filed - anybodylistening.net · 2018-01-11 · veris law group pllc seattle, washington 98101 ......

PLAINTIFFS’ REPLY IN SUPPORT OF THEIR PARTIAL SUMMARY JUDGMENT AND RESPONSE TO DEFENDANTS’ CROSS-MOTION

1 Veris Law Group PLLC 1809 Seventh Avenue, Suite 1400 Seattle, Washington 98101 tel 206.829.9590 fax 206.829.9245

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THE HONORABLE JULIA GARRATT Hearing: December 13, 2013 at 9:00 AM

With Oral Argument

IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF KING

GEOFF TATE and SUSAN TATE, a married couple,

Plaintiffs,

v.

EDDIE JACKSON and TERESA GOLDEN-JACKSON, a married couple; SCOTT ROCKENFIELD and MISTY ROCKENFIELD, a married couple; MICHAEL WILTON and KERRIE LYNN WILTON, a married couple; TRI-RYCHE CORPORATION, a Washington corporation; QUEENSRYCHE MERCHANDISING, INC., a Washington corporation; and, MELODISC LTD., a Washington corporation,

Defendants.

NO. 12-2-21829-3 SEA PLAINTIFFS’ REPLY IN SUPPORT OF THEIR MOTION FOR PARTIAL SUMMARY JUDGMENT – BREACH OF CONTRACT AND RESPONSE TO DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT

I. INTRODUCTION/PROCEDURAL POSTURE

On October 21, 2013, the Tates filed a Motion for Partial Summary Judgment—

Breach of Contract asking the Court to find as a mater of law that Defendants breached Mr.

Tate’s valid, binding and enforceable 1994 Employment Agreement by firing him without the

requisite 80% vote. On November 14, 2013, Defendants filed a “Response and Cross-

Motion” for summary judgment (the “Response/Cross-Motion”) in which they admit Mr.

Tate’s Employment Agreement is a binding contract and admit firing Mr. Tate without the

FILED13 DEC 02 AM 11:38

KING COUNTYSUPERIOR COURT CLERK

E-FILEDCASE NUMBER: 12-2-21829-3 SEA



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required 80% vote, yet ask the Court to dismiss the majority of the Tates’ claims based on the

factually and legally unsupported proposition that Mr. Tate’s Employment Agreement was

somehow miraculously “rewritten” to reduce the 80% Requirement to 75% 16 years ago when

Mr. DeGarmo left Queensryche. As all three Defendants admit, the 80% Requirement “was

never an issue until we had to fire Geoff Tate….”

The Tates file this Reply/Response to Defendants’ Response/Cross-Motion, asking the

Court to grant the Tates’ Motion for Partial Summary Judgment and deny Defendants’ Cross-

Motion. As explained below, the Tates are entitled to summary judgment as a matter of law

because there are no genuine issues of material fact that Mr. Tate’s Employment Agreement

requires an 80% vote to involuntarily terminate his employment, the Defendants fired him

without the 80% vote, and there is no basis in law to rewrite Mr. Tate’s Employment

Agreement as Defendants’ request. Defendants, on the other hand, are not entitled to

summary judgment because their Response/Cross-Motion dramatically oversimplifies the law

applicable to the Tates’ myriad claims and ignores multiple genuine issues of material of fact

related to those claims but unrelated to the Tates’ breach of contract claim.

II. THE TATES ARE ENTITLED TO SUMMARY JUDGMENT AS A MATTER OF LAW

To prevail on their Motion for Partial Summary Judgment—Breach of Contract, the

Tates need demonstrate that, as a matter of law: (1) Mr. Tate’s Employment Agreement is a

valid and enforceable contract with Tri-Ryche; (2) Defendants’ breached that contract; and (3)

Defendants’ breach caused harm to Mr. Tate. See St. John Med. Ctr. v. Dep’t of Soc. &

Health Servs., 110 Wn. App. 51, 64, 38 P.3d 383 (2002). As explained below, the Tates have

met their burden and the Defendants have failed to raise a genuine issue of material fact. As

such, the Tates are entitled to summary judgment as a matter of law. Sheehan v. Central



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Puget Sound Reg’l Transit Auth., 155 Wn.2d 790, 797, 123 P.3d 88 (2005).

A. The Tates Established The Employment Agreement is a Valid, Enforceable Contract and that Mr. Tate Suffered Damages.

In their Response/Cross Motion, Defendants took no issue with the validity or

enforceability of the Employment Agreement. In fact, Defendants’ Cross-Motion for

summary judgment is premised entirely on the validity and enforceability of Mr. Tate’s

Employment Agreement. Defendants state Mr. Tate is “bound to an executed employment

agreement” and all three of them admit that they “never formally changed anything in

writing” because there was no “issue [with the Employment Agreement] until they had to fire

Geoff Tate….” See Response/Cross-Motion, 5:16-17 and 9:12-14; also Declarations of

Messrs. Rockenfield (“Rockenfield Decl.”), 6:13-14; Jackson (“Jackson Decl.”), 2:10-11; and

Wilton (“Wilton Decl.”), 2:10-11. Defendants also did not contradict the Tates’ showing that

Mr. Tate suffered significant harm due to Defendants’ breach. See Declaration of Geoff Tate

in Support of Plaintiffs’ Motion for Partial Summary Judgment (“Tate Decl.”), ¶ 11 (Mr. Tate

no longer deprives a significant part of his income from being the lead singer of Queensryche

through his Employment Agreement.). As such, the Tates satisfied the first and third

elements of their claim for breach of contract.

