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Sharma v. USA International, LLC

United States Court of Appeals, Fourth Circuit

March 17, 2017

JATINDER SHARMA; HAYMARKET FAST FOODS, INC., Plaintiffs - Appellants,
v.
USA INTERNATIONAL, LLC; KHALIL AHMAD; MAHRAH BUTT, Defendants-Appellees.

          Argued: January 25, 2017

         Appeal from the United States District Court for the Eastern District of Virginia, at Alexandria. Liam O'Grady, District Judge. (1:13-cv-01573-LO-MSN)

         ARGUED:

          John Chapman Petersen, SUROVELL ISAACS PETERSEN & LEVY PLC, Fairfax, Virginia, for Appellants.

         ON BRIEF:

          Stephen P. Pierce, SUROVELL ISAACS PETERSEN & LEVY PLC, Fairfax, Virginia, for Appellants.

          Jeffrey S. Poretz, MILES & STOCKBRIDGE P.C., Tysons Corner, Virginia, for Appellees.

          Before NIEMEYER, TRAXLER, and WYNN, Circuit Judges.

          NIEMEYER, CIRCUIT JUDGE:

         In October 2013, Jatinder Sharma purchased from Khalil Ahmad and Mahrah Butt two restaurant franchises - a Checkers and an Auntie Anne's - which were located in a Wal-Mart store in Gainesville, Virginia. He paid $600, 000 for the restaurants, a price negotiated and based on a multiple of the gross sales of the restaurants. When, after closing, the restaurants' sales only achieved 60 percent of what had been represented, Sharma uncovered evidence leading him to believe that the sales figures supplied by Ahmad had been manipulated to falsely increase them. Sharma commenced this action for fraud and conspiracy, seeking as damages the difference between the price he paid and the actual value of the restaurants based on a multiple of the restaurants' actual sales.

         The district court granted the defendants summary judgment, concluding that the plaintiffs had not introduced adequate evidence of their damages, particularly of the actual value of the restaurants at the time of the sale. We conclude, however, that the plaintiffs presented sufficient evidence to create a dispute of material fact as to the amount of their damages. Accordingly, we vacate and remand for further proceedings.

         I

         Ahmad and Butt were partners in USA International, LLC, the entity that owned and operated the Checkers and Auntie Anne's restaurants. Through their accountant, Sharma learned that Ahmad and Butt were interested in selling the restaurants, and he became interested in purchasing them when the accountant told him that the restaurants were generating high sales figures.

         During negotiations, Sharma was provided USA International's 2012 tax returns and financial statements prepared by the accountant indicating that the restaurants' combined sales for November and December 2012 were approximately $75, 000 per month. Ahmad later provided Sharma with additional financial statements for January and February 2013 showing somewhat lower sales, but he explained that sales ...


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