Lawsuits fly in Friedman's fracas
A flurry of lawsuits between Friedman's Freshmarkets and its distributor and landlord, Merchants Distributors Inc. (MDI), could be holding up the sale of the local grocery store chain's buildings.
While rumors swirl that various grocery store chains are poised to buy the Friedman's business and self-owned stores, Friedman's and MDI are engaged in a legal battle in both county and federal court.
The three remaining Friedman's Freshmarkets stores — in the Greater Butler Mart, Saxonburg and Chicora — closed in late January following an issue with the company's distributor, MDI of Hickory, N.C., that caused dwindling inventory on the stores' shelves, according to Carole Bitter, president and CEO of the supermarket chain.
“With the resulting disruption, cost and performance of MDI, it has been very difficult in the last 2½ years to run the type of stores we've always prided ourselves on operating. It's a tough business, but we've managed to do more things right than wrong to have survived 117 years,” Bitter said in a statement at the time of the stores' closing.
Since then, Bitter has refused to comment regarding any plan to sell the stores to another grocery chain, saying she is bound by a nondisclosure order.
And as residents continue to exchange rumors and speculation as to which company might ultimately make the vacant stores home, Friedman's and MDI have exchanged lawsuits and legal filings.
According to a lawsuit filed last month in county court, MDI immediately after the stores' closings filed a lawsuit in federal court for breach of contract, claiming Friedman's failed to make payments to MDI for food distribution services that total $469,167.
Judge Arthur Schwab of U.S. District Court in Pittsburgh on Wednesday referred the case to a mediator. The parties' first mediation session will be on Oct. 18, and the parties must share the cost of the mediator.
MDI also filed a complaint of mortgage foreclosure March 7 in county court against Friedman's for “a mortgage dated Oct. 14, 2016” in which Friedman's borrowed $1.7 million from MDI.
Attorney Jarrod Shaw, representing MDI, would not say which Friedman's building or buildings were mortgaged, nor would he answer any questions about the case, citing the ongoing litigation.
On April 4, Friedman's filed a counterclaim to the MDI suit that alleged issues related to MDI's performance, but not the mortgage.
Friedman's, in the counterclaim, alleges MDI failed to conduct store display changes or provide pricing information and marketing assistance.
For those reasons, Friedman's asked for damages, attorney's fees and an accounting of MDI.
MDI refutes those claims in its own court filings, saying Friedman's had defaulted on its loan and breached the parties' contract.
In response to the federal lawsuit filed by MDI, Friedman's filed a countersuit that a federal judge dismissed, with the caveat that the company could amend and refile.
MDI claims in the lawsuit that Friedman's filed an amended counterclaim containing allegations “that are nearly identical” to those in the original counterclaim.
MDI's mortgage foreclosure suit at county court also claims that Friedman's filed its breach of contract counterclaim, which contained the same allegations, in both federal and county court, which MDI attorneys say is prohibited by law.
MDI also claims that nothing in the parties' mortgage agreement concerns the food distribution services provided by the company.
The lawsuit asks county court judges to dismiss Friedman's counterclaim.
