ROTTENBERG LIPMAN RICH, P.C.

Thomas E. Chase, Esq. (035022-2014)

Jonathan S. Hershberg, Esq. (02383-2010)
369 Lexington Avenue
New York, N.Y. 10017
(212) 661-3080
Attorneys for Plaintiff
-----------------------------------------------------------------KEY FOOD STORES CO-OPERATIVE, INC,
Plaintiff,
-againstUNCLE GINOS ITALIAN GOURMET
MARKETPLACE, INC., GINO PALUMMO, TRANS
EQUITY REALTY, LLC and JOHN DOES 1-10,
Defendants.
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SUPERIOR COURT OF NEW JERSEY

LAW DIVISION:
MONMOUTH COUNTY
DOCKET NO. MON L 1051-15
CIVIL ACTION
SECOND
AMENDED COMPLAINT

COMPLAINT
Plaintiff Key Food Stores Co-Operative, Inc. (Key Food), by and through its
undersigned counsel, Rottenberg Lipman Rich, P.C., as and for its Second Amended Complaint
against Defendants Uncle Ginos Italian Gourmet Marketplace, Inc., Gino Palummo (Mr.
Palummo), Trans Equity Realty, LLC (Trans-Equity) and John Does 1-10 (collectively,
Defendants), alleges as follows:
INTRODUCTION
1.

This action concerns Defendants wrongful retention and conversion of

Key Foods valuable supermarket equipment consisting of extensive refrigeration, storage,

shelving, display and cashier stations and related software (the Equipment).

2.

In 2013 and 2014, TD Equipment Finance purchased the Equipment for

approximately $850,000 and then leased it to an entity named 300 Meat Market, LLC (300
Meat Market) pursuant to an equipment lease dated January 23, 2013 (the Equipment Lease).
300 Meat Market was the owner/operator of a new Key Food store located at 300 Gordons
Corner Road, Manalapan, New Jersey (the Premises) which opened for business in May 2014.
3.

To induce TD Equipment Finance to enter the Equipment Lease with 300

Meat Market, Key Food entered a Surety Agreement with TD Equipment Finance guaranteeing
300 Meat Markets obligations under the Equipment Lease.
4.

300 Meat Market soon experienced financial difficulties and by late 2014

was failing to honor its financial obligations, including its obligations under the Equipment
Lease. In October 2014, 300 Meat Market closed the Key Food store located at the Premises and
failed to make any further payments to TD Equipment Finance under the Equipment Lease.
5.

In satisfaction of its commitment to guaranty 300 Meat Markets

obligations under the Equipment Lease, in March 2015 Key Food paid TD Equipment Finance
approximately $760,000. As part of that transaction, TD Equipment Finance assigned all of its
right, title and interest in the Equipment to Key Food pursuant to two (2) separate Bills of Sale.
6.

Defendants are planning to open a new supermarket at the Premises and

for several weeks in March 2015 Defendants and Key Food negotiated for Defendants to
purchase of the Equipment from Key Food.
7.

On March 18, 2015, however, Defendants abruptly claimed that Key

Food is not the owner of the Equipment, that defendant Trans Equity as Landlord of the Premises
is the true owner of the Equipment, and that Defendants acquired the right to use the Equipment
in their new store pursuant to the terms of Defendants lease of the Premises with Trans Equity.

As explained herein, Defendants position is legally baseless and Key Food now brings this
action to recover its Equipment and to recover damages relating to Defendants conversion of the
equipment.
PARTIES
8.

Key Food Stores Co-Operative, Inc., is a New York cooperative

9.

Upon information and belief, Uncle Ginos Italian Gourmet Marketplace,

corporation.

Inc. (Ginos Italian) is a New Jersey corporation.

10.

Upon information and belief, Gino Palummo (Mr. Palummo) is a

resident of the State of New Jersey.

11.

Upon information and belief, Trans Equity Realty, LLC (Trans Equity)

is a limited liability company authorized to do business in the State of New Jersey and having its
primary place of business at 225 Gordons Corner, Manalapan, New Jersey.
12.

Upon information and belief, John Does No. 1-10 are individuals or

businesses located in the New York metropolitan area who have purchased or may intend to
purchase Plaintiffs equipment from Defendants.
BACKGROUND FACTS
Defendant Gino Palummo Authorized
and Participated in the Development and
Financing of the Manalapan Supermarket
13.

Mr. Palummo was employed by Key Food from June 4, 2012 to February

7, 2014 as V.P. of Business Development and was personally involved with the transactions
giving rise to Key Foods ownership of the disputed equipment.

