Cliff Buchan
News Editor

A settlement agreement that brought closure to an ownership dispute at Stars & Strikes Entertainment Center in Wyoming may have halted court proceedings, but has not eased the breakup pain for two of the business founders.

The agreement, signed on July 9, will halt an ownership dispute that has festered since late last year. The bowling alley and entertainment center opened in June of 2006.

A confidentiality agreement tied to the settlement bars the former ownership team from revealing terms of the settlement.

But court records filed in Chisago County District Court show a sharp divide between Betsy and Mike Rud and Nancy Immel who partnered to begin planning the $8 million Stars & Strikes venture more than six years ago.

The settlement agreement officially brings an end to the Ruds direct involvement with the business and puts forward a plan to replace a court-appointed receiver with an outside management firm to run the facility.

Immel said last month she had retained the interim services of Trifecta Management Group of Agoura Hills, CA, to run the 24-lane facility in the Wyoming Business Park.

Rud’s case

The ownership dispute led to a spate of lawsuits and counter-suits filed by the two parties. Immel brought suit on behalf of her business, NKI Leasing, Inc. which does business as Bar Outfitters, Immel individually and her three brothers, Grant, Robert and Roy Wheaton who were financial partners but not involved in the day-to-day operation of Stars & Strikes.

The Ruds filed a countersuit against NKI Leasing, Inc. (Bar Outfitters) and the Wheaton brothers. In the lawsuit, the Ruds contested claims by Immel that they failed to make required $200,000 contributions to Stars & Strikes as members of the limited liability company. As multi-year employees of Immel’s Bar Outfitters, the Ruds contend that Immel substituted a promise of ownership in Bar Outfitters for ownership interest in the bowling alley and entertainment center.

In their counterclaim, the Ruds argued that Bar Outfitters failed to fulfill the extent of an oral agreement that Bar Outfitters would pay debts owed to the Ruds for compensation and other sums to Stars & Strikes in lieu of the Ruds’ capital contribution to Stars & Strikes. The Ruds also argued that Bar Outfitters was “unjustly enriched” by the amount it has benefited by the Ruds’ labor and other expenses they incurred.

In opposing Immel’s move for summary judgment in the suit, the Ruds said their termination as shareholders would leave them personally liable on the significant debts of the company without any mechanism to assure that the company’s assets are applied to creditors.

In its court filing, the Ruds said they were owed some $300,000 by Bar Outfitters for expense reimbursement, commissions or promised ownership interest as compensation for accepting a lower wage and foregoing overtime compensation and salary increases from 2000 through 2006 as employees with Bar Outfitters.

It was with that understanding, the Ruds contend, that they agreed to personally guaranty some $8.5 million in debt incurred by Stars & Strikes, LLC.

The Ruds also argued that they did not create a hostile environment toward Immel and did not lock her out. In court filings, the Ruds said Immel declined a number of opportunities to attend business meetings at Stars & Strikes since last December.

Bar Outfitters role

The countersuit by the Ruds also calls into question the role of Bar Outfitters, a bar and restaurant supply company that provided equipment and supplies to Stars & Strikes. In its filing, the Ruds dispute that Immel contributed most of what she alleges, or that Bar Outfitters has not been fairly compensated for any product or is unreimbursed by any expenses it incurred on Stars & Strikes’ behalf. The Ruds argued that Immel’s contributions are “substantially illusory” and that Bar Outfitters received more than it was entitled.

In its filing, the Ruds said total payments of $1,280,000 were made to Bar Outfitters. They alleged that some $296,000 constituted overcharges and double billings that should not have been charged against Stars & Strikes.

“In light of the payments received by Bar Outfitters from the construction draws, CIT loan, and other sources, Bar Outfitters had received at least $100,000 more than it was entitled to receive at a time when Stars & Strikes was not able to pay its general contractor who had mechanics lien rights and who could foreclose on the Stars & Strikes facility,” court filings said.

Next step

Immel said last month the business would continue to operate under the direction of the California management firm that has expertise with entertainment businesses.

She said efforts would be made to clear up nearly $1 million in liens filed against the business and that refinancing may be needed along with new capital investors. She said efforts would be made to sell and develop adjoining acreage to a business that may complement the entertainment center.

Court records indicate that in its first half year of operation, Stars & Strikes produced revenues of some $65,000 a week. By this spring, however, that total had dipped to some $35,000 a week.

The business had total valuation of just under $13 million, according to records filed with the court.

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