Applebee’s franchise owners filed a complaint on September 16 in the Supreme Court of the State of New York, Westchester County, alleging that Lineage Foodservice Solutions, LLC, is trying to collect a debt from the plaintiffs that was previously forgiven by Maines Paper & Food Services.
Maines, one of the largest U.S. foodservice distributors, filed for bankruptcy in June and was acquired by Lineage due primarily to restaurant and hotel shutdowns due to the COVID-19 pandemic. A press release from Manes said, “The COVID-19 pandemic, including the ‘shelter-in-place’ protocols enacted by the States has had a devastating impact on the food service and hospitality industry. Maines has not been spared by the COVID-19 pandemic.” This also followed multiple breach of contract lawsuits alleging they did not pay for commodities they delivered to restaurants and hotels and received payments for.
The Applebee’s restaurants said they were seeking declaratory relief based on Lineage’s “wrongful demand for payment.” The plaintiffs said that Maines “expressly released Plaintiffs of any and all claims” and argued that they should not have to pay the debts to Lineage. They asked the court to enter a judgement stating that the release from Maines restricts Lineage from recovering the debt.
Maines and Centralized Supply Chain Services (CSCS), the purchasing agent for the Applebee’s, signed an agreement in 2010 where Maines agreed to provide distribution services for Northeast Applebee’s franchises. The complaint explained that in 2018 Maines experienced financial difficulties and labor shortages and began to be “consistently late in delivering products” and “often failed to pay its suppliers who then stopped shipments to Plaintiffs.”
The plaintiffs said in December 2019 Maines “faced a liquidity crisis” and asked CSCS to prefund a “case mark-up” with $725,000 to insure its supplies continued. CSCS agreed and borrowed the money from the Applebee’s franchises.
A few months later in March 2020 Maines’ proposed sale fell through and it told CSCS to instead find a new distributor. This sudden change allegedly cost CSCS a substantial amount because they did not have time to plan an orderly transition and paid necessary transition costs. Rather than suing Maines for breaching its contract, CSCS and the Plaintiffs agreed on a settlement waiving any fees owed by either side, including the $725,000 owed by Maines. The settlement agreement included that the new distribution vendor would purchase Maines’ remaining Applebee’s inventory.
In the complaint, the franchises asked that the court rule that they do not need to pay any money to the defendant because the debts were already settled in the agreement with Maines. The plaintiffs, represented by Davidoff Hutcher & Citron LLP, include franchisees operating Applebee’s Neighborhood Grill & Bar restaurants, including: Apple-Metro, Inc., Apple Food Service o fNew York, LLC, Apple Food Service of New Jersey, LLC, TLC West LLC, TLC Central LLC, TLC East LLC, Potomac Family Dining Group Operating Company, LLC, Rose Casual Dining LP, Delaware Valley Rose LP, Scott’s Apple West, Inc., Scott’s Apple, Inc., Scott’s M-6A Joint Venture, Scott’s Motel, Inc. and Scott’s Apple Warren, Inc.