Founders Gilliland andCook Sue Wild Oats

Founders Gilliland andCook Sue Wild Oats

BOULDER, Colo.--Michael Gilliland and his wife, Elizabeth Cook, filed a lawsuit against Wild Oats Markets Inc. for failure to pay back the $2 million lent to the company in January 2001. Gilliland and Cook, co-founders and former board members of the grocery chain, filed their lawsuit in Boulder County Court on January 22, asking for payment of the $2 million in addition to interest and attorney's fees.

"When they called the note, we were to pay them back the $2 million," explained SonjaTuitele, a spokesperson for Wild Oats Markets (www.wildoats.com). "But because of this ongoing dispute over money they owe Wild Oats, we wanted to settle that before we paid the loan back."

Martin Berliner, the attorney who filed the claim on behalf of Gilliland and Cook, countered by saying the two financial issues are mutually exclusive. "As a practical matter, Gilliland and Cook made a tender to the company of certain monies that were intended to satisfy the obligations that the company now seeks to use as a setoff, and that tender was denied. ... As far as that's concerned, if you create an impossibility in performance, I don't know that necessarily is a defense to your obligation to pay your promissory note. ... In this particular case, the setoff, under any reasonable circumstances--even if all their allegations were true--the setoff wouldn't even come close to the $2 million. ... [F]rom the standpoint of whether it's a valid defense or not, that's for the court to determine."

In the terms of the promissory note, Gilliland and Cook have been collecting 9 percent interest on their investment, according to the company. The terms also dictated that when the couple called the note, Wild Oats Markets had 10 days to respond. According to Berliner, Gilliland and Cook gave the company notice on two occasions--once on Jan. 7 and again on Jan. 12--before the suit was filed on Jan. 22.

"They [Gilliland and Cook] lent the company $2 million on a demand promissory note. They asked for payment under the note, and the company refused to pay them. It's a very simple lawsuit," Berliner said.

Tuitele reiterated, "We feel we need to settle this financial dispute before we can pay their money back. To us, those are two related things. They owe us money, we owe them money, let's offset it."