong section.

I live in California and in November I purchased a pool service business for 23,000 from a local company that has been around for a few years. I met the owner in his local office, contracts were signed, i received a list of accounts and my take over date is listed in the contract as January 1st. The contracts also listed the equipment i was purchasing and i paid in full. At the end of December I sent out letters to all the customers/accounts on the list I received on the day we signed the contracts. Shortly after that i began receiving calls from people saying they had cancelled with this pool company months prior, i also never received my equipment! I began calling, emailing and text messaging the owner of the company and received no response for 3 weeks until I finally threatened him saying I was going to press charges, it has been excuse after excuse and promises of tomorrow tomorrow tomorrow ever since. I have contacted the DA and was told that they go off of police reports so i needed to call the police department. I then called the police department and they told me NO CRIME HAS BEEN committed until he refuses to give me anything, how can that be, is a contract worth nothing, is it not fraud to take my money and give me a list of fake accounts? They told me its a civil case and i needed to speak to a lawyer. I spoke to an attorney yesterday and was told that it will probably cost me 3-5,000 to handle all of this over the course of a year, and when he is found guilty, there is no pressure on him whatsoever to pay up!? Am i missing something here? Any suggestions on where to go from here or do i need to just let this go as a learning experience?

Blake
 


LdiJ

Senior Member
Well this is all new to me and i apologize in advance if this is the wrong section.

I live in California and in November I purchased a pool service business for 23,000 from a local company that has been around for a few years. I met the owner in his local office, contracts were signed, i received a list of accounts and my take over date is listed in the contract as January 1st. The contracts also listed the equipment i was purchasing and i paid in full. At the end of December I sent out letters to all the customers/accounts on the list I received on the day we signed the contracts. Shortly after that i began receiving calls from people saying they had cancelled with this pool company months prior, i also never received my equipment! I began calling, emailing and text messaging the owner of the company and received no response for 3 weeks until I finally threatened him saying I was going to press charges, it has been excuse after excuse and promises of tomorrow tomorrow tomorrow ever since. I have contacted the DA and was told that they go off of police reports so i needed to call the police department. I then called the police department and they told me NO CRIME HAS BEEN committed until he refuses to give me anything, how can that be, is a contract worth nothing, is it not fraud to take my money and give me a list of fake accounts? They told me its a civil case and i needed to speak to a lawyer. I spoke to an attorney yesterday and was told that it will probably cost me 3-5,000 to handle all of this over the course of a year, and when he is found guilty, there is no pressure on him whatsoever to pay up!? Am i missing something here? Any suggestions on where to go from here or do i need to just let this go as a learning experience?

Blake
No, you shouldn't let it go as a learning experience. You can and should sue him for non-performance under the contract and at least get a judgment against him. You may not collect much under that judgment, but it will haunt him for the rest of his life. What you might want to consider doing however, is studying up on the rules of procedure so that you can sue him without using an attorney. Its more than a bit unlikely that he won't be able to afford one, so its not as if you will have to go up against another attorney.

On top of that, if you get a judgment against him and cannot collect, then you can deduct the 23k on your income taxes as a bad debt. If you do not at least sue him, you cannot do that. He might file bankruptcy at that point, which would make the debt uncollectable, but that would allow you to take a pretty much immediate tax deduction.
 

blakesgst

Junior Member
LDiJ,

Thank you for the quick response and all the info. I guess I will mail the demand for payment letter tomorrow and contact my attorney.

Blake
 

LdiJ

Senior Member
LDiJ,

Thank you for the quick response and all the info. I guess I will mail the demand for payment letter tomorrow and contact my attorney.

Blake
I am also going to suggest that if you do decide to hire an attorney to handle this is that you insist on going straight into a lawsuit, rather than going with the attorney doing much, if any negotiating. Based on what you have described it sounds like negotiating would be an entire waste of your (paid by the hour) attorney. The faster you get a judgment, the less you will spend in legal costs and the sooner you will be able to deduct the bad debt.
 

blakesgst

Junior Member
I am also going to suggest that if you do decide to hire an attorney to handle this is that you insist on going straight into a lawsuit, rather than going with the attorney doing much, if any negotiating. Based on what you have described it sounds like negotiating would be an entire waste of your (paid by the hour) attorney. The faster you get a judgment, the less you will spend in legal costs and the sooner you will be able to deduct the bad debt.
Good point, I forgot to mention the 1 attorney i spoke to so far mentioned starting with a mediation first but as you said, at this point its probably a waste of time.

Blake
 

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