A Franklin County judge ordered Fox’s Bagel & Deli to continue purchasing products from Block’s Bagels Oct. 14, after the longtime Columbus eatery filed a breach of contract lawsuit against Fox’s.

Judge Jaiza N. Page issued a temporary restraining order following a hearing that day in the Franklin County Court of Common Pleas. Page said after considering the information provided at a hearing, Block’s Bagels “has met its burden to demonstrate by clear and convincing evidence that it is entitled to a TRO (temporary restraining order).”

She ruled that Fox’s Bagel & Deli is “enjoined from abandoning and breaching the Sept. 28, 2016 license and supply agreement, and Fox’s Food LLC and FRG (Fox’s parent company) are enjoined from purchasing any products covered by the agreement from anyone other than plaintiff.”

The lawsuit states that Jeremy Fox, owner and operator of Fox’s Bagel & Deli, and others breached a contract between the entities by reopening Block’s Bexley and North Market locations as Fox’s while purchasing a competitor’s business, using equipment and food from Block’s Bagel’s, and abandoning its financial and legal obligations to Block’s. At issue are two shops at 3012 E. Broad St. in Bexley and 59 Spruce St. in North Market in Columbus.

Harold Block, owner of HB3 which operates Block’s Bagels, announced the suit in an Oct. 12 statement provided to the Columbus Jewish News. Block first opened his store in 1967, using recipes from an uncle who had a bakery in New York City.

“I share this update regretfully as I try to keep personal matters personal,” he said. “However, Jeremy Fox’s actions as it relates to the Broad Street bagel shop formerly named Block’s Hot Bagels, risks the livelihoods of my employees – I cannot sit idly by and watch this happen.

“While Jeremy (Fox) tries to positively spin his new bagel shop’s name and origin story, it should be known that Jeremy and his company have failed to pay for the Block’s equipment they have been using and have not paid fees owed under the agreement now totaling into the six figures,” Block said in his statement.

“The situation turned sour when my son, Steven, was in his final weeks battling cancer this past February and March. Behind our backs, Jeremy purchased a competing bagel production facility that he is now using to supply his bagel shop, which we believe violates our long-term supply agreement. While we’ve tried to navigate this situation privately and reasonably, we do not believe Jeremy has worked with us in good faith. It wasn’t until we saw a post Jeremy made on Facebook that we were made aware our relationship would be abruptly ending. We had already purchased the ingredients and food we thought he needed for the next few weeks.

“I’m 89 years old, my plans at this stage of my life didn’t include a legal fight to try and obtain what is owed from a business partner who we helped establish and set up for success,” Block wrote.

James E. Arnold of Arnold & Clifford LLP in Columbus filed the lawsuit on behalf of Block’s Bagels and explained the significance of the initial ruling.

“One of the requirements to get a temporary restraining order is to demonstrate a substantial likelihood of prevailing on the merits,” Anderson told the CJN Oct. 17. “So I think that at least at this superficial stage, we appear to be in good stead to have our complaint granted, at least in part.”

A hearing to either extend the restraining order or replace it with a permanent injunction is scheduled for Oct. 24, Anderson said.

In a statement provided to the CJN, Fox’s Bagel & Deli said, “We recognize and respect the Block family’s legacy in this community, and have spent years in conversations to try and reach common ground and resolve this matter. Unfortunately, it became clear that an agreement to purchase the company could not be reached.

“Additionally, the financial risk of trying to complete a purchase transaction with a company carrying significant debt was too great, forcing us to make the difficult but necessary decision to move on. It is our responsibility to do what is right for our business and our employees – assuming a business that was unhealthy simply did not meet that obligation.”

In addition to breach of contract, the 10-count lawsuit alleges fraud, alter ego, conversion, tortious interference and seeks a temporary restraining order and permanent injunction as well as declaratory judgment, unjust enrichment, civil conspiracy and alleges a violation of Ohio’s uniform fraudulent transfer act. The lawsuit estimates damages at $150,000 in unpaid performance bonuses, $137,500 in unpaid license fees, unpaid equipment costs estimated at $150,000, as well as a loss of sales to HB3 of $400,000 annually.

According to the lawsuit, on Oct. 2, Fox posted to a Bexley, Ohio Facebook group that “officially the Block’s Bagels Bexley location and North Market location are closed. Both locations will now be Fox’s Bagel & Deli.”

The lawsuit said counsel for Fox notified counsel for HB3 on Oct. 3, “Fox’s Foods is no longer a going concern” and that “Fox had made a ‘decision … to sell the existing operating assets of Fox’s Foods (sic) LLC,’ and that the purchaser ‘will now be operating the Bexley and North Market stores as ‘Fox’s Bagels and Deli’ without any affiliation with HB3.”

Block’s argues this move violated legal agreements between the parties regarding use of supplies, equipment and the Block’s name, causing both short- and long-term financial losses.

Sammy’s Bagels, which Fox’s had purchased without Block’s knowledge, provides bagels to Fox’s, according to the lawsuit.

“At the time of defendants’ notice to HB3 of its claimed abandonment of the supply agreement, HB3 had already purchased $10,000 in perishable foods in preparation for its continued production of products to meet its obligations under the supply agreement,” the filing said. “This food is nonreturnable and will be useless within 14 days.”

The lawsuit continued, “HB3 allowed Fox to use a substantial amount of equipment from the Original Broad Street Store in the Bexley store. That equipment has never been paid for. The equipment is still in Fox’s possession at the Bexley store.”

The 10-year supply agreement allowed Fox’s Food the right to use the name Block’s, as well as “intellectual property rights in connection with the sale, marketing and distribution of bagels and related baked and deli products at and within a two-mile radius of the Bexley store,” the suit said.

In exchange, the parties agreed HB3 would be the exclusive supplier of “all bagels and bagel-related products, breads and challahs, desserts, chicken salad, tuna salad, egg salad and cream cheese … at wholesale prices set by HB3.”

The agreement also provided a license fee and performance bonus payments from Fox’s Food to HB3.

While the supply agreement allowed Fox an option to purchase HB3 for an agreed amount within two years of its signing, that option was not exercised, the suit said. Instead, Fox purchased Block’s competitor, Sammy’s Bagels, LLC in February or March of 2022 “in bad faith” in an “attempt to find a way to terminate the supply agreement,” according to the lawsuit.

“The plan involved forming a new company (FRG Enterprises, LLC) causing Fox’s Food to transfer its assets to the new company, operating the Bexley Store and the North Market Store under a new name, and then claiming to HB3 that Fox’s Food was no longer a ‘going concern’ (i.e., out of business). … To accomplish this obvious sham, Fox formed defendant FRG in July 2022,” the filing said.

Columbus Bureau Chief Stephen Langel contributed to this story.

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