B. The Tates Established The Defendants Breached the Employment Agreement.

Defendants readily admit they fired Mr. Tate without the requisite 80% vote. See

Rockenfield Decl., 6:4-15, Jackson Decl., 2:3-12, and Wilton Decl., 2:3-12. They claim,

however, this does not constitute breach of his contract because: (1) “we simply presumed

that 75% replaced 80%”; and that (2) the Employment Agreement was somehow

“automatically rewritten.” Id.; also Response/Cross-Motion at 6:24-7:17. Defendants’



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arguments fly in the face of Washington’s time-honored contract interpretation rules; are

unsupported by citation to any applicable law holding a court can reform a contract where one

of the parties “simply presumed” the terms had been “automatically rewritten”; are based on

self-serving statements insufficient to defeat the Tates’ Motion for Partial Summary

Judgment; and are far too late to undue Mr. Tate’s 18 years of performance under his

Employment Agreement.

1. Defendants’ Attempt to Re-interpret the Employment Agreement Violates Washington’s Contract Interpretation Rules.

Defendants’ are misreading and misapplying the Court’s holdings in Berg v.

Hudesman and Hearst Commc’ns, Inc. v. Seattle Times Co to argue that changed

circumstances can be used to rewrite an otherwise clear and integrated contract. See

Response/Cross-Motion, 7:1-9. Defendants assert that “the purpose of contract interpretation

is to determine the intent of the parties” and thus the Court can assume the 80% Requirement

in Mr. Tate’s Employment Agreement “was automatically rewritten to all but one

member/75%” after Mr. DeGarmo voluntarily left the band in 1997. Id. (emphasis in

original). As all three Defendants admit, “[w]e also never formally changed anything in

writing because the 80% or 75% threshold was never an issue until we had to fire Geoff

Tate….” Rockenfield Decl., 6:13-14; Wilton Decl., 2:10-11; and Jackson Decl., 2:10-11.

In Berg v. Hudesman, the Supreme Court explained the perils and pitfalls of contract

interpretation and adopted the “context rule” for doing so. 115 Wn.2d 657, 801 P.2d 222

(1990). As the Court stated:

Determination of the intent of the contracting parties is to be accomplished by viewing the contract as a whole, the subject matter and objective of the contract, all the circumstances surrounding the making of the contract, the subsequent acts and conduct of the parties to the contract, and the reasonableness of respective interpretations advocated by the parties.



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Id. at 667 (citations omitted). Quoting J.W. Seavey Hop Corp. v. Pollock, 20 Wn.2d 337,

349, 147 P.2d 310 (1944), the Berg Court explained, “[i]t is the duty of the court to declare

the meaning of what is written, and not what was intended to be written.” Berg, 115 Wn.2d

at 669 (emphasis added). Earlier this year, the Court clarified the role of “intent” in contract

interpretation, stating, “the subjective intent of the parties is generally irrelevant if the intent

can be determined from the actual words used.” Condon v. Condon, 177 Wn.2d 150, 162-63,

298 P.3d 86 (2013) (emphasis added). Importantly, the Court stated:

Courts will not revise a clear and unambiguous agreement or contract for parties or impose obligations that the parties did not assume for themselves.

Id. at 163 (emphasis added). In Condon, the Supreme Court reversed the trial court because

the lower court had changed and added terms into a settlement agreement that were not

explicitly contemplated by the parties. Id.

Here, this is exactly what Defendants would have this Court do by changing the 80%

Requirement to 75%. Defendants want this Court to ignore the original circumstances

surrounding the contract formation, ignore the subsequent acts of the parties, and accept

Defendants’ statements regarding their need to change Mr. Tate’s Employment Agreement.

In 1994, all three Defendants and Mr. Tate each signed identical Employment Agreements.

All of the agreements contain the same 80% involuntary termination provision. At that time

they could have inserted 75% as the termination threshold. They did not. In 1997 Mr.

DeGarmo voluntarily left the band. At that time, had they wanted to, the parties could have

revised their employment agreements to reduce the 80% Requirement to 75% or some other

amount. They did not. Instead, they choose to continue working together, touring and

producing albums as Queensryche and Mr. Tate gave another 15 years of his life to the band

and the Queensryche Companies knowing he had a valid, binding Employment Agreement

that required an 80% vote to involuntarily terminate him.



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It was not until 2012, when Defendants decided to “take control” of the band, that they

wanted to change the 80% Requirement. Simply because Defendants now express a

subjective intent for a 75% requirement does not mean they can change the objective intent

found in the clear language of Mr. Tate’s Employment Agreement, or each of theirs for that

matter. Condon, 177 Wn.2d at 163. Under Hearst Commc’ns, Inc. v. Seattle Times Co.,

extrinsic evidence such as Defendants’ self-serving declarations or Mr. DeGarmo’s departure

from Queensryche cannot be used to vary, contradict, or modify the written words of Mr.

Tate’s Employment Agreement. 154 Wn.2d 493, 503, 115 P.3d 262 (2005).1 If that were the

case, then a party to a contract could simply re-interpret it 18 years later to serve their own

needs, which would destroy stability or predictability in contracts and instead lead to an

immense increase in contract litigation. To avoid this, “[i]t is black letter law of contracts that

the parties to a contract shall be bound by its terms.” Adler v. Fred Lind Manor, 153 Wn.2d

331, 344, 103 P.3d 773 (2004).

