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Ly v. Nystrom8/3/2000
During negotiations between appellant Hoang Minh Ly and respondent Kim Nystrom for the purchase of respondent's restaurant, respondent made misrepresentations to appellant relating to monthly profits and the condition of the restaurant and its inventory. The restaurant never made a profit and discussion between the parties led to a contract cancellation. Appellant then brought suit alleging common law fraud and a violation of Minnesota's Consumer Fraud Act (CFA), Minn. Stat. § 325F.69, subd. 1 (1998), and included a claim for attorney fees under the Private Remedies section of the Attorney General Statute (Private AG Statute), Minn. Stat. § 8.31, subd. 3a (1998). The trial court ruled that respondent defrauded appellant and awarded him a common law fraud damage remedy but denied his motion for attorney fees finding that there was no violation of the CFA because respondent's representations were not made to a large number of consumers. The court of appeals affirmed. See Ly v. Nystrom, 602 N.W.2d 644, 647 (Minn. App. 1999). We reverse in part and affirm in part.
In 1981 appellant Hoang Minh Ly came to the United States from Vietnam at the age of 32. When first arriving in the U.S. he worked in various Chinese restaurants as a dishwasher and cook's assistant, positions neither requiring nor providing any business or management experience. In 1989 he met respondent Kim Nystrom while employed as a cook's assistant and she as a waitress at May Ninh restaurant in Maple Grove. Appellant speaks, reads and writes very little English and his formal education ended in Vietnam at the second grade. Respondent is also from Vietnam but speaks and reads English.
A few weeks after the two met respondent left the May Ninh restaurant to work at another restaurant, and between 1990 and 1995 appellant and respondent spoke periodically regarding jobs at various restaurants, including a Shakopee restaurant called Village Wok, the subject of this litigation. In June of 1996 respondent told appellant she had bought the Village Wok in 1994 and that she was having trouble hiring people, she wanted to sell the restaurant and encouraged him to consider buying it.
A few days later, on approximately June 14, 1996, appellant visited the restaurant before it opened in the morning. Respondent told appellant "this is a very good place, and it's a good business," and that she would sell the restaurant for $100,000. Appellant called the next day asking respondent to lower the price; she refused, warning him that someone else wanted to buy it so if he was interested he should decide soon. Respondent then represented to appellant that the restaurant's estimated monthly gross revenue was between $25,000 and $30,000 and the monthly profits between $6,000 to $7,000. Respondent told appellant it was a good business and that she would not trick him because they were friends.
The next day, approximately June 15, appellant and his wife went to the restaurant at about 8:00 p.m. The restaurant was not busy and when appellant asked why there were so few patrons respondent replied that customers in Shakopee usually eat and go to sleep earlier because they commute to work. When appellant's wife asked to see the books respondent said that they were not there but a lawyer did not need to review them because she would not lie to appellant. Respondent agreed to lower the purchase price from $100,000 to $90,000 with a cash down payment of $20,000. She also agreed to charge appellant $2,000 a month for rent, $1,200 a month for taxes and a 9% interest rate on the business loan. That night appellant decided to buy the restaurant because he thought $90,000 was a fair price to pay for a restaurant taking in $25,000 to $3
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