Alsco, Inc. v. Fatty's Bar, LLC
| Decision Date | 14 April 2020 |
| Docket Number | Docket No. 46184 |
| Citation | 461 P.3d 798,166 Idaho 516 |
| Court | Idaho Supreme Court |
| Parties | ALSCO, INC., Plaintiff-Counterdefendent-Respondent, v. FATTY'S BAR, LLC, an Idaho limited liability company, Defendant-Counterclaimant-Appellant, and Clay Roman, an individual dba Fatty's, Defendant. |
Pare & Cozakos, PLLC, Boise, attorneys for Appellants. Shelly Cozakos argued.
Jones Williams Fuhrman Gourley, P.A., Boise, attorneys for Respondent. Derrick J. O'Neill argued.
This appeal concerns the doctrine of successor liability and its applicability to a business known as "Fatty's Bar" ("Fatty's"). Tons of Fun, LLC opened Fatty's in October 2010 and a short time later its manager, Clay Roman, signed a textile services agreement (the "Agreement") with Alsco, Inc. ("Alsco"). The Agreement contained an automatic renewal clause, by which the Agreement would renew automatically for a period of 60 months if neither party terminated it in writing at least 90 days before its initial expiration. Fatty's fell on difficult financial times, and closed for a period in January 2013. Soon after, Steven and Jennifer Masonheimer created a limited liability company called Fatty's Bar, LLC, and re-opened Fatty's in mid-February, 2013, continuing to receive textiles from Alsco. The Agreement automatically renewed in March 2016. In March 2017, Fatty's Bar, LLC terminated the Agreement, well before the 60-month term was set to expire.
Alsco then sued Fatty's Bar, LLC and Clay Roman, seeking damages based on a liquidated damages provision in the Agreement. After a court trial, the district court held that both Fatty's Bar, LLC and Roman, were jointly and severally liable to Alsco for damages under a liquidated damages clause that was also in the Agreement. Fatty's Bar, LLC appealed. We affirm.
Alsco is a linen supply company headquartered in Salt Lake City, Utah, with a local office in Boise, Idaho. Alsco supplies textiles such as linens, uniforms, and cleaning supplies to various businesses. Alsco also services the businesses by picking up, laundering, and delivering the supplies on a regular (usually weekly) basis.
On October 13, 2010, Justin Zora filed a certificate of organization with the Idaho Secretary of State for a limited liability company called Tons of Fun, LLC. Zora listed himself as a member or manager on the filing. Later, Tons of Fun, LLC opened a bar called "Fatty's" located at 800 West Idaho Street, Suite 200, Boise, Idaho. Zora did not register Fatty's as a dba for Tons of Fun, LLC, but it was undisputed that Zora owned Tons of Fun, LLC, which, in turn, owned Fatty's. Tons of Fun, LLC owned some equipment and Zora also leased a liquor license and some equipment from Colby Smith to operate Fatty's. The equipment owned by Tons of Fun, LLC will be detailed below.
On March 11, 2011, Roman executed the Agreement with Alsco. The customer name on the Agreement is "Fatty's," and under Roman's signature is the title "Partner Owner." Roman testified he did not recall executing the Agreement but did not dispute that he did so under the belief that he was accepting service for a delivery. The Agreement was an "exclusive" agreement, providing that Alsco "shall be the exclusive supplier to Customer of the services and goods listed on the Schedule attached hereto, as such Schedule may be amended from time to time." The Agreement also contained the following relevant provisions:
In December 2012, Tons of Fun, LLC began experiencing financial difficulties and had to shut Fatty's down for a time due to a liquor license violation. Tons of Fun, LLC was also unable to secure a new lease for the space occupied by Fatty's. Zora began searching for a financial partner and asked Steven Masonheimer ("Steven") if he was interested in assisting. Steven and his wife Jennifer Masonheimer ("Jennifer") owned a limited liability company called The Drink, LLC, which owned another local bar in Boise called "The Drink." Zora and Roman both worked at The Drink. Notably, Alsco provided linen services to The Drink under a contract—also signed by Roman—identical to the Agreement at issue for Fatty's. Even so, Steven testified that he never saw the agreement between The Drink and Alsco until the current lawsuit had been initiated.1
Steven declined Zora's offer to become a financial partner, but he and Zora did discuss opening what they called a new business at the same location of Fatty's, with Zora as the manager. On January 3, 2013, the Masonheimers filed a certificate of organization with the Idaho Secretary of State for "Fatty's Bar, LLC." When the documents were filed, Jennifer claimed she accidentally listed Zora as a member of Fatty's Bar, LLC after she misinterpreted the term "manager;" however, on January 15, 2013, Jennifer amended the certificate of organization and removed Zora's name as a member manager of Fatty's Bar, LLC.
