PITTSBURGH — Friedman's Freshmarkets has lost its federal case, according to court documents filed this week, and the future of the county's vacant stores is unclear.

Federal Judge Arthur Schwab on Monday ruled in favor of Merchants Distributors Inc., which claims that Harold Friedman Inc. borrowed money to stock the county's Friedman's stores and did not pay it back.

Schwab also ruled against Friedman's counterclaims that MDI's practices destroyed the business.

Schwab's ruling includes a mandate for MDI to submit a proposal for the amount or collateral to be paid by Friedman's after consulting with Friedman's attorneys.

Schwab in his decision said the two parties signed a contract on Oct. 14, 2016, in which MDI agreed to lend Friedman's more than $2 million in two separate loans so that Friedman's could buy products from MDI to stock its depleted shelves.

MDI presented evidence that Friedman's did not make payments as promised, which Friedman's did not dispute.

Friedman's contention in its counterclaim was that MDI performed what is known in the grocery industry as a “reset” of the stores in 2015 and 2016, when the two parties had a verbal contract, that depleted the shelves and caused the business to fail.

A reset is done when a new distributor contracts with a grocery store and rearranges the setup of the store and places its tags and products on the store's shelves.

Friedman's also contended in its counterclaim that an inadequate reset after the signing of the contract further compromised the business, and forced the closing of the Saxonburg, Chicora and Greater Butler Mart stores.

But Schwab agreed with MDI that a reset which occurred before the October 2016 contract has no bearing on the case, and that no reset requirement was included in the 2016 contract.

“The court finds that based on the clear and unambiguous terms of the Oct. 14, 2016 (contract), and given the uncontested relevant facts, (the) defendant is liable to (the) plaintiffs for breach of contract,” Schwab said in his decision.

The judge initially gave MDI a deadline of Oct. 3 to present a proposed judgment, then granted an extension until Oct. 5 because attorneys for both parties were out of town.

The amount Friedman's currently owes MDI is not known, but the court documents state that it is in excess of $50,000.

Also included in Schwab's judgment is a section of the contract that states if Friedman's defaults on the loan, “The liquidation damages shall be payable to MDI” with a formula to determine the amount.

It is unclear whether the three stores owned by Friedman's will be handed over to MDI, sold, auctioned or undergo some other action that would result in payment to MDI because of the ruling.

It appears that Friedman's CEO Carole Bitter will not appeal the case to a higher court, as Friedman's attorneys will consult with MDI attorneys regarding the judgment proposal due Friday, according to court filings entered Tuesday.