2. Defendants’ Argument Renders The Employment Agreement Meaningless and Ineffective

To get around the plain language, Defendants argue that unless “80% means 75%” the

Employment Agreement would be unenforceable and meaningless in violation of Washington

law because they could never fire Mr. Tate. See Response/Cross-Motion, 7:10-23. That

argument, however, ignores and would render meaningless Section 8 of the Employment

Agreement in violation of Washington law. Wagner v. Wagner, 95 Wn.2d 94, 101, 621 P.2d

1279 (1980) (holding that courts should not adopt a contract interpretation that renders a term

ineffective or meaningless.). Section 8 of Mr. Tate’s Employment Agreement provides, in 1 “Since Berg, we have explained that surrounding circumstances and other extrinsic evidence are to be used “to determine the meaning of specific words and terms used” and not to “show an intention independent of the instrument” or to “vary, contradict or modify the written word.” (Emphasis added).



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part:

This agreement may not be modified or amended or any term or provision hereof waived or discharged except in a writing signed by the party against whom such amendment, modification, waiver or discharge is sought to be enforced.

[and]

This agreement embodies the entire agreement and understanding between the parties and supersedes all prior agreements and understandings relating to the subject matter hereof.

Exhibit 1 to Tate Decl. (emphasis added). Defendants do not even address this language in

their Response/Cross-Motion and instead simply state that the only “logical” interpretation of

the Employment Agreement is to make “80% into 75%”. Defendants’ request renders the

modification, amendment and integration clauses in Section 8 meaningless and ineffective.

Not only would doing so violate Washington law, but there are two simpler responses to

Defendants’ concerns: First, in 1994, when they drafted everyone’s Employment Agreement,

the parties could have set the involuntary termination threshold at 75%, which would have

allowed termination by a vote of four out of five shareholders (80%) or three out of four

(75%); or second, in 1997 when Mr. DeGarmo voluntarily left the band, the parties could

have used Section 8 to revise everyone’s Employment Agreement. They did neither.

Defendants cannot now just say, “We want it to be different, so it is.”

The shareholders had 15 years, from Mr. DeGarmo’s departure in 1997 to 2012, to

amend the 80% Requirement to 75%, but did not.2 Defendants excuse their lack of action to

amend the Employment Agreement because the 80% Requirement “was never an issue”

before they decided to gang up on Mr. Tate and oppressively expel him from the band and the

Queensryche Companies. See e.g., Rockenfield Decl. 6:13-15. It is an issue now and 2 The Defendants all executed a similar employment agreement, which provides the same protection to each of them. If one of the Defendants was in Mr. Tate’s position, he would undoubtedly ask the Court to find a breach of the 80% Requirement because that’s what the agreement says.



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adopting Defendants’ interpretation of the Employment Agreement would reward

Defendants’ lack of action. Worse, as discussed above, reforming the 80% Requirement

unilaterally would render Section 8 ineffective and meaningless.

3. Defendants’ Self-Serving Declarations are Insufficient to Defeat Summary Judgment

CR 56(e) provides: When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of his pleading, but his response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If he does not so respond, summary judgment, if appropriate, shall be entered against him.

As the Court stated in Vant Leven v. Kretzler, Once the moving party has sustained its burden, the nonmoving party... may not rely on speculation, argumentative assertions that unresolved factual issues remain, or in having its affidavits considered at face value [and] must set forth specific facts that sufficiently rebut the moving party's contentions and disclose that a genuine issue as to a material fact exists.

Vant Leven v. Kretzler, 56 Wn. App. 349, 355, 783 P.2d 611 (1989). Here, Defendants’

Declarations do not raise genuine issues of material fact regarding the language and terms of

the Employment Agreement sufficient to defeat the Tates’ Motion for Partial Summary

Judgment. In fact, they admit the Employment Agreement is valid and binding, requires an

80% vote to involuntarily terminate Mr. Tate, and that they fired him without an 80% vote.

Instead, the Declarations simply argue, without support save their own self-serving

statements, for a legally untenable interpretation of that contract by asking this Court to

fundamentally rewrite the Employment Agreement and strip Mr. Tate of the protections and

promises he has lived under for 18 years. Self-serving statements alone are insufficient to

defeat a motion for summary judgment. Id.

4. It is Too Late for Defendants to Claim a Different Interpretation of the Employment Agreement

Mr. Tate signed his Employment Agreement with Tri-Ryche in 1994 and faithfully



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performed under it for 18 years until he was improperly fired in June 2012. For eighteen

years, Defendants reaped the benefit of Mr. Tate’s performance under his contract and since

June 2012, have reaped the benefit of the legacy of his work. Mr. DeGarmo voluntarily left

Queensryche in 1997. Had Defendants wanted to reform the Employment Agreement to

reduce or change the 80% Requirement, the time to do that was 1997, not now. Now, it is too

late for them to claim a different interpretation of Mr. Tate’s Employment Agreement because

he cannot recapture 18 years of his life and his work. Had the parties tried to change the 80%

Requirement in each of their Employment Agreements in 1997, they all might have made

different choices about staying together and continuing to pour their lives-work into

Queensryche. Now it is simply too late to surmise what they would have done and the

language in the Employment Agreement must be given its plain meaning; Defendants

breached the 80% Requirement and the Tates are entitled to summary judgment as a matter of

law. Condon, 177 Wn.2d at 162 (citing Hearst Commc’ns, 154 Wn.2d at 503) (In

Washington, courts must “determine the intent of the parties based on the objective

manifestations of the agreement.”). The Tates again request that the Court reserve the issue of

remedies for the damage caused by Defendants’ breach for trial.

