Cold Stone Sues Franchise Owner

Cold Stone Creamery has filed a lawsuit for breach of contract and asked for an injunction against the owner of several franchises in New Jersey, including the one in Millburn.

A "warrant for removal" hangs in the store's window, which has prompted questions and rumors in the community. The store, which is at the corner of Essex and Main streets, has been closed for a number of days, and has only been open intermittently since the beginning of March. A sign hung in the window indicating the store would be closed for the winter.

The Cold Stone signs, furniture and equipment are still inside the Millburn store, but no one has been working there for several days.

The lawsuit alleges Stephen Reiter, a Livingston resident, who was a partner with Chill Out Creamery, which ran the Millburn store and three others in New Jersey, continued to operate the restaurants after Cold Stone ended its franchise agreement with Chill Out.

"Stephen Reiter's unauthorized use of the Cold Stone Marks has caused and is likely to continue to cause confusion or mistake among prospective or actual customers," the court document states. "Stephen Reiter's unauthorized use of the Cold Stone Marks in connection with the restaurants, after the Cold Stone Marks became famous, has caused and will continue to cause dilution and disparagement of the distinctive quality of the Cold Stone Marks, and has lessened and will continue to lessen the capacity of the Cold Stone Marks to identify and distinguish the good and services of Cold Stone Creamery."

The phone number listed for Chill Out in Livingston was disconnected. A call to Reiter's home was unanswered, and the voicemail was full.

Cold Stone issued a statement apologizing to its customers for the action.

"Unfortunately, personal and management issues between the store owners lead to the termination of the franchise agreement and sublease, and ultimately to the injunction action and the landlord eviction filings," the written statement sent to Patch stated. "We apologize for the inconvenience this is causing our ice cream lovers but we encourage people to visit any of our other near by locations."

The warrant for removal—which lists a three-day period for the tenant to vacate the premises—lists Reiter and Cold Stone as the parties to be removed. The notice has been in the window for more than three days.

The action, according to the notice, was brought by Short Hills Realty, which is listed as a Summit company. Calls to two phone numbers listed for Short Hills Realty found the number to either be disconnected or constantly busy.

The suit for breach of contract was filed in U.S. District Court in Newark on Feb. 6 by attorney David Sager on behalf of Cold Stone.

According to the court documents, Cold Stone entered a franchise agreement with Reiter and his company in October 2006 to operate restaurants in Millburn, Englewood, Plainsboro and Warren. Cold Stone also held a sublease agreement for each of the restaurants.

On Nov. 8, 2008, Cold Stone and Chill Out terminated its relationship for the four stores, and the local company agreed to "immediately cease and desist its use of the Cold Stone Marks," according to the court documents.

Cold Stone alleges in the court documents that after November Reiter continued to use the Cold Stone trademarks and do business in the restaurants under the company's name. A letter was sent to Reiter on Dec. 8 asking him to stop the practice, according to the court document.

Reiter was evicted from the Englewood shop on Dec. 15, but he continued to operate in Millburn, Plainsboro and Warren, Cold Stone alleges in the court documents.

A 2005 Baristanet report indicates Reiter is a former Livingston Zoning Board member and was arrested for sending antagonizing letters to his neighbors. The Baristanet report cites a Star-Ledger report, but the link no longer works.