Published in Small Business
Lawsuit alleges Meritage took Anna’s House concept after deal talks stalled COURTESY RENDERING

Lawsuit alleges Meritage took Anna’s House concept after deal talks stalled

BY Sunday, October 20, 2019 12:55pm

GRAND RAPIDS — The company that owns the popular Grand Rapids breakfast spot Anna’s House has sued the owners of the newly-opened Morning Belle restaurant. 

Anna’s House Corporate LLC filed a lawsuit last month against Meritage Hospitality Group Inc. and subsidiary OCM Development LLC in the 17th Circuit Court for Kent County. Anna’s House alleges Meritage used proprietary information about its business in creating the new Morning Belle concept. 

Anna’s House is asking for unspecified damages in connection to misappropriating the company’s trade dress, unfair competition and consumer confusion, among other accusations. The company had asked the court in September to block Morning Belle from opening, but Judge Christopher Yates denied the motion. 

The next step is for Meritage and OCM Development to formally respond to the lawsuit and the judge to outline the perimeters of discovery, said Robert Potts, general counsel at Meritage, a restaurant operator and one of the largest Wendy’s franchisees in the country. 

“We vehemently deny the accusations that were made,” Potts said. “We generate our own casual dining and other concepts, other than Wendy’s. We think that we will be able to prevail on our side of the equation.”

The case stems from talks between Meritage and Anna’s House in 2016 about a potential acquisition or joint venture. Anna’s House said it shared information about its business, marketing and branding strategies while conducting negotiations with Meritage about its request to acquire, franchise or be granted a license to replicate Anna’s House, according to the filing. 

“Anna’s House has learned that, instead of using the information Anna’s House disclosed to defendants to analyze a potential transaction with Anna’s House, defendants have instead used that information to open their own chain of restaurants to compete with Anna’s House,” the company said in court filings.

Anna’s House alleged that Morning Belle is “practically identical” in its exterior and interior, menu, design elements and other features.

In a response to the filing, Meritage President and COO Gary Rose confirmed the two parties were negotiating a deal, but said his company at no point received “substantive, confidential or proprietary information” about Anna’s House. 

In September, Meritage opened Morning Belle, a breakfast, brunch and lunch concept restaurant, at the former Twisted Rooster location at 1600 East Beltline Ave. NE, about 5 miles from the Anna’s House restaurant near Woodland Mall. 

Meritage has owned the Morning Belle building since 2004, and has maintained the facade and color of the building since then. Rose said the interiors of the restaurants are “distinctly different.”

According to Morning Belle’s website, a new location is “coming soon” at 434 Bridge St. NW in the former site of Esquire Hair Salon adjacent to Butcher’s Union. Before the first Morning Belle opened, Meritage announced it planned to spend $70 million to open 35 Morning Belle restaurants by the end of 2025.

Attorneys at Grand Rapids-based Silver & Van Essen PC representing Anna’s House could not be reached for comment for this story.

Smith, Haughey, Rice & Roegge PC is representing Meritage in the case.

Read 15521 times Last modified on Monday, 21 October 2019 06:30