14.

Mr. Palummos main function at Key Food was to develop and approve

viable owner-operators for Key Food stores. One of the first stores that Mr. Palummo approved
for membership in the Key Food co-op was the store to be operated by 300 Meat Market located
at the Premises.
15.

Mr. Palummo was closely involved with the launch of the Manalapan

store, including working directly with 300 Meat Market and the primary equipment supplier,
Resnick Equipment, on the procurement and installation of all equipment in the store.
16.

In the summer of 2012, Mr. Palummo recommended that 300 Meat

Market be approved for participation in Key Foods equipment financing program, operated in
partnership with TD Bank, in which Key Food guarantees supermarket equipment financing
leases. On or about August 6, 2012, 300 Meat Market completed and executed a Key Food New
Member Application.
17.

On or around November 19, 2012, 300 Meat Market entered a lease for

the Premises with Trans Equity. On December 19, 2012, 300 Meat Market executed Key Food
Cooperative membership documents, including a Personal Guaranty from its principal Adel
Hamad. On December 24, 2012, 300 Meat Market submitted an application to TD Equipment
Finance to lease $695,636.43 worth of supermarket equipment under Key Foods equipment
lease financing program. TD Equipment Finance approved 300 Meat Markets participation in
the equipment lease program.
18.

On December 31, 2012 Key Food filed a UCC-1 with New Jersey

reflecting Key Foods blanket security interest in all of 300 Meat Markets property.

300 Meat Market Enters an Equipment

Lease Guaranteed by Key Food
19.

On January 23, 2013, 300 Meat Market executed a Master Lease

Agreement with TD Equipment Finance. The Lease Agreement required Lease payments for
five years and, upon full payment of all obligations under the Lease, the Lessee had the right to
acquire Lease Equipment.
20.

As an inducement for TD Equipment Finance to enter the Lease

Agreement with 300 Meat Market, Key Food executed a Surety Agreement guaranteeing 300
Meat Markets performance under the Lease Agreement.
21.

Concurrent with the execution of the Master Lease Agreement, and as a

necessary part thereof, the Landlord executed a Landlords Consent.

22.

Pursuant to the Lease Agreement, TD Equipment Finance purchased and

leased to 300 Meat Market over $800,000 of commercial-grade supermarket equipment

representing virtually all of the equipment needed to operate a modern supermarket.
January 9, 2013 Acquisition of Equipment
23.

On or about January 9, 2013 TD Equipment Finance purchased

$650,127.50 of supermarket equipment from Resnick Supermarket Equipment Corp. (Resnick)

to lease to 300 Meat Market. TD Equipment Finances January 9, 2013 purchase is reflected in a
January 9, 2013 Invoice from Resnick.
24.

On January 30, 2013, TD Equipment Finance filed a UCC financing

statement reflecting its ownership interest in the January 9, 2013 Equipment leased to 300 Meat
Market under the Lease Agreement including without limitation the equipment listed on Exhibit
A attached hereto.

The January 30, 2013 UCC financing statement attached a copy of the

January 9, 2013 Invoice reflecting TD Equipment Finances purchase of extensive refrigeration

equipment for lease to 300 Meat Market.
November 14, 2013 Acquisition of Equipment
25.

On or about November 14, 2013, TD Equipment Finance purchased

$34,399.11 of supermarket equipment from Computer Registers Systems, Inc. to lease to 300
Meat Market. TD Equipment Finances November 14, 2013 purchase is reflected in a November
14, 2013 Invoice from Computer Registers Systems.
26.

On December 23, 2013, TD Equipment Finance filed a UCC financing

statement reflecting its ownership interest in the November 14, 2013 Equipment leased to 300
Meat Market under the Lease Agreement. The Financing Statement attached a copy of the
November 14, 2013 Invoice reflecting TD Equipment Finances purchase of cash registers, point
of sale software system and merchandise scanners.
April 4, 2014 Delivery of Equipment
27.

On or about February 6, 2014, TD Equipment Finance purchased an

additional $124,465.00 of supermarket equipment from Resnick to lease to 300 Meat Market.
TD Equipment Finances February 6, 2014 purchase is reflected in a February 6, 2014 Invoice
from Resnick. In fact, only a few days before Mr. Palummo terminated his employment at Key
Foods, he recommended that 300 Meat Market be approved for a $125,000 increase in its Lease
budget.
28.