III. DEFENDANTS ARE NOT ENTITLED TO SUMMARY JUDGMENT AS A MATTER OF LAW As explained above, Defendants filed a Cross-Motion for Summary Judgment, seeking

to dismiss nearly all of the Tates’ claims in this matter. The entire basis for Defendants’

motion is their strained and unsupported reading of Mr. Tate’s Employment Agreement.

Defendants claim they “justifiably” fired Mr. Tate and thus the Court should summarily

dismiss the Tates’ claims for minority shareholder oppression, dissolution, breach of contract,

waste, and breach of fiduciary duty. Defendants offer a declaration from Mr. Rockenfield to



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support this proposition.3 Mr. Rockenfield’s declaration is rife with self-serving, conclusory

and argumentative statements intended to justify firing of Mr. Tate and are insufficient to

support summary judgment.

A. Defendants’ self-serving declarations must be read in a light most favorable to Plaintiffs.

Summary judgment is appropriate only “if the pleadings, affidavits, depositions, and

admissions on file demonstrate that there is no genuine issue as to any material fact and the

party bringing the motion is entitled to judgment as a matter of law.” Sheehan, 155 Wn.2d at

797 (citation omitted). As the Court stated in Guile v. Ballard Cmty. Hosp., 70 Wn. App. 18,

21-22, 851 P.2d 689 (1993),

A defendant can move for summary judgment in one of two ways. First, the defendant can set out its version of the facts and allege that there is no genuine issue as to the facts as set out. Alternatively, a party moving for summary judgment can meet its burden by pointing out to the trial court that the nonmoving party lacks sufficient evidence to support its case. In this latter situation, the moving party is not required to support its summary judgment motion with affidavits. However, the moving party must identify those portions of the record, together with the affidavits, if any, which he or she believes demonstrate the absence of a genuine issue of material fact.

Citations omitted; distinguished on other grounds, Morton v. McFall, 128 Wn. App. 245, 254,

115 P.3d 1023 (2005). In considering a motion for summary judgment, the Court views all

facts and reasonable inferences in light most favorable to the nonmoving party. Atherton

Condo Apartment-Owners Ass’n Bd. of Directors v. Blume Dev. Co., 115 Wn.2d 506, 516,

799 P.2d 250 (1990). Since they filed a cross-motion, the Court must view all facts and

reasonable inferences raised by Defendants’ cut-and-paste, self-serving declarations in the

3 The Wilton and Jackson Declarations simply parrot Mr. Rockenfield’s statements regarding the 80% Requirement and add nothing factually to support Defendants’ attempt to dismiss the Tates’ claims.



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light most favorable to the Tates.4

B. Defendants Created Genuine Issues of Material Fact Barring Their Cross-Motion

Defendants’ Cross-Motion relies entirely on their version of the incident in Brazil,

which is disputed. Based on their version of this event, they claim the incident justifies their

actions to form an Executive Committee, to exclude Mr. Tate from running the companies he

helped found, and to fire him. Mr. Tate disputes their claim and has posited a different set of

events showing a pattern of provocation used to justify Defendants oppressive behavior.

Tates’ Motion for Partial Summary Judgment at 11:22-12:11. Mr. Rockenfield disputes Mr.

Tate’s version, saying in his latest declaration, “let me be perfectly clear, as I have stated

many times, I NEVER said anything to Geoff Tate prior to the stage assault regarding ‘I’m

firing you next.’” Rockenfield Decl. at 5:2-6. Not only has this Court already opined that the

incident is “not dispositive” of the Tates’ claims, but Defendants’ own declarations raise

genuine issues of material fact regarding this incident. Since their entire motion is based upon

it, the Court cannot grant Defendants’ motion for summary judgment.

C. The Tates Will Prevail on Their Other Claims Against Defendants.

The Court should dismiss Defendants’ cross motion for summary judgment for the

simple reason that they have offered no evidence to support it. Defendants’ sole support for

summary judgment issue is a single sentence on page 10 of the Response/Cross-Motion:

Mr. Tate’s claims for Dissolution…, Breach of Contract…, Waste…, Derivative Suit, Breach of Fiduciary Duty…, and Permanent Injunction…, should be dismissed on the grounds of the employment agreement alone.

4 The declaration of Michael Wilton and Eddie Jackson just cut and paste the two full paragraphs from page six of the declaration of Scott Rockenfield. To make matters worse, the Defendants speak for Mr. Tate and Chris DeGarmo by using the word “we”, which is impermissible and inadmissible.



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Response/Cross-Motion, 10:16-23 (emphasis added). Not only is this insufficient to warrant

summary judgment, it ignores the facts surrounding the Tates’ claims for shareholder

oppression, dissolution, corporate waste, derivative suit, and breach of fiduciary duty.5

1. The Tates Will Prevail on Their Claim for Minority Shareholder Oppression, Warranting Dissolution.

Dissolution of a corporation is appropriate if majority shareholders “have acted, are

acting, or will act in a manner that is illegal, oppressive, or fraudulent” toward a minority

shareholder. RCW 23B.14.300(2)(b), (d). If the minority shareholder is a founder, one who

committed capital and resources to starting up the venture, courts apply the “reasonable

expectations” test to determine whether there is oppression. Scott v. Trans-Sys., Inc.,

148 Wn.2d 701, 711, 64 P.3d 1 (2003). That test defines oppression “as a violation by the

majority of the reasonable expectations of the minority.” Id. Reasonable expectations are

“those spoken and unspoken understandings on which the founders of a venture rely when

commencing the venture.” Id.

