Hearing set for feud between candy stores | SteamboatToday.com

Hearing set for feud between candy stores

Susan Cunningham

Rocky Mountain Chocolate Factory has filed a lawsuit against the owners of Fuzziwig’s Candy Factory, alleging Fuzziwig’s violated a non-compete agreement.

Rocky Mountain Chocolate Factory is asking that Fuzziwig’s owners Don and Patricia Grueser close their two new Steamboat Springs Fuzziwig’s stores for at least 47 days to fulfill terms of a franchise contract the Gruesers signed. The Gruesers formerly owned the Rocky Mountain Chocolate Factory franchises in Steamboat Springs. The lawsuit also seeks damages and relief as the court determines.

Don Grueser called the suit “baseless and frivolous.”

“We are deeply disappointed by Rocky Mountain Chocolate Factory’s actions,” Don Grueser said.

The attorney representing Rocky Mountain Chocolate Factory, Jeff Cowman, said he had no comment at this point.

The Gruesers’ court-filed response states that the agreement in question was never breached, and so the stores should not be closed, and damages and relief should not be paid.

Grueser said that Rocky Mountain Chocolate Factory’s complaint, filed on Dec. 15, does not hold because of an asset purchase agreement in which Rocky Mountain Chocolate Factory sold the Gruesers Fuzziwig’s Candy Factory five years ago. The Gruesers bought two Rocky Mountain Chocolate Factory franchises in Steamboat in 1992 and then purchased the Fuzziwig’s company.

When the Gruesers bought the Fuzziwig’s company, they kept the Steamboat Springs Rocky Mountain Chocolate Factory stores.

In January 2003, according to court records, Rocky Mountain Chocolate Factory agreed to transfer the Gruesers’ Rocky Mountain Chocolate Factory stores to a new owner, under the conditions that the Gruesers or their relatives or business associates not open up a competing candy shop — including a Fuzziwig’s Candy Factory — within 10 miles of the Rocky Mountain Chocolate Factory stores for two years after the transfer.

For unrelated reasons, the Gruesers had to foreclose on their note with the new Rocky Mountain Chocolate Factory shop owners, then opened two Fuzziwig’s stores in December in the two spots that had been home to Rocky Mountain Chocolate Factory stores. That, according to Rocky Mountain Chocolate Factory, violates the transfer agreement.

Rocky Mountain Chocolate Factory is asking for relief based on several claims: breach of contract, a misappropriation of trade secrets and breach of a non-compete provision.

Rocky Mountain Chocolate Factory also is asking for damages, attorney fees and court costs, as well as whatever further relief the court determines, and that the Gruesers close their Fuzziwig’s stores for 47 days or more, fulfilling the two-year clause.

The Gruesers’ court-filed response states that the agreement with the noncompete clause was unenforceable because the owner that the Gruesers sold the franchises to had defaulted on the agreement.

The new owners paid for the business in part with a $615,000 promissory note. The owners missed several payments and defaulted on that loan, the response states, leaving the Gruesers with a “difficult economic situation.”

Rocky Mountain Chocolate Factory would not let the Gruesers re-open the Rocky Mountain Chocolate Factory stores, the Gruesers’ response states, so the Gruesers looked for new owners. They found one, who said he was interested but who then contracted with Rocky Mountain Chocolate Factory to open a new franchise store in a different Steamboat location and did not buy the Gruesers’ old store.

The Gruesers were “left with no choice but to open two Fuzziwig’s franchises in the old Rocky Mountain store locations,” their response states, as they had no one to pay rent on the two old Rocky Mountain Chocolate Factory locations and had suffered the loss of the $615,000 note, back and lost rent, lost business and lost time, among other reasons.

A hearing on the case is set for 1 p.m. Jan. 13.

— To reach Susan Cunningham, call 871-4203 or e-mail sbacon@steamboatpilot.com

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