Gardner v. Olson

1997 Wash.App. Lexis 1245 (1997)

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Nature of the Case

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Facts

Gardner (P) owned a successful CPA practice and decided to sell it. Olson (D) worked as a corporate CPA and was interested in moving into private practice. On September 13, 1994, P agreed to sell the business to D for $195,000 including $25,000 for furniture, fixtures, and equipment, and $170,000 for goodwill and a non-compete agreement. D agreed to pay $60,000 down and monthly installments of $1,687.20 beginning in February 1995. P took a security interest in the furniture, fixtures, and equipment to secure the remainder of the amounts owed. To finance his purchase, D gave Key Bank a security interest in all of the office fixtures and equipment in exchange for a SBA loan. P agreed to subordinate her interest to the Key Bank agreement. The parties executed an employment agreement that P would work as D’s employee beginning in October 1, 1995, and would be available to train him 15 hours per week. P gave D permission to use her name in conjunction with the business for one year. The relationship went south in November 1995. P sent D several letters which criticized work and appearance in the office and told D that he was not making an effort to learn the practice. The trial court found that these criticisms were part of P’s effort to train D. Eventually P told D he could not use her name. In response, D abandoned the business. P continued to run it under a reservation of rights clause. D stopped paying on the SBA loan, and Key Bank repossessed. P replaced the equipment at a cost of $50,000. P then sued D for a breach of contract and demanded specific performance. D counterclaimed in that P no longer allowed the use of her name. The case was tried on money damages. The court ruled that D was the breaching party and that P had incurred $35,000 in damages and $20,000 for repossessed furniture and equipment. It also found that P had received $70,297 in benefits. The court offset this by $11,713 for attorney fees and determined that P owed D $22,738.40 in restitution. P appealed.