The roles of the two law firms involved in this matter are explained below. The first law firm, Piazza & Grace ('P&G'), is a boutique firm specializing in plaintiffs' civil litigation located in Bethesda, Maryland. The second law firm, The Legal Defense Team ('TLDT') is a boutique law firm specializing in representing defendants in civil litigation matters. This firm is located in Rockville, MD. 

Both firms handle cases arising out of contract claims, personal injury, and other private rights cases. In general, they do not handle criminal matters. The outcomes in their cases are typically some form of money damages, including actual damages, consequential damages, nominal damages, and under the right circumstances, punitive damages. In contract cases, their clients may seek restitution and/or recission of the contract. The cases typically allege some form of breach of contract, fraud in the inducement, or negligent misrepresentation. Initiating a new civil action on behalf of a client requires extensive preparation, research, and analysis. These tasks are often delegated to staff assistants like yourself.

Primarythe firms will focus on a breach of contract case involving Tom and Maureen Mulvaney. The Mulvaneys own an independent "mom & pop" ice cream store, 'Sweet Licks & Bites' (SL&B) in Rockville Maryland. They sold the store to Leonard Jones in January 2021. That sales contract is now the focus of a dispute. The Mulvaneys have sought the legal services of TLDT, and Mr. Jones has sought the legal services of P&K. Both parties have retained their respective counsel to represent them in a potential breach of contract case arising out of the sale of the store.  

Facts and Background of the Breach of Contract (BOC) case:

The Mulvaneys purchased the SL&B Ice Cream store in May of 2014. They have operated the store successfully since that time. The store is located in a busy shopping center on Rockville Pike (Montgomery County, Maryland) which also houses a 10-screen movie theatre and a bowling alley. Tom Mulvaney also has a full-time job as a mail carrier. Maureen Mulvaney focuses her attention on the operation of Sweet Licks & Bites. The Mulvaneys originally purchased the store for $250,000 which included all of the furniture, fixtures, equipment, the name, & an assignment of the real estate lease. They obtained a loan of $200,000 at 3.5% amortized over 10 years with monthly payments of $1,978. As of November 2020, when they decided to put the store on the market for sale, they still owed $79,816 on the loan principle.  In the six years since 2014, the Mulvaneys had seen a steady increase in their sales by increasing their hours of operations and adding additional offerings on their menu. 

They advertised SL&B in local papers and engaged a business broker, Steven Singer to help them sell their business. They agreed to pay Mr. Singer 10% of the gross sales price for the successful sale of the business. All parties offered the business for sale at the price of $475,000.

In December 2020, Mr. Jones was looking for a business opportunity. He was  referred to Mr. Singer. After reviewing several businesses with Mr. Singer, Jones indicated his interest in SL&B. 

 

On December 15, 2020, Mr. Singer introduced Leonard Jones to the Mulvaneys. At the time Tom Mulvaney explained that because of the cash nature of the business, he maintained two ledgers for sales in the business. The first ledger included all of the sales of the business, including cash and credit card sales. This ledger was maintained so that the Mulvaneys could actually track their sales. The second ledger only contained credit card receipts and some minimal cash receipts. The Mulvaneys shared ledger two with their accountants and used in preparing their taxes. However, the Mulvaneys insisted that Leonard Jones use the first ledger as the basis for their offer on the business. The Mulvaneys wanted Jones to rely on Ledger 1 where all of the cash and credit card sales were represented to be recorded. 

Leonard reviewed all the available materials with Mr. Singer. He then prepared an offer to buy the business for $400,000. He would put a deposit down of $80,000, take over the existing loan, and the remainder of the purchase price would be held by the Mulvaneys as a note and purchase money chattel mortgage on the business in the amount of approximately $240,000 at 4% over 10 years.  The Mulvaneys accepted the offer. As a part of the contract, the Mulvaneys agreed to work with the Jones for 6 weeks post-closing. Both parties were represented by counsel at the closing. Mr. Jones, only showed on the ledger with all of the receipts to the attorney representing him at closing. The sale was finalized at SL&B in Rockville, Maryland on February 1, 2021.  

