I was approached by an associate about starting a business. We went
through the initial phase of "Is this a viable business". We moved on
to the other party asking me what I would like for salary/ownership
based on his financing and my running the show. I explained that i
would need $60,000 and 20% ownership with $5000 in advance to get my
family bills settled here in Portland and to find a place to live up
in Seattle . He accepted and asked me to look into property for the
business as well as asking me to investigate our competition. I did
that and spent three weeks of my time getting everything together. He
then emailed me with a short message stating that he was sorry that
the business was not "a go" and that he new I was excited about the
"idea" but he did not have the time to "do this". I have most all of
our conversations in email form. Do I have a chance in hell of
recouping any money from this guy?

You say he "accepted", but did he accept and enter into a partnership,
or did he accept your terms in principle as applying if you
*subsequently* entered into a partnership?

It sounds to me as though you were both still at the exploring stage
rather than actually setting up a business venture.

Forget it and move on. 

Owain

If you want a real answer to this question, you should see a lawyer. 
Some lawyers will do an initial evaluation for a not-so-astronomical
set fee.

State laws vary, but, at least in some states, oral contracts are just
as enforceable as written contracts; there is just a whole lot more
trouble figuring out what the contract terms actually are if the
contract isn't written down.  So, you may have a case.  The problem
is, what are your financial damages?  Certainly, you feel let down by
someone you trusted, but a court isn't likely to give you much for
that.  Figure out what your case is worth, first.  My guess is that
once you add in lawyers fees and your time, (both the time you
actually spend in court as well as the countless hours you waste
ruminating about "your case" instead of watching your kids grow up),
and then balance that against your potential return on investment, you
will probably find that Owain?s advice is pretty sound.

Besides, you're not looking at the plus side here.  You almost went
into business with someone you can't count on.  Unless you really
don?t need to count on them and you are really insulated from their
actions, you have a set-up for disaster.  Far better to find out that
you cannot count on the person up front, before you are left having to
declare bankruptcy because you suddenly find yourself personally
responsible for all the debts of the business.  You got saved from
being in business with this guy.  Chalk it up to experience and see if
there is a way that you can improve your ability to identify people
you want to work with, so that you are less likely to get sucked into
this kind of situation again.

Also, if it was a good business idea when your associate was providing
the financial backing, it should still be just as good an idea for
other sources of financing.  And, if it wasn't such a good business
idea after all, well maybe now is a really good time to figure that
out, as well.