On May 30, 2014, TD Equipment Finance filed a UCC Financing

Statement Amendment updating its January 30, 2013 UCC-1 Financing Statement. The
Amendment attached a copy of the February 6, 2014 Invoice reflecting the extensive

refrigeration, HVAC, compressor and band saw equipment procured by 300 Meat Market
pursuant to the Lease Agreement.
29.

Concurrent with 300 Meat Markets lease of this additional Equipment, on

April 21, 2014 Key Food provided opening inventory financing to 300 Meat Market in the
amount of $125,000 and 300 Meat Market executed a Promissory Note to Key Food evidencing
such debt, payable at 9.5% interest over 5 years.
30.

It is my understanding that by May 2014, TD Equipment had paid all final

balances owing for purchase of the Equipment, including a final payment to Resnick in May
2014 of $50,127.50.
The Supermarket Opens and
Experiences Financial Difficulty
31.

The Supermarket opened for business on May 14, 2014. By August 2014,

the Supermarket was experiencing financial difficulty and started to become delinquent on
purchases made from Key Food. On October 17, 2014 Key Food was copied on a letter to 300
Meat Market demanding payment of delinquent rent of $59,863.59. On October 25, 2014 the
Supermarket closed for business.
Key Food Works Closely with Tran-Equities
to Find a Buyer of the Supermarket or the Equipment
32.

From October 2014 to the present, Key Food worked closely with the

Trans-Equities to find a buyer for the entire Supermarket or, alternatively, a buyer for just the
Equipment. Trans-Equities, therefore, has no basis to claim that it believed that the Equipment
was abandoned. For example, on January 13, 2014, Trans-Equities representative, Jonathan
Klein, emailed Chet Koby, the Vice President for Strategic Planning at Key Food in reference to
the disposition of the Equipment. Mr. Klein asked Mr. Kobynot to discuss rental rates for the

Premises with any potential tenants who the Landlord might refer to Key Food to discuss
acquiring the Equipment:
Chet:
If you would, please do not discuss our shopping center rental amounts
with any potential tenants that we have speak with you on the
equipment as we don't want to mix one tenant deal with another
I wouldn't imagine that you would, but I just wanted to make sure.
Thanks - Jonathan

33.

On November 3, 2014, Key Food brought a potential buyer to the

Premises to view the store and the Equipment. Trans-Equities met with representatives of Key
Food, Mr. Hamad and the potential buyer to permit access to the Premises. At no time during
such visit did Trans-Equities indicate that it claimed or would be asserting any ownership interest
in the Equipment.
34.

On December 4, 2014, Key Food informed Trans-Equities that Key Food

could not find a buyer for the Supermarket and intended to remove the Equipment from the
Premises and sell it to another operator of several Key Food stores.
35.

On or around January 13, 2015, Mr. Klein informed Key Food that Trans-

Equities had located a party interested in purchasing the Equipment for a negotiated price of
$475,000, which statement clearly indicating that Key Food owned the Equipment, rather than
Trans-Equities. Key Food then learned that the buyer who Trans-Equities was working with was
Mr. Palummo and that Mr. Palummo intended to launch a new market called Uncle Ginos
Italian Gourmet Marketplace at the Premises.
36.

On January 14, 2015, Key Food sent Trans-Equities a copy of the invoices

reflecting the Equipment purchased pursuant to the Lease Agreement. In response, Mr. Klein
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indicated that no Equipment had been removed from the Premises. Again, at no time did or has
Landlord claimed to have any ownership rights in the Equipment.
Key Food Satisfies 300 Meat Markets
Obligations Under the Lease Agreement and
Obtains Title to the Equipment
37.

In response to Defendants expression of interest in acquiring the

Equipment, in early February 2015 Key Food informed the other party interested in purchasing
the Equipment for a Key Foods location that Key Foods had found a better deal and would not
be selling it the Equipment. On March 3, 2015, Key Food paid TD Equipment Finance
approximately $760,000 in full satisfaction of Key Foods obligations as 300 Meat Markets
Guarantor under the Equipment Lease. Key Food then obtained title to the Equipment under
Key Foods rights under the Surety Agreement. TD Equipment Finance reflected the transfer of
its interest in the Equipment to Key Food in two Bills of Sale dated March 26, 2015.
Defendants Opportunistically Seek to
Convert the Equipment to their Own Benefit
38.

After initially negotiating to purchase the Equipment from Key Food, in

mid-March Defendants abruptly claimed that Plaintiff had no rights in the Equipment.
Defendants baselessly claimed that TD Equipment Finance had abandoned the Equipment, that
Trans-Equities became the owner of the Equipment and Uncle Ginos leased the Equipment from
Trans-Equities as part of its lease of the Premises.
39.

