YOUNGSTOWN, Ohio — A Mahoning County Common Pleas court ordered the developer of the stalled Chill-Can project on the city’s east side to repay the city $1.5 million, which the city awarded it there has five years to complete the unfinished development.
“The plaintiffs’ failure to complete the project and hire key employees under the amended and restated development agreement renders the grant funds subject to repayment,” Magistrate Dennis J. Sarisky said Wednesday. “This court orders the return of the funds of $1.5 million.”
The court found that MJ Development Corp. had breached two agreements signed with the city in 2017 that provided the project with the $1.5 million grant and tax incentives to help develop the project.
Sarisky also decided that a hearing would be held to determine whether the city is entitled to additional damages. A jury trial scheduled for Oct. 17 has been converted to a conference call, the order said.
“We are very pleased that the court has ruled in our favor on the partial summary judgment,” Youngstown Chief Legal Officer Jeff Limbian said in a statement. “We look forward to resolving or trying out the remaining issues so that we can utilize this property for further economic development.”
The city and MJ Joseph have been locked in a legal battle for more than a year over the company’s plan to develop a $20 million East Side campus that would manufacture the world’s first self-cooling can. The project was also to include research and development to advance self-cooling technology.
Last month, an investor filed a lawsuit in the Lorain County Court of Common Pleas seeking restitution of $1.5 million related to the Chill-Can project. The lawsuit names the company, its CEO, Mitchell Joseph, as defendants, along with an investment broker currently indicted in Erie County.
The city and MJ Joseph Development entered into two agreements in 2017 as the city would provide incentives in exchange for completing the project and creating 237 jobs by August 2021.
At issue was an agreement signed in 2017 that awarded MJ Joseph a $1.5 million development grant from the city to help prepare the site for the project. The money was used for the site, but the developer failed to complete the project and create the number of jobs it had promised.
Only three unfinished buildings have been constructed on a 21-acre lot along Lane Avenue, none of which are occupied. The company reported to the city last year that only one employee had been hired.
In addition to the $1.5 million, the city argues MJ Joseph should repay an additional $700,000 the city spent on property acquisition, demolition, and moving assistance for the project. The city also sought damages of $575,000 in lost income tax revenue from the failure of the project.
Those claims are not part of Wednesday’s decision, Sarisky wrote.
Joseph’s attorneys filed a lawsuit against the city in May 2021, arguing that the language of the contracts limits any return of land, not monetary compensation.
The city countersued the following month, asking the court to award it more than $2.2 million in damages plus the right to recover the land.
In August, MJ Joseph’s solicitor, Brian Kopp, and City Solicitor, Thomas Hull of Manchester, Bennett and Newman, clashed at the first hearing of the case before Magistrate Sarisky.
Each side asked the court for summary judgment and decided whether the city could seek damages in the case. Sarisky’s decision granted the city’s motion for partial summary judgment, but denied MJ Joseph’s request.
Copyright 2022 The Business Journal, Youngstown, Ohio.