Once a minority shareholder has shown oppression, relief is warranted unless the

majority shareholders can prove there were legitimate business justifications for the conduct.

Id. at 709. Under the Business Judgment rule, the majority shareholders must establish,

among other things, that “there is a reasonable basis to indicate that the transaction was made

in good faith.” Id. “Such immunity from liability is absent where a corporate director or

officer is shown to have acted in bad faith and with a corrupt motive.” Interlake Porsche &

Audi, Inc. v. Bucholz, 45 Wn. App. 502, 509, 728 P.2d 597 (1987), rev. denied, 107 Wn.2d

1022 (1987). The majority shareholders must also establish that they acted “with such care as

5 Defendants did not move for summary judgment on the Tates’ claims for declaratory judgment and libel and slander. Therefore, the Tates will not address those claims.



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an ordinarily prudent person in a like position would use under similar circumstances.” Shinn

v. Thrust IV, Inc., 56 Wn. App. 827, 833-34, 786 P.2d 285 (1990).

Here, the reasonable expectations test will apply because Mr. Tate helped start the

band and is an original shareholder of Tri-Ryche, Melodisc Ltd., and Queensryche

Merchandising, Inc. Mr. Tate’s reasonable expectations as a founding member of

Queensryche, and as a founding shareholder of the Queensryche Companies, were to: (1)

remain lead singer of Queensryche and a shareholder in the Queensryche Companies until he

chose to retire and/or sell his shares in the Companies; (2) receive one-quarter of all profits

the band derived from its performances; (3) receive 100% of all net profits the Queensryche

Companies derive from exploiting Mr. Tate’s musical compositions; (4) receive a reasonable

return on his investment of 30 years of effort, time, intellectual property, and legacy; (5) have

the ability to participate in and effect the management of the Queensryche Companies; and (6)

be treated fairly. See Declaration of Geoff Tate in Opposition to Defendants’ Cross-Motion

for Summary Judgment, ¶ 6 (“Tate Response Decl.”). By engaging in a prolonged pattern of

oppressive behavior, cutting him out of management decisions, forming an executive

committee, and firing him, Defendants violated Mr. Tate’s reasonable expectations. See

Hayes v. Olmsted & Assoc., Inc., 173 Or.App. 259, 21 P.3d 178 (2001); rev denied 36 P.3d

974 (2001). In Hayes, the Oregon Court of Appeals found oppression where the majority

shareholders formed an executive committee, cut the plaintiff out of company management,

paid themselves bonuses, and, when Mr. Hayes complained and sought information, they

fired him. Id. at 274-276. As the court stated:

a breach of fiduciary duty occurs when “the majority shareholders of a closely held corporation use their control over the corporation to their own advantage and exclude the minority from the benefits of participating in the corporation, [in the absence of] a legitimate business purpose * * *.” A breach of fiduciary duty by those who control a



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closely held corporation normally constitutes oppression.

Id. at 265.

Such is the case here. Mr. Tate devoted his entire adult life in furtherance of band and

the Queensryche Companies. After Mr. DeGarmo voluntarily left the band 16 years ago, Mr.

Tate assumed almost sole responsibility as the creative and promotional force behind the

band. Tate Decl., ¶ 7. During this same period, Defendants’ contributions steadily declined

to the point where people working with the band assumed that Mr. Tate was the band. See

Declaration of Jeff Albright, ¶¶ 3-12, filed in support of Tates’ Response in Opposition to

Defendants’ first Motion for Partial Summary Judgment (Docket No. 100), a copy of which is

attached for the Court’s convenience. Mr. Tate earned his living, contributed 30 years of

effort, time, intellectual property, and his professional legacy in furtherance of Queensryche

and it is these facts through which his reasonable expectations must be viewed. Defendants

oppressed Mr. Tate by forming an executive committee and excluding Mr. Tate. See Exhibit

4 to Tate Decl. They then passed resolutions firing Mr. Tate and taking for themselves all

control and benefit of the Queensryche Companies. Id.

The Business Judgment Rule does not give corporate directors carte blanch to oppress

a minority shareholder. As the Court stated in Interlake Porsche & Audi, Inc. v. Bucholz, 45

Wn. App. at 508-09:

Directors and officers stand in a fiduciary relation to the corporation they serve and are not permitted to retain any personal profit or advantage gleaned “on the side.” The “business judgment” rule immunizes management from liability in a corporate transaction undertaken within the corporation's power and management's authority where a reasonable basis exists to indicate that the transaction was made in good faith. Such immunity from liability is absent where a corporate director or officer is shown to have acted in bad faith and with a corrupt motive.

