Villar v. Kernan

Frederick Villar (plaintiff), who owned 49 percent of pizza business Ricetta's, and Peter Kernan (defendant), who owned 51 percent, allegedly orally agreed to take only distributions rather than salaries from the company; a third shareholder, Ronald Stephan, later acquired 1 percent from each of them. In 1994, without Villar attending the shareholders' meeting, Kernan and Stephan approved a consulting agreement paying Kernan $2,000 weekly, and Kernan received $90,000 in 1994 and $24,000 in 1995 under it. Villar sued Kernan in federal court for breach of the alleged oral no-salary agreement; the district court found such an oral agreement existed but couldn't find controlling precedent on whether the state's statute of frauds barred its enforcement, so it certified the question to the Maine Supreme Court.