Chill-Can Attorneys Plan to Appeal Magistrate Decision

YOUNGSTOWN, Ohio – Attorneys representing the developer of the stalled Chill-Can project plan to appeal “certain portions” of a magistrate’s decision Wednesday that ordered M.J. Joseph Development Corp. to repay the city $1.5 million in grant monies the company received five years ago.

Given the decision and likely appeal, the litigation could take years to resolve, according to Brian Kopp, attorney for developer M.J. Joseph Corp. and Joseph Manufacturing.

“We have reviewed the magistrate’s decision and plan to appeal certain portions of the judgment entry,” Kopp said in a statement.

“This ruling means there will be a trial,” Kopp said. “If it wasn’t before, it should now be apparent to all that the parties will be entangled in litigation for years to come.”

Mahoning County Common Pleas Magistrate Dennis Sarisky ruled Wednesday that M.J. Joseph had breached development and security agreements it signed with the city in 2017.

According to the court, the city is entitled to a refund of $1.5 million in water and wastewater grant funds it awarded the developer that year to help complete the project.

The development remains unfinished, nearly six years after the $20 million project was announced.

“The plaintiffs’ failure to complete the project and to hire any significant employees under the terms of the amended and restated development agreement, renders the grant funds subject to refund,” Magistrate Dennis J. Sarisky ruled Wednesday. “This court orders the $1.5 million grant funds to be refunded.”

Kopp said while the project has experienced delays, it remains stalled because of the city’s intransigence.

“Make no mistake about it, there were delays in construction but the project is at a complete standstill now because of the mayor,” Kopp said, referring to Mayor Tito Brown. “We will continue to prepare for trial.”

Sarisky’s decision considered motions from both parties requesting the court issue a summary judgment on the matter. He cited specific portions of the amended development agreement that stated “failure to comply with the rules and regulations of any grant funds received may require the developer to reimburse or refund grant funds received to the city.”

M.J. Joseph Corp. and its CEO, Mitchell Joseph, had promised to have constructed four buildings, have hired 237 people and be in full operation by August 2021.

The site was to be used as a beverage and technology hub for production and development of self-chilling cans.

Three empty buildings sit at the site. A report to the city last year said that M.J. Joseph had hired one employee.

City Law Director Jeff Limbian said it’s likely that any trial – initially scheduled for Oct. 17 — will be delayed. That date is now reserved for a telephone conference, court papers say.

“The mayor is not interested in taking the foot off the gas pedal,” Limbian said. “We’ll have a hearing in a couple of weeks,” in which it’s expected that M.J. Joseph will lodge a formal appeal before a judge.

“We are very pleased that the court ruled in our favor on the partial summary judgment,” Limbian said in an earlier statement. “We look forward to resolving or trying the remaining issues so that we can utilize this property for new economic development.”

The city was to begin taking depositions in the matter on Sept. 30, but it’s likely those will be postponed as well, Limbian said. Those depositions, the city hopes, will shed some light on the condition of the developer’s finances and its ability to complete the job.

In addition to the $1.5 million, the city maintains that M.J. Joseph should repay another $700,000 the city spent on acquisition of property, demolition and relocation assistance for the project. The city also seeks damages of $575,000 in lost income tax revenue from the stalled project.

Those claims are not part of the decision Wednesday, Sarisky wrote.

Attorneys for Joseph filed a lawsuit against the city in May 2021, arguing that language in the contracts limit any restitution to land, and not monetary compensation.

The city countersued the following month, requesting the court award it more than $2.2 million in damages plus the right to reclaim the land.

In August, M.J. Joseph attorney Kopp and the city’s attorney, Thomas Hull of Manchester, Bennett and Newman, squared off in the case’s first hearing before Magistrate Sarisky.

Each party asked the court for a summary judgment and rule whether the city could ask for monetary damages in the case. Sarisky’s decision granted the city’s motion for partial summary judgment, but denied M.J. Joseph’s claim.

Kopp added the legal standoff continues to prevent M.J. Joseph from completing the project, which ultimately hurts the region.

“While it is our job to litigate contested matters like these, I can only sympathize with those in the Mahoning Valley that are losing employment opportunities because of the city’s approach to this transaction,” he said.

Copyright 2022 The Business Journal, Youngstown, Ohio.