On December 5, 1997, Michael Dekofsky and Christopher Vrakelos sold Brea Range, Inc., an indoor shooting range, to Michael J. and Kimberly A. Hansen for $140,000. The Hansens paid $70,000 cash and assumed two promissory notes due and owing from the corporation to Mr. Dekofsky and Mr. Vrakelos. After escrow closed, the Hansens discovered that two patrons committed suicide at Brea Range, in 1995 and March 1997.

The Hansens made interest payments on the promissory notes until January 1, 1999; defaulted on the first principal payment; and ceased making payments on June 1, 1999. Mr. Dekofsky and Mr. Vrakelos sued for the balance due. The Hansens defended on the theory that the sellers had unclean hands and breached a duty to disclose material facts. In a cross-complaint, the Hansens sued for conspiracy, fraud, misrepresentation, and rescission. Do the Hansens have a valid defense to the contract’s formation? Was there misrepresentation? Was there fraud?[Dekofsky v Brea Range, Inc., 2001 WL 1613509 (Cal. App. 2 Dist.) (not printed in Cal. Rptr.—unpublished opinion)]