Rosenthal v. National Produce Co., Inc.

573 A.2d 365, 1990 D.C. App. LEXIS 87, 1990 WL 47646
CourtDistrict of Columbia Court of Appeals
DecidedApril 18, 1990
Docket88-226, 88-274
StatusPublished
Cited by79 cases

This text of 573 A.2d 365 (Rosenthal v. National Produce Co., Inc.) is published on Counsel Stack Legal Research, covering District of Columbia Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rosenthal v. National Produce Co., Inc., 573 A.2d 365, 1990 D.C. App. LEXIS 87, 1990 WL 47646 (D.C. 1990).

Opinion

SCHWELB, Associate Judge:

This case arises from a dispute as to whether the dominant individual in a financially ailing corporation is responsible for payment of certain of its debts. Appellant Harvey Rosenthal, a restaurateur who owned all of the stock of a corporation with the alluringly refreshing name of Radishes & Rainbows, Inc. (R & R), appeals from a decision of the trial judge which held him personally liable, as the agent of an undisclosed principal, for produce delivered to the restaurant by a supplier, appellee National Produce, Inc. (National Produce). National Produce asks us to affirm the judgment but, claiming as an alternative ground for recovery that R & R’s corporate identity should have been disregarded, conditionally cross-appeals 1 from a ruling by the motions judge denying in part its motion to compel discovery, and from a decision of the trial judge refusing its request, made at the conclusion of the trial, to amend its complaint to conform to the evidence. National Produce maintains that the trial judge should not only have allowed the requested amendment, but should also have pierced the corporate veil.

Because the relationship between Rosen-thal and R & R 2 on the one side and National Produce on the other was not reduced to writing or otherwise adequately defined, both the trial court and this court have been compelled to wrestle with some fundamental and difficult questions. These include whether National Produce’s agreement was with Rosenthal or with R & *367 R; whether there was a single “umbrella” agreement or a series of separate contracts, each coinciding with an individual delivery; whether and when Rosenthal disclosed that he was acting as an agent for R & R; whether R & R was anything more than Rosenthal’s “alter ego”; and whether the disputes over discovery and amendment of pleadings were correctly resolved.

An ounce of prevention is worth a pound of cure. Most or all of the problems now presented might have been forestalled if the character of the arrangement between the parties had been adequately defined at the outset. This did not occur, however, and the dispute having gone through discovery and trial, we find ourselves compelled, nearly six years after the delivery of the last radish, to remand for further proceedings, both on Rosenthal’s appeal and on National Produce’s cross-appeal. Unfortunately, the complexities are such that the end still may not be in sight.

I

THE FACTS

R & R was incorporated in 1978 and began operating the restaurant in 1979. Shortly before the facility opened, Rosen-thal visited National Produce and spoke with the company’s president, Boris Ballard, about buying produce for the establishment. On behalf of National Produce, Ballard agreed that Rosenthal would place orders with National Produce on a daily basis, that the merchandise would be delivered to the restaurant, and that the National Produce driver would be paid for each day’s deliveries. Ballard intended to have National Produce deal with Rosenthal on a daily cash basis. According to Ballard, “there was never an open account for Harvey Rosenthal.”

When Rosenthal first spoke with Ballard, he stated that he would take care of all the bills. According to Ballard, Rosenthal did not disclose that he was acting on behalf of a corporation, and the form of Rosenthal’s business was not discussed. Rosenthal testified that “truthfully I don’t remember” whether he disclosed to Ballard that R & R was incorporated, but he added that he paid bills with corporate checks and that his suppliers “all knew we were a corporation. We weren’t hiding anything.” In any event, Ballard and other National Produce employees referred to the new account as “Radishes and Rainbows,” but did not allude to any corporate identifier.

At first, Rosenthal paid National Produce’s bills daily and in cash. After a short time, Rosenthal began to encounter difficulties in making daily payments, and he asked National Produce to deliver daily, but to accept payment weekly. National Produce agreed to this new arrangement. The revision in the manner of payment did not, however, enable Rosenthal to pay the restaurant’s obligations to National Produce on a current basis. In September 1984, R & R went out of business and liquidated its assets. 3 At that time, National Produce was owed $18,667.32 for produce which had been received by the restaurant but for which neither Rosenthal nor R & R had paid.

When R & R stopped operating, it carried on its corporate books loans to Rosen-thal totaling at least $45,370.00. Although Rosenthal testified that he may have repaid those loans in part, R & R’s books do not reflect any such repayment.

Beginning in 1984, and continuing into early 1985, National Produce attempted to reach an agreement with Rosenthal and R & R which would have provided for payment over time of the sums owed to National Produce. Some time during these negotiations, disclosure was concededly made to National Produce that R & R was a corporation and that Rosenthal claimed to be acting on its behalf. When the parties were unable to resolve their dispute informally, National Produce sued Rosenthal and R & R, alleging breach of contract by each defendant, fraud by Rosenthal in the inducement of the agreement, and breach of Rosenthal’s personal guarantee to answer for R & R’s debt. National Produce later amended its complaint to include a *368 claim alleging that R & It had fraudulently conveyed assets to Rosenthal.

II

THE TRIAL COURT PROCEEDINGS

Following some spirited barristerial shadow-boxing over, discovery before Judge von Kann, see pp. 373-375, infra, the case came before Judge Dixon for trial by the court without a jury. National Produce contended that there was only a single 1979 contract between the parties. Its attorney described this contract as an “umbrella agreement: we will deliver produce; you will pay us.” 4 Maintaining that at the time the agreement was reached, Rosen-thal had not disclosed that he was acting on behalf of a corporate principal, National Produce argued that he was therefore personally responsible for payment. Rosen-thal contended, on the other hand, that there was never a meeting of the minds in 1979 as to the terms of an agreement, and that “if there is a contract here, the contract would occur with regard to every purchase made by the corporation of produce from plaintiff.” Appellants’ attorney maintained that

whatever contractual claim the plaintiff might have, derives [from and is] based on these deliveries to the corporation, and it would be the corporate debt, if any, that would have been proven. Certainly none on the part of Mr. Rosenthal, because again there is no evidence that he ever originally entered into an agreement respecting the terms of payment of these deliveries.

It was Rosenthal’s position that disclosure was made prior to each delivery for which National Produce has not been reimbursed.

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Cite This Page — Counsel Stack

Bluebook (online)
573 A.2d 365, 1990 D.C. App. LEXIS 87, 1990 WL 47646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rosenthal-v-national-produce-co-inc-dc-1990.