Battle baking between a longtime Ohio bagel family and a business partner

COLUMBUS, Ohio (WCMH) – One morning in early October, store fronts in North Market and Bexley sported the familiar Block’s Bagels logo. The next morning they didn’t: Above each dangled a newly erected “Fox’s Bagel & Deli” sign with a bagel in place of an “O.”

The month and a half since has escalated into a civil court battle between HB3 LLC, the family business that owns Block’s Bagels, and Jeremy Fox, a longtime business partner who owned the two then Block’s, now Fox’s locations and managed more than six Years.

Before that, Fox bought bagels from the family for his food truck: Short North Bagel Deli.

In October, HB3 files a lawsuit against Fox, Fox’s Food

The legal back-and-forth stems from a lawsuit HB3 filed in the Franklin County Court of Common Pleas on Oct. 12 — just over a week after the name change — against Fox, its food companies, and his father Ronald.

In it, HB3 alleges that Fox willfully violated a 10-year licensing and product supply agreement between him and the Block family dating back to 2016, according to which Block’s was the sole supplier of bagels, cream cheese and other deli items to the Bexley location — so Fox — in early 2017 under the Block name and branding opened.

The Blocks and Fox were pursuing a similar oral agreement for the North Market stall, which Fox said the complaint filing opened at the start of the pandemic.

But both Fox storefronts have been bumping up as Fox’s Bagels and Deli for nearly two months, and HB3 claims they’re doing so after Fox fired and immediately reinstated all of its workers, swapped out signs overnight, reformatted menus and started merchandise obtained from another dealer.

“It was his theory that changing the name of his business allowed him to avoid the obligations he had,” plaintiff attorney James Arnold of Arnold & Clifford LLP said in an interview. Arnold said this got into HB3’s business a bit.

The original complaint also cites equipment from the original, now-sealed Block site that Fox owns and performance bonuses that have gone unpaid.

A restraining order was issued on Wednesday

On Wednesday, a magistrate granted HB3 an injunction urging Fox to continue adhering to the original supplier agreement pending a final court hearing. This means that while Fox has attempted to sever ties with Block’s, its stores must continue to source bagels from the company they were formerly named after.

The injunction extends an injunction first issued on Oct. 14, following testimony from both sides. According to a statement, Fox’s lawyers plan to appeal the injunction.

“It’s always unfortunate when parties find themselves in a court battle trying to protect their company,” said defense attorney Andy Clark of Onda LaBuhn Ernsberger & Boggs Co. “In this case, both companies were struggling financially and needed a great deal of money deserve difficult decisions.”

For Fox, one of those difficult decisions included reconsidering its partnership with the Block family as the pandemic hit the business sector. Added to this were HB3’s wholesale prices for bagels and other products, which the defense described as “unfair”, according to a defense preliminary hearing.

Last October, Fox formed a limited company called Sammy’s Bagels, thereby buying HB3’s direct competitor, Sammy’s Foods, in March. According to court records, HB3 did not know this.

In September, Fox sold most of the assets of Fox’s Foods LLC – formed when it finalized the original supply deal and opened its first Block’s Bagels location – to FRG Enterprises, another LLC formed by Fox in July, trading for “Fox Restaurant Group.” ” stands. ”

On the morning of the name change — with a “Fox’s Bagel and Deli” sign hanging outside — Fox’s attorneys informed HB3’s attorneys that the two locations would now be operated under the new name and unaffiliated with Block’s by FRG.

Judge Pamela Broer Browning wrote in her decision Wednesday that Fox pursued the asset purchase for two reasons: to avoid liability and to be able to buy bagels at Sammy’s rather than Block’s. From October 3 until the injunction was imposed on October 14, Fox’s began sourcing bagels and other products from Sammy’s.

Fox outlined his plan in an email in July to his father and business partner Michael Gasbarro, according to court documents, writing that he could not go ahead with the agreement.

“Okay guys I’m done with it,” he wrote.

According to court filings, Fox owns 75% of FRG Enterprises, while Gasbarro owns the other 25% through an LLC formed in September.

“He literally sold what he had in his left pocket to his right pocket,” Arnold said. Plaintiff’s attorney added that HB3’s ultimate goal is for Fox to execute the supply agreement.

In a statement, Clark said the defense would like the judge to “release FRG Enterprises from any ongoing obligation to purchase Block’s Bagels products.” The injunction, issued on Wednesday, now forces Fox to buy bagels and other products exclusively from HB3 until at least the end of 2023, when a trial is expected to be scheduled.