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YOUNGSTOWN -- Pointing to multiple failures to comply with court orders by the owners of the stalled Chill-Can facility in a lawsuit filed by Youngstown, a magistrate awarded $733,480 from the company to the city in sanctions.
In Thursday's decision, Magistrate Dennis J. Sarisky of Mahoning County Common Pleas Court wrote in awarding sanctions against M.J. Joseph Development Corp., which owns the Chill-Can location, that "the history of this case includes multiple discovery failings by (M.J. Joseph) and lack of legitimate excuses or mitigating factors surrounding (its) repeated noncompliance and the number of failed opportunities this court provided the (company) to correct their faulty behavior and the fact that (its) behavior has resulted in substantial delays and expense to the city."
Discovery is the exchange of documents in this case, sharing information in preparation for trial.
City Law Director Jeff Limbian laid the blame at the feet of Mitchell Joseph, the head of M.J. Joseph Development Corp., who said in November 2016, when the project broke ground, that it would cost about $18.8 million and be in full operation by 2018 to produce the world's only self-chilling beverage can.
The project was supposed to be a key part of the revitalization of the city's lower East Side. Instead, only three unfinished buildings sit on the 21-acre site.
"Mitchell Joseph continually and repeatedly used every delay tactic imaginable in order to try to get the city to capitulate and settle for pennies on the dollar," Limbian said. "It is so rewarding to have the court appreciate what Mitchell has been doing and that it sent him a message that court orders mean something."
Limbian added: "My concern is that now Mr. Joseph will file bankruptcy and demonstrate further contempt for the city he claims he cares about helping. Mitchell should be ashamed of himself, but that is not in his makeup."
The city is "very pleased and vindicated," Limbian said. "The fight will go on. Hopefully, there will still be value to that construction site by the time Mitchell recognizes we are not going to stop until the city is made whole."
'UNPRECEDENTED'
Brian Kopp and Justin Markota, attorneys for M.J. Joseph, couldn't be reached Thursday to comment on Sarisky's decision.
In a May 31 filing, Markota referred to the $733,480 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."
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.
Sarisky also agreed Thursday with the city that it is "entitled to reimbursement of its reasonable attorneys' fees expended on the discovery motions it had to file in this case including the first and second motions to compel and all motions for sanctions and the motion to show cause."
Sarisky wrote that a hearing will be scheduled to determine those fees.
Sarisky held a May 24 hearing on the sanctions.
During the 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."
BREACH OF AGREEMENT
Judge Maureen Sweeney on Nov. 21 agreed with a Sept. 28 ruling from Sarisky that M.J. Joseph 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.
Kopp and Markota in a Feb. 6 court filing wrote that Sweeney's decision on the $1.5 million "is not a final judgment or final appealable order."
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.
Thomas F. Hull II, an attorney for the city, 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.
In addition to the $1.5 million and the $733,480 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 $450,000 in additional income tax revenue.
The city filed the $2.8 million breach-of-contract lawsuit June 17, 2021, contending the company failed to live up to its promises to develop the site.
The city is seeking its money back as well as the Chill-Can site. M.J. Joseph attorneys have said if the city would stop litigating, the company would develop the business.
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.
dskolnick@vindy.com