Fatty's Bar, LLC negotiated a new five-year lease for the space occupied by Fatty's. Fatty's Bar, LLC also purchased the liquor license and some equipment that Tons of Fun, LLC had been leasing from Colby Smith. In January 2013, Fatty's Bar, LLC temporarily shut down Fatty's for about two months to remodel the space. Upon reopening, Fatty's Bar, LLC retained most of the employees but hired a new security team. Zora was hired back as the general manager. Fatty's Bar, LLC kept the name, "Fatty's," used the same signage, equipment, and vendors that Tons of Fun, LLC had used while operating Fatty's.
Once Fatty's Bar, LLC reopened Fatty's, Alsco continued to perform under the Agreement, making weekly deliveries and pick-ups. At some point, Jennifer contacted Alsco to change the billing process under the Agreement from cash-on-delivery to monthly statements sent to Fatty's Bar, LLC's address. Jennifer was also listed as the customer representative for Fatty's in Alsco's system. Beginning in April 2013, Alsco sent billing statements for its services to Fatty's Bar, LLC's address and Fatty's Bar, LLC paid those statements for nearly four years.
The district court also found that each statement Alsco sent to Fatty's Bar, LLC contained the total balance owing and the following language: "The services for which these charges are made are being furnished to you pursuant to a service agreement between our company as supplier and the above named customer." In addition, after taking ownership of Fatty's, Fatty's Bar, LLC amended the schedules under the written Agreement on at least one occasion to request new items or add inventory.2
In August 2013, Fatty's Bar, LLC and Zora parted ways and Fatty's Bar, LLC executed an asset purchase agreement with Tons of Fun, LLC/Justin Zora. Fatty's Bar, LLC agreed to pay $10,000 for the following equipment owned by Tons of Fun, LLC, as set forth on the inventory list attached to the asset purchase agreement: "all televisions and brackets, beer pong tables, exterior and interior signage, lighting, sound equipment, decorations, electronic equipment, liquor/alcohol, fixtures (stationary or built in), glass wear [sic], and anything with the Fatty's logo on it." After Zora left, Roman returned to work as the manager for Fatty's Bar, LLC.
On March 11, 2016, the Agreement automatically renewed for another 60 months after no party gave written notice terminating it. Fatty's Bar, LLC continued to accept and pay for services under the Agreement for another year, until Fatty's Bar, LLC found another vendor that could provide the same goods and services at a lower price. Fatty's Bar, LLC terminated the Agreement with Alsco at that time.
On May 2, 2017, Alsco filed a verified complaint alleging breach of contract against Clay Roman, an individual d/b/a Fatty's, and Fatty's LLC, an Idaho Limited Liability Corporation. Alsco amended the complaint the next day, changing the names of the defendants to Clay Roman, an individual d/b/a Fatty's, and Fatty's Bar, LLC, an Idaho Limited Liability Corporation. In it, Alsco alleged "[u]pon information and belief, FATTY'S BAR, LLC became the successor to Clay Roman d/b/a Fatty's in 2013."
The case proceeded to a bench trial on April 10 and 11, 2018. Following the close of Alsco's case, Fatty's Bar, LLC moved for a directed verdict3 , which the district court denied. After the trial concluded the district court issued its findings of fact and conclusions of law. The court held that Fatty's Bar, LLC was liable to Alsco for breach of contract under the theory of successor liability because it impliedly assumed the Agreement. Further,...
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