Judge to decide if dispute over $1 million napkin deal should advance to jury trial

Was a $1 million deal scribbled on a napkin a legally binding contract to buy a portion of Alaska's largest newspaper?

That question is at the heart of lawsuit filed by Alaska Dispatch co-founder Tony Hopfinger against his once-boss, Alice Rogoff, who financed the growth of the media organization which in the span of a few years went from operating in a small hangar on Merrill Field to purchasing the Anchorage Daily News from The McClatchy Company.

Superior Court Judge Andrew Guidi on Monday heard oral arguments from both sides as he considers whether or not to let the dispute advance to a jury trial.

What happens next hinges on the judge's interpretation of laws that determine when a financial contract is enforceable,

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Hopfinger's attorney, Thomas Wang, argues that the deal to purchase his client's 5 percent stake in the company, if unusual, is still legally binding because it lays out several essential terms: "I agree to pay Tony $100k at (the) end of each calendar year (beginning '14) for 10 years."

In that one sentence, which is followed by Rogoff's signature and the date she put blue pen to cocktail napkin, the two parties agreed on a sale, the price of purchase, and the dates of payment. Rogoff, at the time, had 90 percent ownership of the Dispatch's limited liability corporation and wanted full ownership before merging that company with the newspaper. Amanda Coyne, the other co-founder, had already sold her stake.

Rogoff's attorney, David Gross, contends that details requisite for a binding contract were not put in writing even if his client did sign the document.

"Was the payment for Tony Hopfinger's shares in Alaska Dispatch Publishing, or was it for the commitment, the loyalty, over a 10-year period?" Gross told the judge. "Because the napkin doesn't talk about that, it's a one-sided unilateral contract. Unilateral contracts are not enforceable."

Whoever is deemed correct on that front, the plaintiff's attorney also alleges that Rogoff had an ulterior motive for putting terms of a deal on a napkin rather than a traditional contract.

Northrim Bank helped finance the $34 million purchase of ADN from McClatchy in 2014, and according to Wang, in agreeing to lend money to Rogoff's company, the financial institution stipulated that all large debts had to be approved.

"Debt covenants involved in the pending acquisition of the (Anchorage) Daily News prohibited a writing (of a formal contract) from being made," Wang said. "So on one hand, Ms. Rogoff was telling Mr. Hopfinger, 'I can't put this in writing. I have obligations to my bank regarding my ability to enter into this agreement with you.' And then, she came back and say a year later, 'Well, the reason you're out of luck is this failure to memorialize an agreement, which I solely insisted upon.'"

While the judge did not rule from the bench and say whether or not he will let the case proceed to trial, he did tentatively set a trial date of March 5.

If it does in fact come to that, the arguments beneath a fracture in a relationship that not long ago brought diversity to Anchorage's media scene will be put on full display.

Already, the newspaper and its publisher are in uncomfortable territory.

ADN did not send a reporter to cover the oral arguments on Monday, and Rogoff's attorney asked that media not be allowed to cover the hearing at all because details of her personal finances could come up, something of heightened public interest as the paper faces two other lawsuits related to alleged nonpayment of bills.

One was filed by M&M Wiring Service, Inc., which claims that ADN did not pay for nearly half a million dollars of electrical work, and the other is from Catalyst Paper Company which alleges that payment for roughly $50,000 worth of paper is past due.

It is unclear at this point if the mounting legal challenges are simply routine business disputes, or instead signal trouble ahead for the only large print media organization in Anchorage, which also commands the largest online audience in the state.