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Tully's Coffee Asia Pacific Inc. v. Asia Food Culture Management Pte Ltd.

United States District Court, W.D. Washington, Seattle

February 5, 2014

TULLY'S COFFEE ASIA PACIFIC INC., Plaintiff,
v.
ASIA FOOD CULTURE MANAGEMENT PTE LTD., Defendant.

ORDER DENYING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

MARSHA J. PECHMAN, Chief District Judge.

THIS MATTER comes before the Court on Defendant Asia Food Culture Management PTE LTD's ("AFCM") Motion for Summary Judgment, arguing Plaintiff Tully's Coffee Asia Pacific, Inc. ("TCAP") lost its management authority over Tully's Coffee Asia Pacific Partners, LP ("TCAPPLP") when TC Global, TCAP's parent company, engaged in an "Indirect Transfer." (Dkt. No. 8.) Plaintiff responded to this motion on its merits and also argued it needed additional discovery in order to present the Court with a proper record. (Dkt. No. 13.) The Court considered the Motion for Summary Judgment, the Response, the Reply (Dkt. No. 15), and all related documents. The Court DENIES the Motion for Summary Judgment.

Background

AFCM and TCAP debate how the limited partnership agreement between them should be interpreted. AFCM argues TC Global made an "Indirect Transfer" to Global Baristas ("GB"), giving AFCM management authority over TCAPPLP. (Dkt. No. 8.) TCAP argues it did not lose its management authority over TCAPPLP because TC Global did not make an "Indirect Transfer" to GB. (Dkt. No. 13.)

A. Formation of TCAPPLP

TC Global was formed in 2001, and it conducts a business of wholesale coffee roasting and sales. (Dkt. No. 13 at 8.) TC Global formed TCAP as a wholly owned subsidiary in order to expand Tully's in Asia through an Exclusive License Agreement in October 2007. (Dkt. No. 8 at 4.)

On December 21, 2007, TCAP and AFCM entered into a limited partnership agreement to create TCAPPLP. (Dkt. No. 8 at 5.) TCAP transferred all rights and benefits under the Exclusive License Agreement to TCAPPLP. (Id.) TCAP became the general partner, and AFCM became the limited partner. (Id.) AFCM and TCAP each hold a 50 percent interest in TCAPPLP. (Id. at 6.) The pertinent language of the limited partnership agreement is:

13.4 Notwithstanding any other section of this agreement, no Partner may transfer a portion or the entirety of the control of themselves as a corporate entity... without the express consent of the Partner (" Indirect Transfer "). Should such an Indirect Transfer occur without consent, the transferee shall have no rights of management in the Partnership through the partner entity, nor shall they have the ability to bind the Partnership through the partner entity.

(Dkt. No. 14-1 at 32.) A "Partner" is the General Partner or the Limited Partner. (Id. at 16.) A "General Partner" is "TCAP, any person or other entity substituted for it, and any additional General Partner admitted to the Partnership pursuant to this Agreement." (Id.) A "Limited Partner" is "AFCM, any Persons or other entity substituted for him, and any additional Limited Partners admitted to the Partnership pursuant to this Agreement." (Id.)

B. TC Global Files Bankruptcy

TC Global filed Chapter 11 bankruptcy on October 12, 2012, in the U.S. Bankruptcy Court for the Western District of Washington. See In re: TC Global, Inc., Case No. 12-20253-KAO, Dkt. No. 1 (W.D. Wash 2012). TC Global sold most of its assets to GB. (Dkt. No. 8 at 7.) The Sale Order and the Asset Purchase Agreement stated all of TC Global's interest in TCAP would be sold to GB. (Id.)

C. Three Separate Actions

Interested parties now debate whether the Exclusive Agreement was terminated with the bankruptcy and whether TC Global made an "Indirect Transfer" to GB. Two actions discuss whether the Exclusive Agreement was terminated: a state court action and a bankruptcy court action. The action ...


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