Granddaughter denies fraud, enrichment claims in Stuffy's suit

Skai Hogue, the granddaughter of the cofounders of Longview's Stuffy's II diner, alleges that the fraud and forgery lawsuit filed against her and her husband last month is part of a "concerted campaign" by her grandparents to remove her as one of their business partners.

According to a newly filed court response, Hogue claims that her grandparents are attempting to oust her "illegally" because of disputes between them over how to allocate the insurance money from the Aug. 4 fire that closed the business and over who has the right to sell the burned restaurant property at 804 Ocean Beach Highway.

Stuffy's owners want to reopen, but lawsuit says fraud, forgery by staff blocking them

The state's highest court will weigh in on the Longview diner's $936,000 in COVID-era fines Thursday, but another court battle after an August fire also threatens the restaurant's reopening.

Stuffy's II founders Glenda and Grant "Bud" Duling filed their civil suit against Hogue and her husband, Zane Hogue, April 16 in Cowlitz Superior Court. Their claims include breach of fiduciary duty, forgery and contractor fraud.

The Hogues vehemently denied those accusations in a detailed response filed late Thursday, which was prepared with the help of their lawyer, Jackson Maynard of Olympia.

Maynard sent a copy of the response to The Daily News on the same day.

The response claims the Dulings' lawsuit - along with a motion to freeze an $868,000 insurance payment deposited into a business account belonging to Hogue's husband - boil down to "a business dispute" over control of two businesses: Duling Enterprises, which does business as Stuffy's, and Duling Properties, which holds a self-storage business at 1818 South Pacific Ave. in Kelso.

"This entire suit and this motion is an effort to circumvent the clear requirements of those agreements that entitle her to rights as a partner in the management and proceeds of those business," Maynard wrote in his clients' response.

The civil suit between the Hogues and the Dulings is one of two pending legal matters involving the closed family business.

Separately, the Washington State Supreme Court opened its spring term on May 14 with oral arguments on whether the restaurant's $936,000 in COVID-19-related fines were excessive under the Eighth Amendment of the U.S. Constitution.

Disputed partnership

Stuffy's

A sign outlining temporary closure hangs on a door to Stuffy's II on Tuesday, May 12, in Longview. Cowlitz County Superior Court records show the owners aim to reopen after an August fire, but are stalled. A lawsuit says they suspect the restaurant's former manager, who is also their granddaughter, of using insurance money to pay her husband's business for repairs without the owners' knowledge.

The Dulings claim in their lawsuit that they "offered to make Hogue a one-third partner in the restaurant in exchange for her continued help with management and bookkeeping," but they "did not actually issue her ownership shares or calculate gifting her ownership shares in either Duling Enterprises LLC (Stuffy's II) or Duling Properties LLC (storage units)."

Instead, Hogue was on the payroll, "but did not pay herself in ownership shares or options to purchase ownership from us," Glenda Duling stated in a signed declaration filed with the case.

The Dulings allege that Hogue added herself to business accounts "through overreaching, manipulation of information and deceit."

Hogue's response filed Thursday argues that she is a business partner based on two separate operating agreements that Bud and Glenda Duling co-signed with Hogue. One agreement was dated Jan. 9, 2023, and another has a date of Feb. 29, 2024.

Hogue refutes the Dulings' claims line-by-line, and directly disputes an accusation of self-enrichment her grandmother made in the lawsuit.

Put plainly, "I did not pay myself $491,809.01," Hogue wrote.

Appeals court upholds Stuffys II COVID fines; Longview diner focused on reopening

The Longview restaurant says they remain focused on reopening after the fire, and that they intend to keep fighting the fine.

Glenda Duling stated in court filings last month that her granddaughter had filed paperwork with the Washington Secretary of State's office, substituting Hogue as the registered agent without her knowledge; that she filed paperwork to use her private email address to manage the businesses and that "she effectively stopped hard copies of mail showing up at the business where we would see them."

Hogue stated in response that "(t)his is not true."

"She (Glenda Duling) was there and aware when I made any changes. She also opened all the mail which was sent to the restaurant's location," Hogue said in a declaration that accompanied the court filing. "I made no changes to mail service."

Wind down the business?

Stuffy's

Overgrown weeds and caution tape are seen at Stuffy's II on Tuesday, May 12, in Longview. The dinner has been closed since an Aug. 4 fire.

According to Hogue's response, the ownership dispute erupted in November, shortly after a roughly $885,000 insurance payment came in.

The Dulings told her - after the contract with Hogue's husband's construction company had been entered - that they "wanted to file for bankruptcy and use the insurance proceeds to settle the business affairs of the restaurant in lieu of making the repairs," Hogue's response states.

Hogue "refused to agree," the filing states. It adds that Hogue "wanted to proceed as previously decided with her husband's company ... and continue the family business.

"Following this dispute, both Dulings engaged in a concerted campaign to illegally remove Ms. Hogue from the business partnership for financial gain," Maynard, Hogue's lawyer, wrote.

Hogue's claims differ starkly from those made by the Dulings, who stated in their April lawsuit, prepared with the help of Longview lawyer Michael W. Frey, that it's their goal to reopen.

"Bud and Glenda Duling intend to rebuild and reopen because of the high likelihood that their customers will return, and the business will prosper again," their lawsuit states.

Other fraud, six-figure claims disputed

Each side claims the other locked them out of important business records and accounts.

Glenda Duling alleges in her filing that she "was very disturbed to find that I had no access to our company financial records ... and (that) our granddaughter had apparently abandoned her job as manager."

Hogue, however, claims in her response that she was the one removed from the business accounts on Dec. 15.

2 Longview restaurants were fined for defying COVID rules. Here's where payments stand today.

One eatery is no longer in business.

Glenda Duling said the more than $868,000 check from insurance payments was endorsed with a stamp bearing her signature, but was not endorsed with her knowledge or permission.

Hogue, however, states that her grandmother had authorized her to use the stamp.

"This was authorized by the bank because she had to sign an agreement allowing the use of the stamp and allowing the bank to accept the stamp," Hogue said in her response.

It's not the only financial dispute. Hogue accuses her grandparents of not providing a $300,000 loan they promised so that the younger couple could build a home. Although they signed a contract in 2023, Hogue alleges that the "agreed upon $300,000 loan was never actually paid."

She said they ultimately found "alternative financing for our home."

Meanwhile, the Hogues are also being accused of financial malfeasance from another set of grandparents. Cowlitz Superior Court records show the grandparents of Hogue's husband, Zane, filed a lawsuit in December, accusing the couple of defaulting on a separate loan in which they agreed to repay $220,000 on March 15, 2024.

The Hogues' response claims that Claude Nelson Millard Jr. and Hurmalee Joyce Millard of Castle Rock "made statements indicating that immediate repayment was not required," and that they "relied on those statements in proceeding with refinancing."

Court records show that Judge Thad Scudder issued a judgment on May 13, ordering the Hogues to pay a combined $281,180.39 to the Millards. The breakdown includes $57,067.39 in interest, $3,598 in attorney fees and $515 in court costs.

The next hearing in the Dulings' civil case is a Thursday hearing regarding the frozen $868,000 payment.

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