One shareholder of Massachusetts-based Tree House Brewing has filed a lawsuit against co-owners Nate Lanier and Damien Goudreau, claiming they have misused company funds, neglected to offer shareholder dividends, and withheld tax documentation.
Eric Granger, a Monson, Massachusetts resident who owns 2% of Tree House’s shares, filed the lawsuit against Lanier, Goudreau and Tree House Brewing Company in Massachusetts Superior Court on November 15.
“As a result of the acts alleged herein, Lanier and Goudreau have directly and indirectly profited and are continuing to profit at the expense of Tree House and Granger,” the lawsuit reads. “Tree House and Granger have sustained and are continuing to sustain additional losses, all in an amount presently unknown to Granger and ascertained only on an accounting herein.”
Granger acquired his shares in May 2012, the year after Tree House was founded. It has since “mushroomed exponentially,” and is “the largest direct-to-consumer on-premises brewer in the United States” with more than 1 million visitors annually to its five locations, according to the lawsuit.
In the lawsuit, Granger accuses Lanier and Goudreau of manipulating Tree House’s corporate formation to freeze out other shareholders.
In 2015, Granger allegedly unknowingly signed a document authorizing the transformation of Tree House LLC into Tree House Brewing Company, Inc., which divided its shares into voting stock (Class A) and non-voting stock (Class B). Only Lanier and Goudreau received Class A shares, with the brewery’s other shareholders taking Class B shares.
“Lanier and Goudreau took advantage of their Class A share status to appoint themselves as the president, secretary, treasurer, and only two members of the board of directors, thus arresting absolute control of corporate governance,” the lawsuit reads.
Lanier and Goudreau stopped hosting annual meetings for Class B shareholders in 2020, and told Granger “they were not required to under the company’s by-laws.”
Granger has been “without the ability to fully and fairly value his shares of Tree House.” His requests for information have allegedly gone unanswered, except for the minimum required by state law.
Granger remains the only other shareholder, with Lanier and Goudreau each holding about 49% of the company. Former minority shareholders and co-founders Dean Rohan and Jonathan Weisbach “accepted a corporate redemption of their shares” in 2023, and Denise Koran-Klisiewicz and Donald Klisiewicz redeemed theirs in 2016, according to the lawsuit.
Last year, Granger discovered that Tree House had used prior Criminal Offender Record Information (CORI) request forms on his behalf and without his knowledge to apply for a liquor license from the Massachusetts Alcoholic Beverage Commission (ABCC), which he alleges is “tantamount to forgery.” He filed a complaint with the ABCC, which investigated the situation and “issued a written warning to Tree House for their mishandling of company documents.”
In the investigator’s report, obtained by Brewbound, Granger’s attorney Geoffrey Farrington reported the allegedly altered CORI release forms to the ABCC, which prompted an investigation. Farrington told the ABCC that Granger “has no end game” and “simply wanted [the alteration of forms] to be reported,” according to the ABCC investigator’s findings.
“Attorney Farrington also advised the issues between his client and Tree House are much more in depth, however, [he] would not elaborate any further,” the investigator wrote.
Tree House’s attorney told the ABCC Granger had not responded to the brewery’s request for assistance on its CORI release forms and “in an attempt to save time and streamline the paperwork” the brewery reused old forms with updated location information. The attorney “provided an email chain showing the multiple attempts to reach Mr. Granger for a new form with negative results.”
A conversation between ABCC investigators and Tree House’s attorney revealed “there were some ‘internal issues’ taking place within the ownership structure.”
As a result of the investigation, Tree House was given a written warning and the ABCC “will no longer be accepting previously completed forms.”
Early last year, Granger alleges Tree House stopped providing quarterly estimated tax distributions to shareholders, a standard practice for businesses classified as Subchapter-S by the Internal Revenue Service (IRS). The quarterly distributions are made to shareholders “for the purpose of covering income taxes owed on their proportionate share of earnings.” Tree House director of strategic finance Kenny Mitchell told shareholders “the company had overpaid previous quarterly estimated tax payments and took advantage of certain tax benefits,” and “would pause payments until further notice.”
As a result, Granger was forced “to make abrupt financial decisions” and “has and will continue to incur tax penalties,” according to the complaint. Granger claims the combination of Tree House’s withholding of tax documentation and a letter Lanier wrote to shareholders that summarized the business’s 2021 performance “including successes and alleged financial pressures” was done “to gain financial leverage in shareholder stock redemption negotiations” in April 2023.
Granger also claims that Lanier and Goudreau have been conducting business for their personal gain, rather than for the benefit of Tree House as a corporation.
Included in those alleged actions is the formation of several other limited liability companies (LLCs), including two real estate companies, which Lanier and Goudreau allegedly concealed from Granger.
Lanier and Goudreau formed Massachusetts-based Landreau Realty in January 2016, followed by Connecticut-based Pride and Purpose in December 2018, both allegedly formed without disclosure to other Tree House shareholders, according to the complaint.
“Thereafter, Lanier and Goudreau engaged in an intentional common scheme to purchase real estate in the name of Landreau Realty, LLC and Pride and Purpose, LLC and lease same
back to Tree House, thereby purposefully and significantly devaluing the share value for Granger and other shareholders,” the complaint reads.
Landreau Realty alone amassed real estate holdings valued at more than $13 million – including a “single-family, beachfront home” in Sandwich, Massachusetts, adjacent to Tree House’s Cape Cod location – “without offering any opportunity to Tree House or its shareholders prior to acquisition.”
