A former partner in Capital Resources Inc. which does business as Dunkin’ Donuts Guam is seeking compensation he claims he is owed by the company.
The plaintiff Artemio P. Ricarte filed a lawsuit in the District Court of Guam on May 14 2003 alleging the defendants Capital Resources Inc. and Joe B. Sicad Maria Elizabeth V. Cristi and Edgar S. Surban agreed to pay Ricarte $100 000.“On or about Sept. 30 2000 defendants executed a promissory note by which they agreed to pay plaintiff the sum of $100 000 in monthly installments of no less than $4 000. A true and accurate copy of said note is attached as Exhibit A and incorporated by reference herein.”
Ricarte is represented by attorney David J. Highsmith. Capital Resources Inc. Sicad Cristi and Surban are represented by J. Patrick Mason and David P. Ledger attorneys in the law firm of Carlsmith Ball LLP.
Court documents indicate that after the company was formed the plaintiff Ricarte and the defendant Sicad did not have money and brought in the two other defendants Cristi and Surban. According to the documents Ricarte and Sicad created Capital Resources Inc. but Christi and Surban paid $300 000 into the company.
The documents also state “Plaintiff was hired as general manager to run Dunkin’ Donuts franchise. He was paid annual compensation of $80 000.00 in addition he was given a housing and car allowance of more than $1 000.00 per month.” The court documents also state Ricarte was in charge of the operations of the franchise while Sicad acted as the “go-between” for the plaintiff and the other shareholders.
The defendants allege that after the first two years of operating Dunkin’ Donuts business began to drop. “Plaintiff attributed the decline to a normal cycle caused by a slow-down during the summer months. Plaintiff was asked to come up with a plan to correct the decline in business.” According to the defendants Ricarte responded by saying he was working on it.
Later the documents allege the owner of Cuppiccino Café and Route 66 at the Micronesia Mall asked about having Dunkin’ Donuts doughnuts served at the Cuppiccino Café. That owner also allegedly asked Ricarte if he wanted to take over Route 66. “Sicad later learned that plaintiff had signed a lease agreement for the Route 66 space. Sicad also learned that plaintiff had used employees of Dunkin’ Donuts to clean and prepare the Route 66 space for plaintiff’s takeover.” The documents state Cristi and Surban advised Sicad to fire the plaintiff as general manager.
The documents allege Ricarte was upset and asked to have the company buy his stock. Documents also state Ricarte drafted a promissory note and stock purchase agreement for the sale of his stock and assured Sicad the business was worth $1 million and that his 10% of the stock was worth $100 000. The defendants said Ricarte set up the accounting system for business and that under the system four Dunkin’ Donuts locations were operating out of four kitchens but that the costs did not include kitchen expenses. “Each retail outlet marked up the amount they paid to the kitchen for the donuts. On the books the retail stores were making a profit. However this profit did not account for the losses for the kitchen. Based on this system Sicad believed the business was operating at a profit.” The defendants stated “After plaintiff’s departure Sicad and the other shareholders learned that the company was in very bad financial condition. It was behind in vendor payments and in payment of its gross receipts taxes.”
According to the defendants King’s Restaurant’s general manager was hired as a consultant. The consultant allegedly advised Sicad that the business had little or no inventory control and was very poorly managed. “Due to its financial problems the business is now defunct.” Court documents also stated “Nonetheless while the business was still in operation and able to make payments on the note plaintiff was paid $74 000.”
“As recently as Oct. 27 2004 when he was deposed Defendant Joe Sicad testified that the business was still running ” Highsmith Ricarte’s attorney said. “There is no evidence that the business’s recent collapse was Mr. Ricarte’s fault anyway. In fact Mr. Sicad testified that the business’s declining fortune was largely due to the company’s failure to replace Mr. Ricarte as a manager — not anything Mr. Ricarte did or said.”
Highsmith indicated the defendants knew that he was starting up a second business. “Therefore it cannot be a basis for fraud.” He also wrote “Defendants did not rely on anything Mr. Ricarte did or said about the Route 66 business. They knew all about it and contracted with him anyway.”
The court documents filed on behalf of Ricarte state “The defendants also claim that they justifiably relied on Mr. Ricarte’s representations about the state of the Dunkin’ Donuts business. This is hooey. Mr. Sicad has a master’s degree in business administration.” Highsmith stated “He had access to the company books.” He added “If he did not know what the true status of the company was it was his fault.”
Ricarte’s response reads “The consideration for the note was the surrender of plaintiff’s right to own and control his 10% ownership in Dunkin’ Donuts as well as his surrender of the right to act as manager of that business. Defendants have remained in possession of the consideration for more than three years. Defendants have never told plaintiff they do not have to pay under the note nor have they requested such relief from the court.” MBJ