In re Digital Resource, LLC, Debtor. Digital Resource, LLC, Plaintiff-appellee, Signal Bank National Association, Intervenor plaintiff, v. Abacor, Inc., a Minnesota corporation formerly known as Alderbrook Technologies, Inc.; James A. Lostetter; Randy J. Lostetter, Defendants-appellants. Digital Resource, LLC, Plaintiff-appellee, Signal Bank National Association, Intervenor plaintiff, v. Christopher A. Grove; Severson, Sheldon, Dougherty & Molenda, P. A.; Appellants, Abacor, Inc., a Minnesota corporation formerly known as Alderbrook Technologies, Inc.; James A. Lostetter; Randy J. Lostetter, Defendants-appellants. Digital Resource, LLC, Plaintiff-appellant, Signal Bank National Association, Intervenor plaintiff, v. Abacor, Inc., a Minnesota corporation formerly known as Alderbrook Technologies, Inc.; James A. Lostetter; Randy J. Lostetter, Defendants-appellees., 246 B.R. 357

Summary

In a case concerning the sale of a business, defendants-appellants, sellers and their attorney, appealed from the bankruptcy court's findings of fraud and breach of contract, its order rescinding the contract, and its award of sanctions against the attorney. The buyers, principal shareholders of plaintiff-appellant debtor, cross-appealed. The court affirmed in part, holding first that defendants-appellants breached the disclosure warranties contained in the asset purchase agreement. The 1996 financial statement misleadingly depicted a profitable business. However, the court reversed on the finding of fraudulent intent. The court also reversed the recission of the contract, because the trial court did not consider whether adequate damages at law were available. A constructive trust was properly denied, because the buyers failed to identify a specific trust res that remained in the hands of defendants-appellants. Attorney fees to the buyers' attorney were appropriate, because the ...