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Food distributor files lawsuit against local grocer Nemenz
YOUNGSTOWN
Longtime grocer Henry Nemenz, owner of two area IGA stores and 20 Sav-A-Lots in Northeast Ohio and Pennsylvania, is facing a lawsuit filed by the second-largest publicly traded wholesale food distributor in the United States.
Nash Finch, based in Minnesota, filed the lawsuit in Mahoning County Common Pleas Court this week. In it, the company alleges that Nemenz IGA stores defaulted on a line of credit that the distributor extended between 2004 and 2005 totaling more than $253,000.
According to court documents, Nash Finch is seeking either immediate payment on the full balance or profits from the sale of collateral leveraged against the debt under the security agreement both parties signed at the time credit was taken.
Lawyers for the Cleveland law-firm Baker & Hostetler, representing Nash Finch in the complaint, declined to comment, and Nash Finch could not be reached to comment Friday.
But Nemenz, along with his lawyer, Christopher Gagin of Youngstown, contend that the lawsuit amounts to nothing more than corporate strong-arming.
“When it became apparent that Nash Finch had constructed a pricing structure and delivery surcharges that were no longer competitive, the decision was made to drop Nash Finch as a primary supplier,” Gagin said in an email. “The decision to drop Nash Finch was communicated to them on Monday, Oct. 15, and it was at that point that Nash Finch’s corporate temper- tantrum began.”
On the day Nemenz notified Nash Finch of his intention to switch suppliers, the company sent a letter demanding immediate payment on a portion of the past due balance and threatened legal action without a prompt response. But two days later, the lawsuit was filed alleging that ample time was given for Nemenz to respond and pay his debt.
In an unrelated matter, Nemenz Canfield IGA closed its doors Oct. 12 At the time, Nemenz cited competition from a nearby Giant Eagle as the reason for closing. The 20 Sav-A-Lots owned by Nemenz are not involved in the lawsuit.
Court documents state that “defendants Canfield, Nemenz Food Stores and Nemenz Market are in default of their obligations under the credit agreements and security agreements, having, among other things, failed to make the required payments due under the credit agreements.”
But Gagin maintains that those payments are not overdue. A payment of $100,000 will be made to Nash Finch on Monday.
The Nemenz family has been in the local grocery business for 82 years. Nemenz himself has been involved in the industry since 1957, and he said he has never faced a similar lawsuit.
“They’re an upset big corporation, and I’m switching to an independently owned company, and they’re hostile about it,” Nemenz said.
Nash Finch and Nemenz have been involved for years, but Nemenz added that “when it comes to retail, you have to be priced right,” and he said he had no choice but to take a better deal with another supplier.
Nash Finch has remaining supplies in IGA stores, all of which are on credit with Nemenz. Gagin said the debts will be paid, and the relationship between the two companies will end thereafter.