The judge in the dispute over ownership of the Edgewood Bakery in Jacksonville, Florida, issued an opinion overwhelmingly in favor of Stache Investments and Jaguars owner Shad Khan in a preliminary hearing on January 22, according to Jacksonville.com.
Judge James Daniel said he found from the evidence presented by Stache lawyers and attorneys for Edgewood Bakery operators Tom and Carol Rykalsky that Khan owns more than half of the business. Daniel also told both parties that he will appoint a receiver to oversee the financial dealings of the bakery that’s been in business for about seven decades on Edgewood Avenue in Murray Hill.
Jack Webb, attorney for the Rykalskys, said he will seek a civil trial before a jury to decide the fate of the bakery’s ownership as receivership continues. Webb said he will begin the discovery phase of the case by beginning interviews with witnesses while preparing for a trial possibly as early as April.
Daniel was clear in his opinion that he saw no indication that the Rykalskys and their partner Mike Zimmerman had a majority stake in the ownership of the business operated under the company name U.S. Culinary & Beverage. Daniel said multiple times that in his view Edgewood Bakery belongs to Stache.
“They will be able to prove that through a contract, in fact, that at least 51 percent, perhaps 56 percent of this company was intended to be owned by Stache Investments,” Daniel said. “I also believe that the plaintiffs [Stache] have demonstrated irreparable harm. …”
The harm caused to Stache, Daniel said, is that Stache representatives have been excluded from being involved in decisions determining the financial future of the business.
The judge’s opinion comes after a nearly two-month legal and public fight between the Rykalskys and Khan.
Khan filed the lawsuit in early December contending that Stache Investments’ $800,000 of seed money for the Rykalskys to buy the bakery in June as part of a startup venture constituted majority ownership. He asked the court to grant Stache control of the business. The suit says the Rykalskys and Zimmerman, under U.S. Culinary & Beverage, have hurt the business through waste.
Edgewood Bakery is a Jacksonville institution that has operated on Edgewood Avenue since the 1940s.
The business remains open. The Rykalskys and about 40 employees continue to manage operations despite multiple notices of termination sent by Stache Investments to the workers there.
The Rykalskys bought the bakery after appearing as “creators” in the inaugural One Spark crowdfunding festival in Jacksonville in 2013, and after meeting with Stache officials. Stache officials said they were impressed with the Rykalsky’s entrepreneurial spirit and agreed to provide startup money for the business called Pure Treats.