In TKG Assocs., LLC v. MBG Monmouth, LLC, No. 24A-PL-1270, 2025 Ind. App. LEXIS 121 (Ct. App. Apr. 16, 2025), TKG Associates, LLC (“Buyer”) appealed the trial court’s judgment in favor of MBG Monmouth, LLC and other related entities (“Seller”) regarding a dispute over the purchase of four Sky Zone franchises. The disagreement arose during the due diligence period concerning the accuracy of financial information provided by Seller. The trial court ruled in favor of Seller, allowing them to retain Buyer’s deposit, but the appellate court found this judgment to be clearly erroneous due to Seller’s material breach of the agreement.
Facts
Buyer, operated by Ajay Keshap and his family, and Seller, consisting of several LLCs operated by Barbara and Mark Glazer, entered into an Asset Purchase Agreement on January 19, 2022, for $6,500,000. The purchase price was based on Seller’s EBITDA, which was later found to be inflated due to undisclosed rent abatements and deferments. Buyer discovered these discrepancies during a site visit from February 22 to February 24, 2022.
Due Diligence and Breach
The Agreement required Seller to provide all due diligence materials within ten days of execution, but Seller failed to disclose certain lease amendments and rent abatements until February 28, 2022. Buyer did not receive the required thirty days to review these documents, which constituted a material breach by Seller. Despite this, the trial court initially found that Buyer breached the Agreement by not providing written notice of conditions satisfied or waived by March 5, 2022.
Court’s Decision
The appellate court determined that Seller’s failure to provide accurate financial data and due diligence materials constituted a material breach, which precluded Seller from enforcing the contract against Buyer. The court reversed the trial court’s judgment, ruling that Buyer was entitled to judgment on its breach of contract counterclaim. The case was remanded for a hearing to determine Buyer’s damages and attorney fees.
Conclusion
The appellate court concluded that Seller was the first to materially breach the Agreement, and thus, the trial court’s findings were clearly erroneous. The judgment for Seller was vacated, and the case was remanded for further proceedings consistent with the appellate court’s opinion.
