SANDPOINT — A Bonner vCounty jury has awarded $1 in damages to the owners of a failed daycare business in Kootenai who claimed they were sold a bill of goods.

The nominal sum was awarded to Beth Ann Hall and Sarah Allison Rieper on Aug. 28, following a five-day jury trial in 1st District Court.

The mother and daughter purchased Kootenai Children’s Center from Joel and Melissa Baker in 2007 and sued the couple the following year, claiming they grossly overstated the revenues of the business.

The Bakers countersued Hall and Rieper for defamation, interference with business prospects and breach of contract for defaulting on promissory note payments.

During closing arguments, counsel for Hall and Rieper portrayed the Bakers as a couple desperate to extricate themselves from a dying business and used deceit to induce its sale. The Bakers’ attorney contend the business was mismanaged after the sale and accused Hall of using her experience in finance and real estate to manipulate her clients and obtain the business at a deep discount.

The Bakers’ counsel, Glorianne Gooding-Jones, emphasized during her closing remarks that Hall was originally their real estate agent and persuaded the couple to knock the listing price from nearly $350,000 down to $149,000.

“This is truly a case where the ink hadn’t even dried on the listing reduction before this real estate agent swooped it up for herself, taking it off the market,” Gooding-Jones said during her closing remarks.

Gooding-Jones also maintained that Hall defamed Joel Baker by telling a broker during aborted third-party negotiations over a promissory note that his representations were not to be trusted.

Toby McLaughlin, the attorney for Hall and Rieper, said his clients acted in good faith and relied on the Bakers’ representations that the business was sound and increasingly profitable.

In reality, the Bakers were propping up the business with their personal finances and loans to make Kootenai Children’s Center appear profitable, McLaughlin said.

McLaughlin further argued that Bakers “strenuously resisted” efforts to obtain complete business records so an accurate financial picture of the business could be developed.

“It is our position that this stonewalling, this continued refusal to provide records is proof that the Bakers knew that they had misrepresented the financial condition of the business and they didn’t want my clients to find out about it,” McLaughlin said in his closing.

After a day of deliberations, jurors found the Bakers had fraudulently misrepresented the condition of the business, and that Hall and Rieper were in breach of contract for defaulting on note payments.

However, jurors also found that Hall and Rieper had successfully argued they were not liable for the breach because of the misrepresentations by the Bakers.

The jury concluded Hall did not defame Joel Baker or interfere with the couple’s business prospects.

In an e-mail responding to a request for comment, McLaughlin called the outcome and the $1 damage award “interesting.”

“That, however, doesn’t tell the whole story,” he said.

As part of the sale of Kootenai Children’s Center, Hall and Rieper made a $50,000 down payment and executed the promissory note for the remaining $100,000. Hall and Rieper ceased paying on the note with a balance of $72,000 plus interest.

“When a contract is found to have been entered by fraud, it is unenforceable. So, the jury effectively wiped out $72,000 of the debt, plus around $4,000 in interest that had accrued,” McLaughlin said.