Post-closing deal disagreement upends $81 million business asset purchase: All States v. Gorman

In February 2024, The Gorman Group, LLC (“Gorman”) agreed to sell certain of its asphalt-related business assets to each of All States Construction, Inc and All States Emulsions LLC (collectively, “All States”) pursuant to an asset purchase agreement (the “APA”).  The parties valued the deal at $81 million.  

All States claimed that, under the APA, it would be acquiring access to certain asphalt storage tanks which Gorman had earlier leased from a third party lessor.  

When Gorman, following the APA’s execution, announced plans to transfer its rights under such lease to a competing asphalt storage business, All States brought a lawsuit against Gorman (“All States v. Gorman”) in an upstate New York federal court alleging the following:

• breach of contract (Gorman is alleged to have failed to disclose material facts related to the storage tanks to All States and to have breached its APA-related disclosure obligations); 
• fraudulent misrepresentation (Gorman is alleged to have knowingly making false statements and concealed key facts relating to the sale of its business assets to All States); and
• unjust enrichment  & equitable relief (All States is seeking rescission of the APA or damages based on unjust enrichment and loss of the expected value of the assets covered by the APA).

In its complaint, All States sought damages exceeding $30 million, including the return of $4 million of its funds held in escrow, the rescission of the asset purchase transaction (or compensation to cover its losses as a result of entering into the APA) as well as punitive damages and attorneys’ fees.

For documents associated with All States v. Gorman, see All States Construction & Peckham Industries v. Gorman Group et al. (Filed: U.S. District Court, N.D.N.Y., February 3, 2025)

For businesses contemplating asset sales or acquisitions, All States v. Gorman underscores the importance of drafting purchase agreements with an unyielding emphasis on precision as well as conducting comprehensive and transparent due diligence processes.  

Are you contemplating a business sale or purchase? Do you need an overview of the steps to be taken to achieve your acquisition- or disposition-related goals? If so, contact Castle Garden Law for an introductory conversation.