A Bend business owner used close to $300,000 from a profit-sharing fund to buy two vacant lots in Bend, and the fund’s trustee is suing for the return of that money.
Lori Howland, who owns Roundtable Pizza restaurants in Bend and Redmond with her husband, David Howland, withdrew $294,000 in June from the profit-sharing plan of Delight Foods, a Redding, California, company that owns several Subway restaurants, according to a lawsuit filed Jan. 30 in Deschutes County Circuit Court. The money went to the July 7 purchase of two vacant lots on Woodriver Drive in Bend, the lawsuit says.
The Howlands also have an interest in Delight Foods, and David Howland was its CEO until he was replaced by another shareholder, Steven Ahrens, on Jan. 2.
Ahrens’ lawsuit alleges Lori Howland’s withdrawal of money from the profit-sharing plan was made for reasons unrelated to the plan, “was solely for defendant’s personal enrichment,” and lacked a reasonable business purpose and adequate security or collateral. The suit alleges breach of fiduciary duty, conversion and unjust enrichment.
David Howland said the land was purchased as an investment for the profit-sharing fund. He said the land must have been placed in his wife’s name because she was a trustee of the fund at the time.
“It’s just a mix-up in the titling,” he said.
Lori Howland transferred the Bend properties to the Delight Foods Inc. 401(k) Profit Sharing Plan last month, according to the Deschutes County Assessor’s records.
Yet, Ahrens hasn’t dropped the lawsuit, which seeks $294,000 in damages, plus 9 percent interest from June 12, and constructive trust, which is a way of claiming the property.
Ahrens’ California attorney, Jeff Swanson, said the transaction is more than a misunderstanding.
“We filed suit because we didn’t think what happened was correct,” he said.
Swanson declined to discuss why Ahrens took over running the California company.
Howland said he’s known Ahrens, a retired dentist, for more than 30 years.
“This legal wrangling is drawing us apart, of course,” he said.
Howland said he stepped down as CEO of the Northern California Subway chain because he and his wife needed to focus on their Bend businesses. They own the Round Table Pizza Clubhouse on N. U.S. Highway 97 in Bend and the Round Table Pizza on SW 11th Street in Redmond. They also own a Subway in Sunriver that’s part of the gas station on Venture Lane.
The Howlands had also been partners in Crossroad Station, which formerly owned the gas station property. Crossroad Station filed for bankruptcy protection in 2013 and 2014 before selling the property in 2014 to American Energy Inc. for $1.4 million.
David Howland was also a partner in Bear Creek LLC, which sold Bear Creek Village, this year for $7.25 million.
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