Tully's Coffee sued by former partner Ueshima, again

Tully's Coffee is being sued by a former business partner, Ueshima Coffee of Japan, which says its interest in Tully's Asia business has been compromised by a deal Tully's cut with another company.

Ueshima used to be licensed to operate Tully's coffee shops in much of Asia. It opened only one store, which later closed, according to Tully's.

In 2006, Ueshima sued Tully's for terminating its license agreement. That lawsuit was settled last year, and Tully's agreed to pay $6 million.

Tully's still owes $3 million, according to a lawsuit Ueshima filed March 4 in U.S. District Court in Seattle.

But that's not the problem.

Ueshima is suing over an option it says Tully's made available to another partner, Asia Food Culture Management in Singapore, to own the controlling interest in a business partnership that opens Tully's stores in Asia. The partnership oversaw the opening of its first two Tully's franchises in Singapore late last year.

Tully's currently controls the partnership, and Ueshima says it owns part of that controlling interest.

Ueshima wants the court to declare Tully's in breach of its agreement, to prevent Asia Food Culture Management from becoming the controlling owner. It seeks unspecified damages to be determined at trial.

A spokesperson for Tully's did not have an immediate comment.

Tully's has said in recent securities filings that it plans to repay $26 million in debt to Ueshima and other creditors if shareholders approval the sale of its wholesale business to Green Mountain Coffee Roasters of Vermont. A special shareholder vote on the deal is scheduled for Monday.

Melissa Allison: 206-464-3312 or mallison@seattletimes.com