Both companies also “entered into lease agreements for Tree House to lease the real estate it operates on, rather than purchasing it through the corporation.” The payments for those leases “were and are above market value and did not serve any legitimate business purpose,” according to the complaint. Between 2016 and 2021, the two companies were allegedly paid nearly $10 million.
Granger was “unaware of the real estate holdings, and the existence of the leases with Tree House,” until January 5, 2021, and he alleges Lanier and Goudreau did not “admit to owning the real estate in question” until after September 28, 2022, after Granger filed a Shareholder Derivative Demand.
Lanier and Goudreau also allegedly formed several other companies “with connections to Tree House,” without informing Granger of the duo’s personal interest in the companies, including Landreau Transport, Tree House Motors and Tree House Orchard & Farm Fermentery. The businesses allegedly “usurped corporate opportunity away from Tree House,” including, but not limited to, loaning more than $4 million “from various entities currently controlled or formerly controlled by Lanier and Goudreau.”
Additionally, there was “at least $370,000.00 in undefined withdrawals from bank accounts owned by Landreau Realty, LLC between 2019 and 2021,” the complaint reads.
Granger claims that Lanier and Goudreau personally benefited from “excessive officer salaries and bonuses for themselves” and former minority shareholder Rohan, “while not issuing any dividends to other minority shareholders.” Between 2017 and 2020, officer salaries and bonuses allegedly totaled more than $4 million.
“Through Lanier and Goudreau’s scheme, they were able to reap the financial rewards of Tree House’s incredible success, while depriving Granger and other minority shareholders of the same,” the complaint reads. “This information was not known to Granger until he obtained certain financial records of Tree House in 2020 and beyond.”
Lanier and Goudreau allegedly purchased “ultra-luxury vehicles for their personal use and use by family members,” beginning in 2018, including “two 2019 Tesla Model 3, a 2016 Range Rover Sport, a 2021 Mercedes GLC300 and a 2020 Audi Q8 (valued at $110,000).”
The lawsuit accuses Lanier and Goudreau of eight counts of breach of fiduciary duty, including:
- The co-owners’ conduct regarding the formation of LLCs and the companies’ business dealings with Tree House;
- The altering of Granger’s CORI form;
- The lack of response to Granger’s derivative demand;
- Lanier and Goudreau’s “excessive salaries and bonuses;”
- The lack of dividend payments;
- Lanier and Goudreau’s failure to provide Granger information for tax documents;
- And the late issue of Tree House’s 2022 Schedule K-1 to Granger.
The complaint also alleges the violation of Massachusetts General Law, Chapter 93A, due to “unfair or deceptive acts or practices,” and one count of civil conspiracy, in relation to the formation and conduct of Landreau Realty and Pride and Purpose.
Granger is seeking more than $50,000 in damages, “retroactive reasonable dividend issuance to first quarter 2015,” and the reimbursement of all legal fees and experts’ fees. Additionally, the complaint’s prayer for relief requests:
- Lanier and Goudreau “be compelled to account for all money and property of Tree House” from January 1, 2016 “through present and continuing into the future;”
- “Tree House has judgment against Lanier and Goudreau for any money or property of Tree House found to have been wrongfully or fraudulently paid out, disbursed or delivered, or which has in any manner been lost or wasted,” with those “wrongly appropriated funds” returned to Tree House and distributed “as dividends to shareholders;”
- And the issuing of “preliminary and permanent injunctive orders to prevent Lanier and Goudreau from selling, transferring or encumbering any real estate affecting Tree House, including executing real estate lease agreements.”
Tree House was the No. 61 largest regional craft brewery by volume in the U.S. in 2022, as well as the largest taproom in the country, according to the Brewers Association (BA) in the May/June issue of the New Brewer magazine. The craft brewery produced 44,000 barrels of beer in 2022, a +10% increase versus 2021.
Last month, Tree House announced plans for its sixth location, a facility in Saratoga Springs, New York, scheduled for 2024. The brewery’s other locations include:
- Charlton, Massachusetts, its flagship location;
- Tewksbury, Massachusetts, opened in early 2022 on a 50-acre golf course;
- Sandwich, Massachusetts, in operation since 2021, despite some conflict with locals;
- Deerfield, Massachusetts, opened in 2021;
- And Woodstock, Connecticut, a 100-acre farm that began serving beer on-site this year, in addition to its existing hard cider offerings.
Tree House’s flagship location generates $60 million in annual economic impact, according to a study released this month by the Donahue Institute at the University of Massachusetts. Since opening in 2017, the facility has generated $483 million in cumulative economic impact.
Tree House’s four Massachusetts locations generate $143 million in annual economic impact to the Bay State – $42 million from Tewksbury, $26 million from Deerfield, and $15 million from Sandwich – with a cumulative economic impact of $635 million.
“Tree House is far more than that brewery your cousin won’t stop talking about – it’s an engine of economic vitality within our communities and a force of opportunity for individuals and businesses we share space with,” the company wrote in a LinkedIn post last week. “We take this stature very seriously, and we are committed to remaining a strong, diverse business that continually reinvests any successes back into our locations to build a stronger future, provide new job opportunities, bolster local economies and curate vibrant shared community spaces for all to enjoy.”
Tree House did not return a request for comment.
Editor’s note: This story was updated at 5 p.m. ET on Tuesday, November 21 to include information from the Massachusetts Alcoholic Beverages Control Commission’s report of its investigation into Tree House’s license applications.