REDMOND — The four owners of Smith Rock Brewing Co. are feuding over ownership of the brewpub on NW Seventh Street, according to a lawsuit filed in Deschutes County Circuit Court.
Natalie Patterson and her partner, Donald Fredrickson, in a complaint filed Nov. 3, allege their business partners Danielle Stewart and Kevin Stewart failed to make good on a May agreement to buy Fredrickson’s and Patterson’s interest in the business. The lawsuit alleges breach of contract and asks the court to order the sale or dissolve the company. It also asks for $125,000, with interest, in damages.
The four are family as well as business partners. Fredrickson and Danielle Stewart are siblings, and the Stewarts are married, according to The Bulletin archives. Fredrickson and Patterson are partners in life as well as business, according to the archives.
The rift dates to 2014, two years after the four signed an ownership agreement. In the deal, Patterson and Danielle Stewart each received 26 percent shares in the brewpub and Fredrickson and Kevin Stewart each received 24 percent shares, the suit states.
“In 2014, (Patterson and Fredrickson) concluded that it was no longer reasonably practicable to carry on Smith Rock Brewing’s business with the (Stewarts) because they could not work productively together,” the suit by Patterson and Fredrickson claims, “and felt that the (Stewarts) had excluded them from the operation of Smith Rock Brewing’s business.”
Contacted Tuesday at the brewpub, Danielle Stewart declined comment on the lawsuit. A message left Wednesday with attorney Donald Oliver, of Redmond, identified in the suit as the Stewarts’ lawyer, was not returned. Patterson, Fredrickson and their lawyer also declined comment Thursday.
According to the lawsuit filed by attorney Kurt Barker, the Stewarts agreed May 18 “after much back and forth” to purchase the Patterson and Fredrickson shares for half the cash assets of the company plus $70,000 due 18 months after the purchase closed.
That was the final offer from Patterson and Fredrickson, their lawyer wrote in the complaint, but it included an option. Patterson and Fredrickson would sell their stake to the Stewarts, if that offer would end the partnership, according to the suit. The offer to buy evaporated with the suit, but not the offer to sell.
“Plaintiffs remain ready, willing and able,” the suit reads, “to sell their interest in Smith Rock Brewing to the (Stewarts) on the agreed-on terms.”
The sale terms, and the option by Patterson and Fredrickson to buy the company instead, were proposed in writing in April, according to a May 11 letter filed with the lawsuit. The letter, by Adam Adkin, then attorney for Patterson and Fredrickson, expressed disappointment with the Stewarts for dragging out the potential sale.
“To cut to the chase, they are through negotiating,” Adkin wrote. Later, he added, “Let’s get this done.”
Adkin, writing to Oliver, also expressed concern that the company’s cash income had fallen from 14 percent in 2013 to 2 percent in 2015. Adkin advised Oliver that Patterson and Fredrickson considered going to law enforcement. The couple were hiring a professional to dig into the books, Adkin wrote.
“Please keep in mind,” he wrote, “our clients are in the process of engaging a forensic accountant who they expect will confirm their suspicions that there is no reasonable explanation for such a drastic reduction in cash income other than embezzlement.”
On June 29, the deal stalled when the Stewarts, through Oliver, decided they’d rather sell their shares to their two ostensible partners than purchase the entire business, the complaint alleges. The offer came too late, Barker’s complaint states, Patterson and Fredrickson had agreed to sell and had prepared accordingly.
Smith Rock Brewing Co., incorporated five years ago, as of August had sold 45 barrels of beer in Oregon this year, making it the 203rd largest brewery of 251 in Oregon, according to the latest beer report from the state Liquor Control Commission. For the same period last year, Smith Rock Brewing sold 51.5 barrels in Oregon, making it 173rd in production out of 203, according to the OLCC.
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