(citations omitted) (emphasis added). “Because many things can constitute oppressive

conduct or a breach of fiduciary duties, what matters is not so much matching the specific



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facts of one case to those of another but examining the pattern and intent of the majority

and the effect on the minority of those specific facts.” Cooke v. Fresh Exp. Foods Corp.,

Inc., 169 Or.App. 101, 109, 7 P.3d 717, 722 (2000) (emphasis added). As the court continued

in Cooke, the “court must evaluate the majority's actions, keeping in mind that, even if some

actions may be individually justifiable, the actions in total may show a pattern of oppression

that requires the court to provide a remedy to the minority.” Id. at 110. In Cooke, the court

found oppression where the majority shareholders, a father and daughter, fired a 25%

shareholder, the former son-in-law, tried to force him to sell them his shares, and ran the

company to their own benefit and his detriment. Defendants’ reliance on Robblee v. Robblee,

68 Wn. App. 69, 841 P.2d 1289 (1992), is misplaced because the court found in that case that

the brother/shareholders were equally to blame for the disputes and bad behavior.

Here, Defendants acted and continue to act in bad faith, motivated by their desire to

seize Mr. Tate’s share of the Queensryche revenue. See Bucholz, 45 Wn. App. at 509. Their

argument that the Business Judgment rule immunizes them from any liability for oppressing

Mr. Tate belies the facts. Defendants began a scheme to remove Mr. Tate from the band more

than two years ago. They approached Jason Saunders in August and September of 2011 to

replace Mr. Tate as the lead singer. Declaration of Jason Ames Saunders (“Saunders Decl.”),

¶¶ 9-10; also Declaration of Maureen Fisher (“Fisher Decl.”), ¶¶ 6-8; copies of each

declaration filed in support of Tates’ Response in Opposition to Defendants’ first Motion for

Partial Summary Judgment are attached for the Court’s convenience. Defendants implied to

Mr. Saunders that Mr. Tate wanted to leave to pursue a solo career and asked him not to

mention the offer to Mr. Tate. Saunders Decl. at ¶¶ 11 and 14; Fisher Decl. at ¶ 9. When Mr.

Saunders subsequently learned that Mr. Tate did not intend to leave the band, he declined the



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offer to become the next lead singer of Queensryche. Saunders Decl. at ¶¶ 16-19. When

Defendants offered Mr. Tate’s lead singer role to Jason Saunders, they offered him $600 per

week, which was half what he was then making as a backup vocalist on the tour. Saunders

Decl. ¶¶ 12 and 15-16. Offering the lead singer position and a cut in pay led Mr. Saunders to

believe that Defendants were trying to get rid of Mr. Tate so they could keep more money. Id.

at ¶ 16-17. Presumably, in order to cover their tracks, Defendants fired Mr. Saunders and his

girlfriend, Maureen Fisher who was Queensryche’s wardrobe manager, from their positions

on the tour. Saunders Decl. at ¶ 20; Fisher Decl. at ¶12.

These decisions were aimed personally at Mr. Tate. Defendants, at an improperly

called director’s meeting that Mr. Tate could not attend, fired Susan Tate and Miranda Tate.

It was not until four days later that they notified Susan, via an email sent on the Tates’

wedding anniversary, that they had fired her. Tate Response Decl., ¶ 2. In Brazil, before the

concert, Mr. Rockenfield told Mr. Tate that Defendants had just fired his wife, his daughter

and his son-in-law, and said “you’re next.” Tate Decl., ¶ 9. Having known Mr. Tate for 30

years and realizing that they were effectively dismantling both his livelihood and legacy,

Defendants provoked Mr. Tate into the Brazil incident, which they now say justifies all of

their decisions, and which this Court opined is “not dispositive” of a corporate dispute.

Forming an executive committee and excluding Mr. Tate is further evidence of

improper motives and oppression. With all corporate power ostensibly vested in an executive

committee, Mr. Tate has no ability to participate in the management of the Queensryche

Companies or determine where payments and proceeds are going and whether Defendants are

treating him reasonably. Mr. Sussman, the band’s long-time attorney and financial manager,

has expressed concern about how Defendants are managing the Queensryche Companies’



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finances. Tate Response Decl. ¶ 3 and Exhibit 1 thereto. Mr. Tate recently received two

notices of penalties the IRS imposed on Melodisc Ltd., for the improper payment of employer

taxes. Tate Response Decl. ¶¶ 4 and 5 and Exhibit 2 and Exhibit 3 thereto. Defendants

appear to have: (1) mishandled Queensryche Company income by paying crew members off-

book; (2) failed to pay employment and employer taxes, thereby creating liability for Mr. Tate

as a shareholder; and (3) failed to properly account for merchandise revenue a portion of

which goes to Mr. Tate. Again, the Court must examine all of the Defendants’ motives and

actions-- not just the smokescreen of a provoked incident--before it can resolve the Tates’

minority shareholder oppression claim.

2. The Tates Will Prevail on Their Claim for Corporate Waste.

The Tates’ claims for corporate waste stem from Defendants’ mismanagement of the

Queensryche Companies, the damage to the fan base, and the damage to Queensryche’s value

and brand since his firing in June 2012. Resolution of these claims will be factually intensive

and cannot be summarily dismissed on the bald assertion that the Defendants “justifiably”

fired Mr. Tate and that the Business Judgment Rule insulates their actions.

Since last year, this Court has permitted two versions of Queensryche to perform, tour

and produce and sell albums. Mr. Tate remains a 25% shareholder in the Queensryche

Companies, including the version being run by the Defendants. Defendants, as majority

shareholders and the Directors on the Executive Committee, owe Mr. Tate a fiduciary duty of

good faith and fair dealing and are obligated to maximize the return to the Queensryche

Companies and the shareholders. See Bucholz, 45 Wn. App. at 508-09. To resolve the Tates’

waste claim, the Court must examine the financial success of the Queensryche Companies

with Mr. Tate as the lead singer and Mrs. Tate as the band’s manager compared to how these



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companies have fared since Defendants fired Mr. and Mrs. Tate. Even a cursory review

shows the Defendants are damaging the Companies and driving the brand into the ground.

