Facts

On Dec. 6, 2004, plaintiff Paul Cobb purchased Alameda Publishing Corp. Inc. (APC) from defendant Velda M. Berkley. APC published the Oakland Post and other area newspapers. Cobb completed his purchase of APC after reviewing the disclosure letter submitted by Berkley's attorney, defendant William Taylor, listing the company's potential liabilities.

On Dec. 12, 2004, Cobb and other corporate officers witnessed employees arrested for the illegal toxic dumping of ink and other waste products in a field, which had occurred under the previous ownership, and the corporation was charged. Cobb and APC then learned that there were two pending lawsuits by former employees and a possible lawsuit from advertisers who accused APC of misrepresenting circulation levels. It was also discovered that the publishing software installed in APC's computers was a pirated version and the copier lease had been recently renewed (which Berkley had stated prior to the sale that it was set to expire). None of these liabilities had been listed in the disclosure letter provided by Taylor.

Cobb et al. filed suit for breach of contract, breach of warranty, and legal malpractice.

PLAINTIFFS' CONTENTIONS:
The plaintiffs contended that defendants were aware of the investigation into the toxic dumping but did not disclose as was required of them in their disclosure letter listing potential liabilities. As well, all the other deficiencies not listed on the deliberately misleading disclosure letter required them to expend time and money to defend, which was covered under their indemnity agreement.

DEFENDANTS' CONTENTIONS:
The defendants contended that they were unaware of the investigation into toxic dumping and did not know about the other liabilities.

Damages

The plaintiffs suffered damages in the amount of $40,000 for the employee settlements, $150,000 for the advertisers' settlement, $25,000 for the copier lease, and $140,000 for defense against the criminal allegations.

Result

The jury found for the plaintiffs and awarded $778,869.50 against Berkley and $85,000 against Taylor and his firm.