Opinion ID: 1125005
Heading Depth: 3
Heading Rank: 1

Heading: NCC v. Higashi

Text: In 1989 the Browns owned both the Stop Shop & Save and the Nome Liquor Store. [1] Mr. Higashi managed both stores. Mrs. Higashi worked at the Stop Shop & Save as a part-time clerk. In November 1989 the Browns completed a sale of the Stop Shop & Save. They decided to move to Snohomish, Washington. The parties disagree about what happened next. The Browns allege that they offered Mr. Higashi a position as manager of the Nome Liquor Store in November 1989. Mr. Higashi accepted the offer; the management fee would be the net income Mr. Higashi could earn for NCC. This management agreement was functionally a lease of the business. At termination of the agreement, an inventory accounting would provide final management compensation. The terms were memorialized in corporate minutes. [2] Mrs. Higashi claims that the Browns sold the liquor store to her and her husband as of December 1, 1989. The agreement required the Higashis to pay for the inventory on hand at takeover, the cash in the tills and safe, and the money in NCC's bank account, and to sign a five-year lease at $15,000 a month on the building that was owned by the Browns. The Higashis would run the business as their own until they paid for the inventory, at which time the liquor license would be transferred to their names. This agreement was not put in writing. The Browns added the Higashis as authorized signators on NCC's operating account at NBA. The signature card shows that the Browns remained authorized to utilize the account. Minutes of a shareholders' meeting dated December 14, 1989, explain that the Shareholders and Board of Directors had passed resolutions which would leave Greg and Vickey Higashi in charge of the Nome Liquor Store operation, and that Greg and Vickey Higashi be added as check signers on the Corporate Bank Account. These minutes also indicate that the Alaska Liquor Control Board would be notified that the Higashis had been elected officers of the corporation, [3] and granted permission to Mr. Higashi to operate a pull-tab business so long as [it is] done independently of Nome Commercial Company, and Nome Liquor Store. The Browns continued to be responsible to pay the vendors for the inventory on hand at the time of the agreement. Mr. Higashi ordered inventory with Mr. Brown's continuing personal guarantees to the liquor vendors. On December 14, 1989, Mr. Brown wrote to his vendors: We are pleased to announce the appointment of Greg and Vickey Higashi to the position of Vice-President, General Manager, and Vice-President, Assistant General Manager, respectively, for Nome Liquor Store. This appointment is effective December 1, 1989, and I hope you will extend to them the same service and assistance you have provided me over the years. Carrol and I are moving back to our home in Snohomish, Washington, and are looking forward to taking it easy for the next year. To insure timely payment of all future invoices would you please change your records to reflect our new address.... In December 1990 and 1991 Mr. Higashi signed liquor license applications for Nome Liquor Store. On both applications, the Browns are shown as the sole owners of NCC, dba Nome Liquor Store. Mr. Higashi signed both applications under oath; Mrs. Higashi signed the 1990 application also. On August 31, 1992, Mr. Higashi filed a sales statement with the city of Nome, stating under penalty of perjury that he was Vice-President of NCC. The Browns did some of NCC's bookkeeping and accounting from Snohomish. On December 8, 1990, Mr. Brown wrote to C.J. and Rosemary Phillips, who had sold the store to the Browns and retained a security interest in it, explaining that the Browns had moved out of Nome, but left the liquor store in really capable hands. According to Mr. Brown, he approached Mr. Higashi in 1991 with an offer to sell NCC and the real estate for a price of $1,458,274. Mr. Higashi was not interested. The Phillips, who had to consent, indicated they would not. Mrs. Higashi disputes Mr. Brown's testimony. She testified that in February 1991 Mr. Brown told the Higashis that the lease would be prepared and the liquor license would be transferred into the Higashis' names. The parties met in Cabo San Lucas, Mexico, in February 1991. Mr. Brown sent the Higashis a memorandum summarizing the meetings held there. According to the memorandum, the discussions focused on various operating considerations for the liquor store. Mr. Brown also wrote, We next discussed the need to formalize our operating arrangement, and we agreed to proceed with the drafting of a long term lease which when executed would also cause the liquor license to be transferred in compliance with applicable state law. Mr. Higashi died on October 19, 1992. Mr. Brown flew to Nome to manage the store while Mrs. Higashi attended the funeral in Oregon. When she returned, she and her brother met with Mr. Brown. Again, the parties disagree about what happened at this meeting. The Browns contend it was a meeting to discuss the future of the management agreement. Mr. Brown stated he gave Mrs. Higashi several options, including having Mrs. Higashi continue to manage the store. He claims to have left the meeting allowing Mrs. Higashi and her brother to propose a new deal. Mrs. Higashi claims that Mr. Brown's first comment to her at this meeting was that [your] lease [is] terminated. Mrs. Higashi thought he meant the rent on the building where the liquor store was located, and that she was losing her place of business. She started crying, was upset, and felt like it was a real blow. Mr. Brown returned to Snohomish. On November 6, 1992, the Browns learned that Mrs. Higashi had signed a management contract with a competitor and was moving the liquor store's inventory to the competing store. Mrs. Higashi claims that because she thought the liquor store's lease of the Browns' building was terminated, she was looking for a new place to run her business. Mr. Brown fired Mrs. Higashi, and telecopied a demand that she leave the premises. When she left, she padlocked the door to the store. NCC sued to enjoin her from barring access to the store. The superior court denied a temporary restraining order and scheduled a preliminary injunction hearing for November 20, 1992. NCC withdrew its motion after peaceably securing access. Mrs. Higashi testified that Mr. Brown changed the locks over her protest. She wanted to avoid the use of force and leave the decision to the court so she did not fight Mr. Brown. She never got back into the building. NCC sued for an accounting of the management fee. Mrs. Higashi counterclaimed for damages. She alleged fraud if the Browns sold the liquor store with no intent to sign over the license. The case went to trial. NCC and the Browns moved for a directed verdict on all counts. The judge granted a directed verdict in favor of the Browns on Mrs. Higashi's claim for negligent accounting services, and denied the motion as to all other counts. The jury returned its verdict, awarding Mrs. Higashi $1,188,709.00, and ownership of NCC's bank account. NCC and the Browns moved for a judgment notwithstanding the verdict. This was denied. They appeal.