Without Mr. Tate, Defendants’ Queensryche is forced to play smaller venues for less

performance fees. During 2008 through June 5, 2012, the day Defendants fired Mr. Tate,

Queensryche averaged $31,257.72 per performance with a high of $100,000 and a low of

$7,500. See Tate Response Decl., ¶ 7. Since June 6, 2012, Defendants’ Queensryche

averaged $20,190.22 per performance, with a high of $40,000 and a low of $3,000. Id. The

table below shows how the Defendants are causing waste by negatively impacting the

Queensryche Companies’ income:

Company 2008-2011 Average

with Geoff Tate

20126 Without

Geoff Tate

2013 Without Geoff

Tate

Tri-Ryche $473,103.70 $313,850.84 $165,838.177

QR Merchandising $446,596.82 $86,485.38 $67,989.308

Melodisc $2,120,821.63 $492,624.43 $680,039.939

Total: $3,040,522.15 $892,960.65 $913,867.40

The numbers speak for themselves: In the year since expelling Mr. Tate, the Queensryche

Companies have earned less than one-third the amount the Companies averaged with Mr.

Tate as singer and Mrs. Tate as manager. There is no question that Defendants’ stewardship

of the Queensryche Companies caused the IRS to penalize Melodisc twice for the improper

payment of employer taxes. Exhibit 2 and Exhibit 3 to Tate Response Decl. Mr. Tate, while

6 Defendants expelled Mr. Tate on June 5, 2012, but, through improperly called directors meetings, had assumed control of the Queensryche Companies as early as April. 7 Through November 1, 2013. 8 Through mid-August 2013. 9 Through mid-August 2013.



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excluded from running the Queensryche Companies, is nonetheless responsible for payment

of one quarter of the penalties, which amounts to $818.32. While this is somewhat de

minimis damage, it is further proof of corporate waste because these penalties could easily

have been avoided. Each of the other management gaffes damaged the Queensryche

Companies in amount to be determined at trial. Viewed in the light most favorable to the

Tates, there is no question that Defendants are mishandling, misappropriating, and wasting

corporate assets.

3. The Tates Will Prevail on Their Derivative Claim.

The Tates’ derivative claim stems directly from their corporate waste claim; namely,

that Defendants are damaging the Queensryche Companies as explained above. It has long

been the case that shareholders have the power to assert a corporation’s rights on behalf of the

corporation if the directors or officers have failed to protect the corporation and are causing it

damage. In re F5 Networks, Inc., 166 Wn.2d 229, 236, 207 P.3d 433 (2009). To sustain a

derivative claim, shareholders must also demonstrate that a demand to the directors or officers

was either made or would be futile. Id. at 237 (citing RCW 23B.07.400(2)).

With the power of the Queensryche Companies in the hands of the executive

committee comprised of Defendants, any request by Mr. Tate for them to address the

corporate waste claim would be futile. Defendants completely fail to address or demonstrate

how they are entitled to summary judgment on this claim and the only evidence before the

court indicates Defendants are mishandling, misappropriating, and wasting corporate assets.

Again, viewed in the light most favorable to the Tates, Defendants’ request to dismiss this

claim is premature and should be denied.

4. The Tates Will Prevail on Their Breach of Fiduciary Duty Claim.



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Courts have defined the fiduciary duties directors owe to shareholders as a duty of

good faith, utmost care, or against retaining profits owed to the corporation and shareholder.

McCormick v. Dunn & Black, P. S., 140 Wn. App. 873, 894-95, 167 P.3d 610 (2007) (citing

Zimmerman v. Bogoff, 402 Mass. 650, 660, 524 N.E.2d 849 (1998)). The nature of closely-

held corporations, with a small group of shareholders, creates a higher standard of integrity

and good faith dealing. Saviano v. Westport Amusements, Inc., 144 Wn. App. 72, 80, 180

P.3d 874 (2008) (citing Wenzel v. Mathies, 542 N.W.2d 634, 641 (Minn.App. 1996). One

court noted “that oppressive conduct by majority shareholders is closely related to the

fiduciary duty of good faith and fair dealing owed by them to the minority shareholders.”

Scott, 148 Wn.2d at 711 (citation omitted). In Scott, the court quoted the Oregon Supreme

Court’s decision in Baker v. Commercial Body Builders, 265 Or. 614, 507, P.2d 387 (1973):

[A]n abuse of corporate position for private gain at the expense of the stockholders is “oppressive” conduct. Or the plundering of a “close” corporation by the siphoning off of profits by excessive salaries or bonus payments and the operation of the business for the sole benefit of the majority of the stockholders, to the detriment of the minority stockholders, would constitute such “oppressive” conduct as to authorize a dissolution of the corporation....

Scott, 148 Wn.2d at 713-14.

