The question at the core of a lawsuit contesting the ownership of a popular Tacoma restaurant is what defines a “partner” in a business.
Jake Barth sued Kwan Yee this month in Pierce County Superior Court, arguing that he and Yee are equal partners in Dirty Oscar’s Annex, 2309 Sixth Ave.
Yee argues that tax records show Barth has not been a partner but instead is a consultant compensated with 50 percent of the profits.
That’s unusual for the restaurant industry, in which consultants generally are paid with fees, not ongoing profit shares.
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Barth argues he was paid that way, “because I’m not a consultant, I’m a partner.”
A woman who identified herself as Yee’s wife referred The News Tribune to her husband when reached by phone and asked for comment on the lawsuit. A message left at the number she gave for him was not returned, and his attorney, Richard Wooster, declined to comment Friday.
The lawsuit also names Yee’s wife, who it identifies as Qi Yee.
According to the lawsuit, filed June 17, and related court records:
Barth and Kwan Yee were friends, and in November 2010 agreed to join forces to revamp one of Mr. Yee’s restaurants, Sax.
Barth said he agreed to partner with Yee, as long as he gave Barth control over the rebranding and operation of the facility.
“While Mr. Yee claimed that he could not list Mr. Barth as an owner on the corporate paperwork, he agreed that Mr. Barth would, in fact, be an equal partner in the restaurant and would share equally in the restaurant’s net profits,” the lawsuit states.
Barth said he was the one who named the place Dirty Oscar’s Annex, managed the restaurant, hired staff and gave input on the menu.
Yee, he said, was a “silent partner,” who helped manage the restaurant’s finances.
In 2012, Barth created DOA LLC, and filed for a business license to register that name with the state. Yee didn’t object, and has paid Barth as DOA LLC, “tacitly acknowledging DOA LLC as a general partner in Dirty Oscar’s Annex,” the lawsuit states.
Yee argues he had already registered the Dirty Oscar’s Annex name with the state, and that he and his wife are the sole owners of the business.
“Mr. Barth was informed from the outset that he was brought on as a consultant and that he would not be made a partner or shareholder of the business,” he said in a court filing. “Our agreement was that he would split the profit with me.”
Last year, Barth opened a DOA restaurant without Yee in Roundup, Montana. He moved to Montana and until recently had overseen the Tacoma restaurant’s operations from there by keeping in touch with staff members and making trips to Tacoma.
On June 10, Yee’s attorney sent Barth a letter saying Barth was a consultant, not an owner, and that he was fired immediately.
He was told to hand over all business records and passwords to the restaurant’s social media sites.
Yee had the locks changed on the business that day, and fired several staff members, including the chef, Barth alleges.
Yee countered he did not fire the cook, but had fired the restaurant’s manager after noticing he had been working for the Montana restaurant, allegedly on the Tacoma restaurant’s time.
“I felt his loyalties were with Mr. Barth and not the best interest of my business,” Yee wrote in his court filing.
Barth alleges that the Yees have regularly spent profits on “nonpartnership expenses,” such as vehicle costs and building maintenance.
Yee alleges Barth diverted funds from the Tacoma operation to his Montana restaurant, which Barth denies.
Despite the lawsuit, Barth seems hopeful about the restaurant’s future, and of his working relationship with Yee.
“My goal is just to preserve Dirty Oscar’s Annex and the partnership that we have,” Barth told The News Tribune. “When you have growth like we were doing and your start new ventures, it always strains partnerships.”
It’s not clear what Yee’s position is, but his attorney, Wooster, said in his June 10 letter to Barth: “Your continued claim of an ownership interest in Dirty Oscar’s Annex in Tacoma is defamatory and amounts to tortious interference with business relations.
“Mr. Yee has determined to sever all business relationships with you going forward.”
The letter noted that, for now, Barth has permission to keep using the Dirty Oscar’s Annex name for his Montana business.