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price in excess of its worth and caused them to suffer damages
for this difference in value and the difference between the
represented income of the hotel and the actual income of the
hotel. Finally, petitioners alleged that Mr. Meglin negligently
misrepresented that the Truckee Hotel had the income and expenses
for 1989, 1990, and 1991, as listed in the income and expense
statements, which proximately caused petitioners to purchase the
hotel for a price in excess of its worth and suffer damages for
the differences between the purchase price and actual value of
the hotel and the represented income and the actual income of the
hotel.
The matter was referred to nonbinding arbitration, and a
hearing was held on April 14, 1994. During arbitration,
petitioners sought the following damages: (1) $612,000 for the
difference between the purchase price and the actual value of the
property at the time of sale; (2) $343,437.27 for lost profits
based on the financial information provided by Mr. Meglin; (3)
$338,000 for amounts reasonably expended in renovation of the
hotel based on Mr. Meglin’s representations; (4) attorney’s fees
and costs; and (5) punitive and exemplary damages. The
arbitrator found that the income represented by Mr. Meglin in the
income and expense statements was accurate but that the
representations made regarding operating expenses were careless
at best and grossly negligent at worst. The arbitrator found
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