Patel

I. BACKGROUND

The Purple Orchid Inn (Purple Orchid) is an inn, spa, and special event facility located on a 20-acre parcel of real property (the property) in Livermore, California. Kaushik Banerjee, through his corporation, Arkesh, owned and operated the Purple Orchid and the property in November 2010. The Purple Orchid’s revenues and margins had declined between 2008 and 2010, to the point where the business was losing money or just breaking even. Banerjee, who had other business interests in the technology field, felt it had become too time- consuming for him to manage the business. In September 2010, Banerjee entered into a listing agreement with a real estate broker, Steven Wang, and had begun actively marketing the business, but no offers had been made. Banerjee hoped to sell the business and the property as a package for somewhere in the range of $4.7 to $5 million. Banerjee, Patel, and their spouses had been acquainted with each other as social friends for several years. In November 2010, Banerjee and Patel began to discuss potential terms for Patel to purchase the Purple Orchid property and business from Banerjee. Patel made it clear to Banerjee from the outset of the…