SALT LAKE CITY — A Salt Lake City doughnut company is suing its former distributor after recently cutting ties, arguing it was not paid for more than $400,000 worth of the sweet treats.
Attorneys for Madbrook Donut Company argue that Frank Granato Importing tried to force Madbrook out of business and out of the space it leased from the distributor. The lawsuit filed Friday seeks damages to be determined at trial.
"We thought we had a standstill agreement," said Granato Importing spokesman Doug Foxley. "We were very surprised when they filed the lawsuit."
Defendants include Ann Granato, director of the business, and her son Frank Granato, its president. Ann Granato is a Salt Lake County councilwoman who succeeds her husband, Sam Granato, who served as councilman until his death in April and who formerly headed the family business.
The doughnut makers allege the distributor has refused to pay it $462,000 and the problems didn't start until after the late executive's death. The companies also signed a contract for an estimated 1 million doughnuts a month to be sold in 300 Maverik convenience stores, the suit argues, and Madbrook took out loans to buy equipment and hire employees to prepare for large-scale production. But ultimately, fewer doughnuts were sold in fewer stores, the complaint states.
The disputes arise from ambiguity in agreements that were drafted by Sam Granato and Madbrook, Foxley said. He said the money was withheld from Madbrook and its president, Anna Duletsky, because the doughnut company itself owed the distributor. He declined to give details.
Madbrook alleges Frank Granato told Maverik and other chains that the city would shut down and doughnut orders wouldn't be filled, forcing the shop to close for more than a day and hurting the business's reputation, according to the 40-page complaint.
In August, Granato Importing issued notices ordering the doughnut makers to vacate their rental space at 1391 S. 300 West, saying items that had long been in place were a nuisance, the court filings say. The company also reported a business license violation to Salt Lake City that stemmed from a years-old incorrect registration by Sam Granato and was later corrected, the complaint says.