Saipan Tribune

Wednesday, May 22, 2013

Tuesday, February 19, 2013

Shareholder sues No Ka Oi, seeks damages

One of the incorporators of No Ka Oi Termite & Pest Control (Saipan) Inc. has sued the company for allegedly unlawfully terminating him as manager and refusing to pay any dividends to its shareholders.

Joey D. Lopez Sr., through counsel William M. Fitzgerald, sued No Ka Oi for breach of contract, wrongful termination, and failure to pay dividends.

In a lawsuit filed Thursday, Lopez, a resident of Guam, is demanding $103,000 or more in compensatory damages if the company's profits are shown to be more than $40,000 a year for the years 2009 to 2012.

When asked for comments, No Ka Oi (Saipan) vice president Paul Romias II said yesterday that they are going to answer the complaint accordingly in court.

No Ka Oi counsel Mark Hanson also told Saipan Tribune that the company has not seen the complaint so it is difficult to comment except to say that Lopez “has launched several attacks against the company” since he was asked to leave the management team.

“None of Mr. Lopez's attacks, to-date, have had any merit. The company will respond to the complaint in the U.S. District Court,” Hanson said.

According to the complaint, Lopez, along with Paul Romias, Paul Q. Romias II, Lincoln Delos Santos, incorporated No Ka Oi in September 1990.

Fitzgerald said the total number of shares issued was 1,000 at a par value of $1 and that Lopez paid $250 for 250 shares or 25 percent of the corporation.

The lawyer said subsequent to incorporation, the shareholders elected four directors: Paul Romias, Paul Romias II, Delos Santos, and Lopez. The directors then appointed Delos Santos as company manager.

Fitzgerald said Delos Santos managed the affairs of the company until the board removed him due to poor health and replaced him with Lopez.

Fitzgerald said that under Lopez's management, No Kai Oi's customer base expanded and the company enjoyed the greatest profits in its history.

“Despite diligently discharging his duties and producing record profits for the company, Lopez was summarily discharged from his management position without any board action in September 2010,” the lawyer said.

Since at least 2010, the company has allegedly failed to conduct an annual shareholders' meeting; has failed to elect four directors; and has failed to distribute profits or dividends despite profits being made.

On Oct. 1, 2011, Lopez, pursuant to Article 15 of the Articles of Incorporation, offered in writing to sell his shares back to the corporation.

Fitzgerald disclosed that by letter dated Nov. 1, 2011, the company accepted Lopez's offer and informed him that Karvin Flynn Jr. of Scott Magliari and Co., a certified public accountant, had compiled the book value of his shares.

The company also told Lopez that No Ka Oi would deduct all personal expenses that were paid for his personal business and not related to company business.

Lopez then requested from No Ka Oi financial statements for the year 2008 through 2011, the accounting disclosure sheet and valuation prepared by Flynn, and a detailed list of Lopez's personal expenses.

Fitzgerald said No Ka Oi ignored Lopez's demand, preventing him from determining the true value of the shares and the validity of the claim that he owed the company money.

Fitzgerald said that, in September 2012, Lopez was informed that the book value calculated by the company at the time it agreed to buy his shares was $36,000, and by letter of Dec. 13, 2012, he agreed to accept that amount for the purchase of his shares.

Fitzgerald said No Ka Oi refused to honor the agreement made in November 2011 and continues to refuse to pay Lopez.

The lawyer said that since at least 2009, No Ka Oi has failed to pay any dividends to its shareholders and that during this time, the records that Lopez has been able to examine show that the company has made, after taxes, profits of approximately $40,000.