Here, Defendants, as directors and shareholders in the Queensryche Companies, owe a

fiduciary duty to Mr. Tate as a shareholder. They breached this duty by engaging in a pattern

of behavior to remove Mr. Tate from Queensryche and the Queensryche Companies. As

discussed above, Defendants engaged in a year-long scheme to remove Mr. Tate from

Queensryche and to replace him with another lead singer, who they would pay significantly

less, thereby allowing them to keep more Queensryche revenue for themselves. Similarly,

Mr. Sussman’s email shows Defendants are siphoning off company revenue for their benefit

and Mr. Tate’s detriment. Defendants are doing this while failing to properly pay taxes,



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which Mr. Tate has no control over since he is not on the executive committee but for which

he is still liable for one-quarter of the penalties. And last, the revenue figures show

Defendants are running the Queensryche Companies into the ground. As directors,

Defendants have a fiduciary duty to maximize returns, not reduce them. Viewing all

reasonable inferences and facts in a light most favorable to the Tates, Defendants breached

their fiduciary duties.

VI. CONCLUSION

For the reasons articulated above, Geoff and Susan Tate respectfully request the Court

enter an Order granting partial summary judgment against the Defendants on their claim for

breach of contract, reserving the issue of damages for trial, and denying Defendants’ Cross-

Motion on the Tates’ other claims.

DATED this 2nd day of December, 2013.

VERIS LAW GROUP PLLC By /s/ Joshua C. Allen Brower Joshua C. Allen Brower, WSBA No. 25092 Benjamin J. Stone, WSBA No. 33436 Denver R. Gant, WSBA No. 38552 Attorneys for Geoff and Susan Tate



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DECLARATION OF SERVICE

I declare under penalty of perjury under the laws of the State of Washington that on

this date I caused the foregoing document to be served on the following persons via the

methods indicated:

Thomas T. Osinski, Jr., Esq. OSINSKI LAW OFFICES, PLLC 535 Dock Street, Suite 108 Tacoma, Washington 98402 [email protected] 253.383.4433 (phn) 253.572.2223 (fax)

Overnight Delivery via Fed Ex First Class Mail via USPS Hand-Delivered via ABC Legal Messenger Facsimile E-mail / King County E-Service

Dated at Seattle, Washington, this 2nd day of December, 2013.

s/ Alison Sepavich Alison Sepavich, Paralegal

4852-1039-2599, v. 4

mailto:[email protected]

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THE HONORABLE CAROL SCHAPIRA

IN THE SUPERIOR COURT OF THE STATE OF WASHINGTON IN AND FOR THE COUNTY OF KING

GEOFF TATE and SUSAN TATE, a married couple. Case No. 12-2-21829-3 SEA

Plaintiffs, DECLARATION OF JEFF ALBRIGHT

V.

EDDIE JACKSON and TERESA GOLDEN-JACKSON, a married couple; SCOTT ROCKENFIELD and MISTY ROCKENFIELD, a married couple; MICHAEL WILTON and KERRIE LYNN WILTON, a married couple; TRI-RYCHE, CORPORATION, a Washington corporation; QUEENSRYCHE MERCHANDISING, INC., a Washington corporation; and MELODISC LTD., a Washington corporation.

Defendants.

I , Jeff Albright, declare as follows;

1. I'm not here to denounce the talents of any of the Queensryche band members

as all have been consummate professionals throughout, but simply to present the facts

regarding my experiences as the band's publicist over the past six years.

2. Geoff Tate eats, sleeps and breathes Queensryche.

3. Since my representation of the band in May, 2006, Geoff has easily done the

majority of the interviews (over 90%) and often accomplished more than half-a-dozen on any

Veris Law Group PLLC DECLARATION OF JEFF ALBRIGHT 1809 Seventh Avenue, Suite 1400

Seattle, Washington 98101 TEL 206.829.9590 FAX 206.829.9245

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given day during a campaign... this wasn't necessarily the result of presenting him as the only

member available for such, but simply a result of who the media wanted to talk to and saw as

the central figure.

4. Essentially, he is the face, the voice and the most well-known entity of

Queensryche.

5. I've now been doing this for almost thirty years and have represented nuinerous

bands and artists that have been inducted into the Rock & Roll Hall of Fame along with,

personally, being awarded over 20 gold and platinum albums.

6. Geoff Tate is one of the most articulate and creative musicians I've had the

chance to work with over the years.

7. It's been my observation that he is the creative and driving force behind

Queensryche.

8. He's constantly pushing the envelope and stretching the boundaries, while

always remaining true to his craft and making all efforts to keep the band relevant.

9. Not once did I ever experience anything other than a "Where do I need to be

and at what time?" attitude... always willing, always available.

10. Like most creative, talented and immensely passionate artists, Geoff Tate is in

"it" not only for the legacy (which he's worked so hard to build over the past 30+ years), but

for the art.

11. For me, it's always been exciting to see what his creative mind could conjure up

next...

12. In my opinion, when it comes to a band (despite their individual and

considerable talents), there can only be one "ringmaster"... without question, Geoff Tate was it

in Queensryche... front and center.

Veris Law Group PLLC DECLARATION OF JEFF ALBRIGHT 2 l^Og seventh Avenue, Suite 1400

Seattle, Washington 98101 TEL 206.829.9590 FAX 206.829.9245

I declare under penalty of perjury of the laws of the State of Washington this day

of October 2012 that the foregoing is true and correct.

4845-1874-4081, V. 2

DECLARATION OF JEFF ALBRIGHT Veris Law Group PLLC 1809 Seventh Avenue, Suite 1400 Seattle, Washington 98101 TEL 206.829.9590 FAX 206.829.9245

filed - anybodylistening.net · 2018-01-11 · veris law group pllc seattle, washington 98101 ......

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