YOUNGSTOWN — An attorney for the city contends documentation not provided by the owner of the idled Chill-Can plant is being withheld as “part of an ongoing scheme to hide assets.”

Meanwhile, an attorney for M.J. Joseph Development Corp., which owns the Chill-Can location, stated the city’s “overbroad, vague and ambiguous request for every business record concerning full depreciated equipment amounts to a burdensome discovery request.”

The two sides in the two-plus-year litigation over the stalled Chill-Can plant on the city’s East Side filed legal documents — furthering the arguments they made during a May 24 hearing in front of Magistrate Dennis J. Sarisky of Mahoning County Common Pleas Court.

The city wants Sarisky to award sanctions against M.J. Joseph in the amount of $733,480.80 for failing “to present any meritorious reason for why they repeatedly have failed to comply with this court’s order and their discovery obligations under the civil rules,” wrote Thomas F. Hull II, an attorney for Youngstown.

The sanctioned amount of $733,480.80 by the city is $414,948.09 it spent on acquiring 15 properties bought for the project, which also included relocation expenses, and $318,532.71 in demolition and abatement costs. The city also is seeking undisclosed attorney fees.

BREACH OF AGREEMENT

Judge Maureen Sweeney on Nov. 21 agreed with a Sept. 28 ruling from Sarisky that M.J. Joseph Development Corp., which owns the Chill-Can location, breached a $1.5 million agreement with the city to receive water and wastewater grants for the project and the city was entitled to get the money returned.

In his latest court filing, Justin Markota, an M.J. Joseph attorney, referred to the $733,480.80 as “the city’s unprecedented request for sanctions.” He also wrote the city’s contention that his client has exhibited a “blatant failure to provide discovery” to be a claim that “cannot be any further from the truth and amounts to a clear misrepresentation to the court.”

Markota wrote: “The court’s oversight is now required to eliminate the city’s abusive discovery tactics and direct the parties’ efforts toward preparing this case for trial.”

He asked Sarisky to not only deny the city’s motion for sanctions, but to also issue a protective order to prohibit Hull from “continuing with abusive discovery tactics.”

Sarisky will rule on the city’s sanctions motion as well as M.J. Joseph’s requests.

NOT IN COMPLIANCE

During the May 24 hearing, Sarisky said to M.J. Joseph attorneys: “I don’t understand why we have to have six motions or requests for discovery, motions to compel. Here we are, in this point in time, where we’re still not in compliance with discovery.”

Hull said he filed eight discovery motions and Sarisky has twice ordered Chill-Can lawyers to provide information and there still isn’t compliance so the sanctions are needed. Discovery is the process in court cases in which parties exchange information about the case.

Markota said M.J. Joseph has given nearly 1,700 documents to the city including bank statements, income statements, balance sheets, profit-and-loss statements, payroll records, Uniform Commercial Code filings, inter-company loan documents, recorded lien filings, contracts, email correspondence and other financial information.

Hull has “demonstrated an inability to comprehend corporate financial documents,” Markota wrote.

WHERE ARE ASSETS?

Hull wrote M.J. Joseph has refused to provide documents to determine the whereabouts of assets that were pledged to the city in exchange for a $1.5 million water and wastewater grant given the company.

“It has now become apparent that (M.J. Joseph has) been liquidating and / or hiding these very assets and likely others,” Hull wrote.

Hull added: “The city continues to be thwarted by (M.J. Joseph’s) failure to fully respond to discovery as ordered by the court and the full extent of this liquidation and likely accompanying fraudulent transfers is still unknown.”

He referred to M.J. Joseph’s delays as “discovery shenanigans” that “are part of an ongoing scheme to hide assets.”

Hull raised concerns at the May 24 hearing about Joseph Co. International, also owned by Joseph, selling its building in Irvine, Calif., shortly after the lawsuits were filed. Equipment that was supposed to be used as collateral for the $1.5 million grant was stored there.

Only one document has been provided that shows a $10,000 piece of equipment was sold to a Joseph sister company, Hull said.

Markota wrote: “The primary complaint levied by the city is that financial accounting information was not outlined in the most conveniently digestible format. Such a grievance is not proportional to the case, lacks justification and plainly ignores how discovery is granted.”

MILLIONS OF DOLLARS

Mitchell Joseph, who was raised in Youngstown and is the principal of M.J. Joseph and its sister companies, had said the project, which broke ground in November 2016, would cost about $18.8 million and be in full operation by 2018 to produce the world’s only self-chilling beverage can.

M.J. Joseph failed to construct four finished buildings and create 237 jobs by Aug. 31, 2021, as per its agreement with the city for the $1.5 million in grants. To date, there is one employee and three unfinished buildings at the 21-acre location.

M.J. Joseph hasn’t repaid the $1.5 million to the city.

In addition to the $1.5 million and the $733,480.80 for property acquisition and demolition is a city claim that as of June 2021, it lost at least $575,000 in income tax revenue from the project’s failure. That lawsuit said the “full amount of lost income tax revenue will be proven at trial,” but the city was losing about $18,333 a month. At that rate, the city would have lost more than $400,000 in additional income tax revenue.

The city filed a $2.8 million breach-of-contract lawsuit June 17, 2021, contending the company failed to live up to its promises to develop the site.

Knowing the city’s lawsuit was coming, M.J. Joseph and Joseph Manufacturing Co. Inc., a sister company, filed a May 24, 2021, lawsuit against the city to stop it from reclaiming the $1.5 million in grants. That suit also contends the city doesn’t have any legal rights to money, property and buildings.

In a March 29, 2021, certified letter, the city informed Joseph he had 60 days to construct a number of buildings and hire about 150 workers or it would file a lawsuit. The city followed through June 17 with the lawsuit that was postponed because of the Joseph legal action.