I am starting a business , and I have found a shop to move into . I have met up with the owners , who I am going to share a shop with , we talked about going 50/50 on the lease,pg&e ,water etc , we talked what part of the shop they are going to use and what part we are going to use , oh by the way they have been in the shop for a year already. After that we made a verbal agreement and shook hands that we were moving in for 1year . Our grand opening day was on feb 1 , we made this verbal agreement on jan 5 so we had less than a month to make arangements for advertising , signs , billboards on the shop ,ran 2 new phone line for our us , uniforms , tools ,office supplies ,cable wires for a waiting room , insurance, hire a small staff, all this was done wile they were conducting there business , we were already getting mail over there that they were handing to us. On jan 28 is when we are going to sign the contract for a 1 year lease and talk about extending it after that 1 year and they had decided that they did want us to move in . Grand opening is in a few days and we already invested a lot of money into this shop . What can I do from here and do I have a case in court . Thanks .

If you both agreed on the terms you had a contract, although it was verbal, which they breached. You have damages, of course, because of the money you spent in anticipation of moving in. If you did NOT both agree to the terms you did not have a contract. Was this a crummy thing for them to do - of course; does it rise to a lawsuit if you did not have a meeting of the minds, probably not. It could be your word against theirs.

Why did they back out (if you know)?

There are many issues here, First poor business, never never do agreements verbally As you are learning the hard way.

But now you have to fight it in court.