The store is located in Rockville Maryland which is in Montgomery County. Maryland, Leonard Jones lives in Annapolis Maryland which is in Anne Arundel County Maryland. The Mulvaneys live in Fairfax Virginia, which is located in Fairfax County Virginia.

The contract contained Seller and Buyer Warranties.

Seller Warranties:

1. The Seller has provided all of the records to the Buyer necessary for the Buyer to make an informed choice on the purchase of the business.
2. The Business is organized and duly incorporated under the laws of the state of Maryland.
3. Seller has the authority to sell the business
4. Seller has prepared accurately and timely filed all tax returns on behalf of the business.
5. Seller has provided Buyer with accurate payroll records of the business.
6. There has been no act or omission by the Seller which would give rise to a claim of any kind.
7. The Seller will not compete in a similar business to that being sold with the Buyer for a period of three years within the Washington, Maryland, Virginia area.

Buyer Warranties

1. The Buyer has the financial resources to complete the transaction.
2. The Buyer is satisfied with the documents presented and the representations made by the Seller with regard to the business.
3. Buyer acknowledges that they are experienced business operators and have a complete understanding of the operation of the SL&B.

The Buyers and Sellers closed on the sale of SL&B on February 1, 2021. By July 2021, Leonard Jones realized that not only wasn't he making the amount of money claimed under Ledger 1, he wasn't even making the amount of money claimed in ledger 2. At this time, Mr. Jones decided to stop making payments to the Mulvaneys on the purchase money chattel mortgage. Leonard Jones  contacted P&G in September 2021 after they attempted to resolve the matter directly with the Mulvaneys. The Mulvaneys contacted the TLDT in September 2021 when they realized there was an issue and that the Mulvaneys were seeking legal counsel.

Having assisted the respective clients in gaining a better understanding of the legal system, Attorney Piazza  & Attorney Gonzalez want their respective staff to shift their focus to examining specific causes of action that each party may consider in their breach of contract (BOC) claims. As a primer on contract, the attorneys have stated that a contract is a voluntary agreement between two or more parties that the courts will enforce. The elements of a valid and enforceable agreement are as follows:

A. An Offer

B. An Acceptance

C. Consideration (usually an exchange of property or service for some form of payment).

D. A Legal Purpose

E. Capacity to Enter into the Agreement

Another required element to having an enforceable contract is mutual assent. That is, the parties must voluntarily and knowingly enter into the contract.

It is essential that the parties understand the potential claims they can make and determine which claims represent their best chance for success on the merits.

This includes the claims by Jones against the Mulvaneys for fraud, misrepresentation, and breach of contract. The Mulvaneys have potential claims for breach of Buyer warranties in the contract as well as breach of contract on the promissory note for non-payment.

The paralegal of the P&G Team:

The P&G paralegals are getting coffee and a discussion breaks out on the Jones-Mulvaney case. Chloe is concerned that Jones breached the contract by failing to make the required payments on the promissory note. Steven steps up and states, 'what difference does it make as there was no valid and enforceable contract in the first place. Blair disagrees and argues that all of the requisite elements for a valid and enforceable contract are in place. The paralegals have identified the following causes of action for both the plaintiff and the defendant in the case:

The potential claims are as follows:

A, Fraud

B. Misrepresentation

C. Sellers breach of contract on the Seller's contract warranties

D. Breach of contract for Jones's failure to make payments on the promissory note

E. Breach of contract for Buyer's breach of contract.

They recognize that there may be other causes of action to consider, and may consider other potential contract claims believed are relevant and would be likelihood of success on the merits.

Consider the arguments of Chloe, Steven, & Blair and analyze which of these arguments presents the best foundation for a cause of action on behalf of the client.

 

The paralegals for TLDT:

The paralegals of the firm are in the library discussing the Jones/Mulvaney case. Tessa states that she believes each of the potential claims for both parties has merit so we could put them on a board and throw a dart to consider which one to use as our cause of action. They are all good claims and we can argue for and or where appropriate against any of the claims if the case goes to trial. Mr. Gonzalez walks in after overhearing the conversation and states that choosing the proper cause of action can make or break a lawsuit. Mr. Gonzalez wants an analysis of each potential cause of action and determine which cause of action is most appropriate for the Mulvaneys; and which one will be the most difficult to defend against from Mr. Jones.

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