Family dispute brews up trouble for beer distributor

Alana Roberts

Friday, Dec. 3, 2004 | 11:09 a.m.

A bruising family legal battle could imperil Nevada Beverage Co., Southern Nevada's exclusive distributor of Anheuser-Busch products for 50 years, according to lawyers for the battling children of the late Pat Clark Sr., founder of the beer distributor.

The dispute between Pat Clark Jr., current president of Nevada Beverage Co. and his sisters Joann Clark Callahan, Mary Clark Houston and Barbara Clark Klassen over the payment of 11 promissory notes worth $39 million could cause Anheuser-Busch to terminate its wholesaler agreement with Nevada Beverage Co., Pat Clark Jr., alleged in a complaint filed Nov. 17.

If that were to occur it would have a "devastating" impact on the business, he said in the complaint.

The sisters are seeking to sell shares of Nevada Beverage Co. and Alternative Beverage Inc., which serve as collateral for the notes. The sisters allege Pat Clark Jr. has defaulted on payments of interest owed to three family estate trusts and they want to make up for that loss by selling the shares. The trusts are related to the estate of their parents Pat Clark Sr. and the late Bernice Clark.

However, Pat Clark Jr. denies he defaulted on the payments, and alleges he paid more in interest than he owes.

On Nov. 19 a Clark County District Court judge granted a temporary restraining order blocking the sale of the shares. A preliminary injunction hearing is set for Tuesday.

Pat Clark Jr.'s attorney Steve Morris said the shares can't be sold and his client is seeking the preliminary injunction in order to get the court to declare that.

"The stock is not available for sale," Morris said. "It can't be sold and that is because if it were and it were sold without A-B's (Anheuser-Busch's) permission, which is what the defendants are proposing to do, that would provide a basis for A-B to terminate Nevada Beverage's franchise. But that isn't going to happen because the stock is not salable and we're asking the court to officially say no sale of the stock by entering an injunction."

Pat Clark Jr. could not be reached for comment.

Pat Clark Jr. alleged in his complaint that in a Nov. 12 letter Anheuser-Busch representatives said any sale of shares of Nevada Beverage Co. would be considered a breach of contract and grounds for termination of the contract.

"Immediate termination of the Anheuser-Busch Wholesaler Equity Agreement between Nevada Beverage Co. and Anheuser-Busch Inc. would have a devastating impact upon the business and value of Nevada Beverage Co," he said in court documents.

The sisters allege in an opposition to the complaint filed on Nov. 24 that Pat Clark Jr.'s allegations of how much he paid on the notes are based on "contradictory" accounting.

In a statement Don Johnson, vice president of wholesaler development for Anheuser-Busch Inc., said the company has the right to approve any change in ownership of the company.

"Nevada Beverage Co. is an independent wholesaler, and Anheuser-Busch has no involvement in its daily operations," Johnson said. "Anheuser-Busch, however, has the right to approve any change in the ownership of this and any other distributor of our products. Our interactions with wholesalers are designed to ensure that the wholesalers always live up to the high-quality standards our consumers and retailers have come to expect, and that they serve consumers as effectively and efficiently as possible."

It is unclear what percentage of the distributorship the shares represent.

According to court documents the collateral on the notes equals seven shares of Nevada Beverage Co. voting stock and 18,976 shares of non-voting stock.

"It's not the company at all, it's a few shares of stock in the company," Morris said. "It's less than 20 shares of several thousand shares."

Morris said the company is a well-run company and that the dispute between Pat Clark Jr. and his sisters stems from Clark Jr.'s sisters' dissatisfaction with what they were awarded from their parents' estate.

"This is an exemplary company," Morris said. "It is a marvelously run and managed company. It is a successful Budweiser distributor since 1948. It's unfortunate Mr. Clark's sisters are trying to express their dissatisfaction (in such a way) that it calls some questions into the company. It's run and operated by a lot of very dedicated and very decent people."

Elliot Blut, a lawyer for the sisters, declined to comment.

Kim Kouba, niece of Pat Clark Jr. and daughter of Houston, denied that the actions of her aunts and mother will result in the closure of the business. Kouba is involved in her own separate legal dispute with Pat Clark Jr.,

"No one's going to lose their job," Kouba said. "All of our family, I'm not talking about Pat, all we want is for the employees to be happy and to have job security. To know they can wake up and they're going to have a safe job. The business should be flourishing despite what goes on litigationwise. The business is still going to continue."

Gary Mauger, secretary-treasurer of Teamsters Local 14, which represents 110 warehouse workers and truck drivers at Nevada Beverage Co., said the dispute is unlikely to cause the business to close and put about 300 people out of work.

"The only way I foresee it affecting the business is a change of ownership," Mauger said. "I don't think the courts would allow them to shut this company down. Whoever prevails, hopefully they'll keep it as it is."

Mauger said Anheuser-Busch has the power to find another company to take over the distributorship.

"Budweiser nationally will have a say in this. They have the ability to yank a distributorship and give it to someone else," Mauger said. "They're not going to jeopardize their product while disputing siblings fight. I don't foresee them closing the business, I foresee one or the other getting it."

Mauger said the union reached a five-year contract with Nevada Beverage Co. in March. He said because the business is so lucrative, it is unlikely the parties would allow it to close.

Nevada Beverage Co. distributes all Anheuser-Busch products in Southern Nevada, including Budweiser, Bud Light, Michelob and Michelob Light.

Mauger also said whoever assumes the distributorship will likely keep the current employees because of their experience. He said the union also negotiated similar contracts with Bonanza Beverage Co., Deluca Liquor and Wine Ltd. and Johnson Brothers of Nevada this year.