Lenders to eatery, brew pub file suit
$1M IS OWED: Assets spread in 'fraudulent' way, financiers claim
By BRIAN KELLY
TIMES STAFF WRITER
WEDNESDAY, APRIL 7, 2010
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Financiers of the Sackets Harbor Brew Pub and Good Fellos restaurant claim the owners owe them about $1 million and, if the money is not paid, the lenders want the businesses sold to satisfy the debt.
Stephen and Kathleen Guarino, Medford, N.J., Thomas Guarino, Mount Laurel, N.J., and Phoenix Capital Opportunity Fund L.P. filed state Supreme Court action Monday at the Jefferson County clerk's office against North Country Hospitality Inc. and the company that now controls it, Seaway Valley Capital Corp.
It is alleged that the Guarinos provided a series of loans totaling $525,000 to North Country Hospitality, which defaulted on them. It also is claimed that Phoenix Capital obtained a $547,000 judgment against the company, a judgment that remains unpaid.
According to court documents, Stephen and Kathleen Guarino lent Christopher M. Swartz, former president of North Country Hospitality, $125,000 in April 2005 and $200,000 in September 2006. Thomas Guarino lent Mr. Swartz $100,000 in September 2006 and an additional $100,000 in March 2007.
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In May, a Florida court entered two judgments on behalf of Phoenix Capital against North Country Hospitality because the latter company had defaulted on loan agreements. Mr. Swartz signed a confession of judgment in the matter, conceding the money was owed. The first judgment was for $235,000, while the second was for $22,000.
When the judgment went unpaid by August, Phoenix Capital started action in state Supreme Court seeking its enforcement in New York. On Oct. 1, Judge Hugh A. Gilbert awarded the company summary judgment for the amounts, plus interest.
The debts predate Seaway Valley's ownership of North Country Hospitality, but the lenders claim that as successors in interest, the corporation is liable for payment. Seaway Valley acquired the assets and companies of North Country Hospitality, owner of Alteri Bakery, Sackets Harbor Brewing Co., Sackets Harbor Brew Pub, Good Fellos Brick Oven Pizza and Wine Bar and 1812 Station House, in June 2008.
The lenders claim that the agreement transferring the entities' ownership to Seaway Valley made it responsible for all debts and liabilities "whether known or unknown" as of June 1, 2008. The lenders claim that Thomas W. Scozzafava, chief executive officer of Seaway Valley, knew or should have known of the debts through the due diligence process. <<ANOTHER WHOOPSIE I DIDN'T SEE IT FROM TS>>
The problem for the lenders, it is alleged in the suit, is that the assets of North Country Hospitality have been dispersed among other several other entities controlled by Seaway Valley, causing the lenders to "expend additional effort to track down where the assets have been moved" and to seek judgments against multiple entities.
The lenders claim the transfers are "fraudulent" transactions designed to "have the effect of separating the assets securing the debts from the parties who undertook the obligation to repay" them. They claim the transfers occurred at the direction of Mr. Scozzafava and with his approval.
Neither Mr. Scozzafava nor Mr. Swartz could be reached for comment Tuesday.
The lenders claim they have a security interest in the assets of the Sackets Harbor Brew Pub and Good Fellos, as well as other assets not specified in the suit. They are asking for judgments for all of the money allegedly due, or that all of the assets of the former North Country Hospitality be surrendered to them to be sold to satisfy the debts.
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