The appellate opinion, written by Judge Mike J. Fain, said the court erred in applying the doctrine of clean hands because that defense was not raised in the answers that were filed.
The appellate court also struck down the application of other defenses. The filing reversed the judgment of the trial court and remanded it for further proceedings.
Reid originally sued the former corporation her family helped start in 1996, and Peh individually, for $626,116.37. The total was derived from $100,000 plus 15 percent interest.
Reid said $100,000 was used to buy kitchen equipment she leased to Peh.
Wallaby’s and other restaurants at that site were foreclosed in 2010 after failing to pay $245,000 in taxes.
Kessler ruled that by using the “clean hands doctrine,” a person pursuing a lawsuit must be free from unfair conduct. Using that standard, he ruled for Peh.
About the Author