On March 18, 2015, Defendants counsel Derick Hanna emailed Key

Foods counsel Alexis Soterakis stating:

My client leased a fully equipped store from the landlord and he
took possession, in good faith, with no notice. Your client cannot
prove ownership of anything; not with the bill of sale, nor now,
with a purported waiver of whatever. The Resnick invoices are to

an "Eddies Market" not to 300. You offer no proof of delivery of

anything.
40.

On March 19, 2015, Petitioners Chief Executive Officer Dean Janeway

spoke with David Shehadah, an owner of several Key Food locations. Mr. Shehadah mentioned
to Mr. Janeway that he had recently purchased from Defendants a large refrigeration unit that
had been located in the Premises. Mr. Janeway asked Mr. Shehadah if he was sure that the unit
had come from the Premises and Mr. Shehadah assured him that he was. If Mr. Shehadahs
information is accurate, the refrigeration unit that he purchased clearly is part of the Equipment
and is owned by Key Foods and Defendants had no right to sell it.
41.

On March 22, 2013, Trans-Equitys real estate manager, Jonathan Klein,

submitted a certification in this litigation contesting Plaintiffs ownership interest in the

Equipment. Mr. Kleins certification claimed that TD Equipment Finance had failed to respond
to Trans-Equitys letters regarding the Equipment and stated that [t]he Plaintiff in this case has
no right to remove anything from 300 Gordon Corner Road, store numbers 24, 25, 26, 27 without
the landlords consent.
42.

In response to Defendants objections regarding the clarity of the original

Bills of Sale reflecting TD Equipment Finances sale of the Equipment to Key Food, on March
25, 2015, Key Food asked TD Equipment Finance to issue new Bills of Sale particularly
referring to and attaching the invoices describing all of the equipment being sold to Key Food.
See Ex. A (describing the Equipment).
43.

On March 26, 2015, Key Food sent Defendants counsel a written demand

that Defendants immediately return the Equipment to Key Food. Defendants failed to respond to
that demand.

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FIRST CAUSE OF ACTION

(Conversion)
44.

Based on the foregoing, Defendants are wrongfully converting Plaintiffs

property for their own benefit and to the detriment of Plaintiff.

SECOND CAUSE OF ACTION
(Replevin)
45.

Key Food repeats and realleges each and every allegation contained in

paragraphs 1 through 44 as if fully set forth herein.

46.

Based on the foregoing, Plaintiff is entitled to a replevin order directing

Defendants to turn over the Equipment to Key Food.

WHEREFORE, Key Food respectfully requests that this Court award the following
relief against Defendants:
a. Issuing a writ of replevin ordering Defendants to produce the Equipment
to Key Food at the Premises on a date and time selected by the Court;
b. Awarding Plaintiff damages resulting from Defendants wrongful
conversion of the Equipment in an amount to be determined at trial but
believed to equal $475,000;
c. Awarding Plaintiffs attorneys fees, costs and disbursements, plus
interest; and
d. For such other and further relief as the Court may deem just, proper and
equitable.

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Dated: March 30, 2015

ROTTENBERG LIPMAN RICH, P.C.

By: ____________________________
Thomas E. Chase, Esq.
Jonathan S. Hershberg, Esq.
369 Lexington Avenue
New York, New York 10017
(212) 661-3080
Attorneys for Plaintiff

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CERTIFICATION PURSUANT TO R. 4:5-1(b)

Thomas E. Chase, Esq., of full age, hereby certifies:
This matter is not the subject of any other action pending in any court or of a pending arbitration
proceeding and no other action or arbitration proceeding is contemplated. Adel Hamad and 300
Meat Market, LLC are potentially subject to joinder pursuant to R. 4:29-1(b) because of their
liability to Key Food on the basis of the same transactional facts involved in this action. For the
reasons stated herein, the Court should grant Plaintiffs application for an emergency temporary
restraining order and preliminary injunction.
CERTIFICATION PURSUANT TO R.4:5-1(b) (3)
The undersigned hereby certifies that confidential personal identifiers have been
redacted from documents now submitted to the court, and will be redacted from all documents
submitted in the future in accordance with Rule 1:38-7(b).
DESIGNATION OF TRIAL COUNSEL
Plaintiff designates Thomas E. Chase, Esq. of Rottenberg Lipman Rich, P.C. as
trial counsel.
Dated: March 30, 2015

ROTTENBERG LIPMAN RICH, P.C.

________________________________
Thomas E. Chase

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