Judge denies Alteri Bakery request that Jreck Subs be temporarily ordered to use Watertown company’s products

For the second time in five months, a state Supreme Court judge has denied Alteri Bakery Inc.’s request that Jreck Subs Inc. be forced to buy all of its rolls from the Watertown bakery while a lawsuit is pending in the matter.

Judge Hugh A. Gilbert said in a decision filed Tuesday at the Jefferson County clerk’s office that legal documents submitted to the court by both sides have provided little help in unraveling various corporate relationships between the parties and created “many, many more questions than answers.”

The judge denied a similar motion for temporary injunctive relief in July, stating he needed more information about the corporations involved and the contracts each entered into before he could determine whether Jreck was obligated to continue to purchase all of its rolls used within the state from Alteri.

At the time of that decision, Jreck had stopped using Alteri as its exclusive roll vendor, notifying the bakery in December 2010 that it would begin buying rolls from other vendors. Seaway Valley Capital Corp., parent company of Alteri, filed suit, claiming it had a 2002 agreement with a Jreck affiliate, Pastry Product Producers LLC, that called for Alteri to supply all Jreck rolls in the state for 30 years. Christopher M. Swartz, a Jreck principal who once had an ownership stake in Alteri, countered that a 2004 “cross-licensing” agreement allowed Jreck to use other vendors, but Seaway Valley Capital argued that agreement was never disclosed when it acquired Pastry Product Producers in 2008.

While Judge Gilbert denied the initial motion for injunctive relief, Alteri renewed it after Jreck informed the company Aug. 24 that it was moving all of its roll production to Orlando Baking Co., Cleveland. The loss of more than half its current revenue prompted Alteri to immediately lay off 16 employees and potentially jeopardized its ability to repay loans provided by the Jefferson County Industrial Development Agency and Watertown Local Development Corp. Alteri argued that due to the change in circumstances, it could demonstrate a negative economic impact if the requested relief was not granted.

Judge Gilbert wrote in his decision that the parties need to share more information with the court and each other about the various corporations and contracts before he can make any rulings, as the discovery materials needed are “very complex, if not confusing.”

“It is the number of corporations involved, other than Alteri Bakery Inc., that make this legal morass so complicated and confusing that all parties need to avail themselves of statutory rights of discovery for not only the court, but themselves to have a better understanding of what actually happened,” the judge wrote.

For instance, Judge Gilbert noted that “there appears to be a corporation known as CFB Enterprises Inc. who enters the picture on July 16, 2007.” It was on that date that JCIDA and WLDC entered into an agreement requiring CFB to be the sole source of sub rolls for Jreck. Alteri’s is successor to CFB, and that requirement was transferred to Alteri’s in an agreement the same day. The agreement was supposed to last for 12 years or until the public agency loans were repaid.

However, Judge Gilbert said, CFB is not a named party in the legal action and he is not sure how any of the contracts submitted to date vested any rights in CFB to transfer exclusive rights to Jreck’s roll requirements to Alteri. He said additional discovery is needed to support the claim that the rights were properly transferred.

JCIDA and WLDC, which are owed a total of about $100,000, are both now participating in the legal action.