Court Opinion

ID: 9631450
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:38:29.788969+00
Date Added: 2024-06-11T18:07:54.404297
License: Public Domain

JOHNSON, Justice,
concurring, concurring in the result, and dissenting.
I concur in all of the Court’s opinion, except part IV(E) (concerning the admission of exhibits A through Q), part IV(H) (concerning the effect of the reliance section of the sale agreement), and part V (the conclusion).
I concur in the result of part IV(E). At the time of the hearing on the motion in limine the trial court did not have evidence that the buyers knew at an earlier time about the documents that were offered in evidence at trial as exhibits A through Q. This infor*210mation came to light during the trial, immediately before the exhibits were offered. Farr objected to their admission on the grounds of relevance, and did not reassert an objection concerning their late production. In my view, the motion in limine was properly denied because of the absence of evidence at that time of the buyers’ knowledge of the exhibits earlier than their production. Farr’s failure to reassert this objection to the admission of the exhibits during trial prevents him from now raising the issue based on the evidence presented in trial.
I respectfully dissent from part IV(H) of the Court’s opinion. The sale agreement states:
4. Sellers’ Representations. The Sellers have provided to the Buyers the following items for Buyers’ review and inspection:
a. Income tax returnfs] for the last four (4) years;
b. Profit and loss statements for the last four (4) years;
c. Income statements for the last four (4) years;
d. CPA evaluation of the business;
e. List of the inventory and fixtures held by the Corporation, as described in Exhibit “B”; and
f. Synopsis of operation costs for the last eighteen (18) months.
It is understood and agreed that the CPA evaluation of the business was based upon the above items which were given to the Buyers for their inspection. There is a business relationship between the CPA and the Sellers herein, and the Buyers should, if they so desire, obtain the services of an independent CPA to make their own evaluation as to the Corporation’s business and value.
(Emphasis added).
The CPA evaluation, which was addressed to the corporation, stated:
For your information, I have made some computations to arrive at a fair market value for the company, Pacific Northwest Investigations, Inc., based on the assets and past financial statements.

Following is a sampling of the various approaches that can be used to arrive at this value:

1.Corporation and owners income $ 35,000
FMV of assets $ 45,000
Goodwill/Going concern concept $ 60,000
$140,000
2.Five times gross receipts at a factor to represent expect return. (190,000X 5X.15) $142,500
3.Five times income. (35,000 X 5) $175,000
To justify any of these computations, you must consider the fact that you have been in business several years, have an excellent client list, many established contacts and an outstanding reputation in the Northwest.
(Emphasis added).
Reading the caution about the buyers obtaining their own CPA evaluation of “the Corporation’s business and value” together with the three approaches taken by the corporation’s CPA in his evaluation and the language of the “Reliance” section of the sale agreement brings me to the conclusion that the buyers were not entitled to rely on the values contained in the CPA evaluation. In fact, the buyers paid only $90,000 for the corporation, far less than any of the values contained in the CPA evaluation. In my view the following words of the “Reliance” section of the sale agreement are dispositive:
The Buyers are relying upon their own judgment and that of their advisors as to the value of the Corporation, its ability to operate with an income, and the future costs of operation.
I conclude that the trial court should have granted Farr a directed verdict based on this language.