Grocery store owner plans to appeal
The owner of Friedman's Freshmarkets will appeal the decision of federal Judge Arthur Schwab, who recently ruled in favor of the local grocery chain's distributor, Merchants Distributors Inc. of North Carolina.
While attorneys are waiting for Schwab to rule on a final judgment in a few weeks regarding monetary damages awarded to MDI by Friedman's, the former grocery store's attorney, David Fuchs, said Friedman's owner Carole Friedman Bitter will not back down.
“Obviously we're disappointed, but we feel there are meritorious issues to raise before the Third Circuit Court, so we are going to raise those issues and get (the decision) reversed,” Fuchs said.
Friedman's signed a contract in October 2016 with MDI after having used the company for food distribution for several months.
The contract included a $470,000 loan so Friedman's could buy products from MDI for their store shelves. It also included a $1.7 million loan.
MDI claimed breach of contract when Friedman's failed to pay on the loans, but Friedman's attorneys argued that MDI destroyed its business by failing to do a proper reset of the store when they became the Friedman's distributor, as they say is the industry standard.
A reset occurs when a store contracts with a new distributor and the store brands change. The distributor sends employees in to remove the old products and shelf tags and replace them with the new distributor's items.
Fuchs said he will proceed with the argument in federal appeals court in Pittsburgh regarding MDI's failure to perform an effective reset, removing the stores' remaining inventory and placing them in banana boxes on pallets in the back room without resetting the shelves, forcing Friedman's to pay for their products up front, pricing products so low that Friedman's took a loss, and other actions.
During a deposition Bitter claimed the actions of MDI destroyed the 114-year-old business.
“Within a couple years of MDI being (Friedman's) supplier, we're out of business,” Fuchs said on Thursday.
Testimony included in the court documents states that Friedman's owes MDI $153,498 for products delivered to the Saxonburg store, $180,650 for products for the Chicora store, and $131,028 for deliveries to the Greater Butler Mart store.
When Friedman's signed the contract with MDI in 2016, the buildings owned by Harold Friedman Inc., Friedman's official name, were put up for collateral, according to court documents.
Asked what will happen to the Saxonburg, Chicora and downtown Butler stores, Fuchs said his client, Harold Friedman Inc., owns only the Saxonburg building and leased the other two, which are owned by “others.”
The Chicora property is owned by Bitter and her husband, Frederick, according to court records. The West Brady Street property, according to the county tax map, is owned by Carole Bitter's sister, Nancy Crerar. Friedman's leased the store at the Greater Butler Mart.
Asked if any buildings were demanded by MDI to be handed over as collateral, Fuchs said “the documents speak for themselves.”
“I don't know what is going to happen at this point,” Fuchs said of the Friedman's buildings. “We'd like to see something positive happen to them for the company and the community.”
Fuchs said Bitter has no plans to accept defeat in the matter.
“She is disappointed as well, but she's very smart and dedicated to the cause of pursuing these claims and trying to bring some sort of resolution,” he said.
“It's also a disappointment for the community.”
A similar case between HFI and MDI was filed in County Common Pleas Court, and will likely move forward when Schwab decides on an order at the end of the month, Fuchs said.
MDI's attorney, Jarrod Shaw, refused on Thursday to comment on the case.
