Judgments in Legal Proceedings

9 Months Ended

Sep. 28, 2014

Judgment In Legal Proceedings [Abstract]

Judgments in Legal Proceedings

Note 13.  Judgments in Legal Proceedings

On October 28, 2009, the Company initiated a legal proceeding entitled American Restaurant Concepts, Inc. v. Cala, et al was filed in in the United States District Court for the Middle District of Florida, Jacksonville Division, in Duval County.  In the complaint, the Company alleged damages for trademark infringement.  Also on that date, a legal proceeding entitled Cala v. Rosenberger et al. was filed with the Fourth Judicial Circuit Court in and for Duval County, Florida.  In the complaint, the plaintiff alleged damages for breach of contract.  In January 2010, the parties to each of the actions entered into a settlement agreement with respect to both actions pursuant to which the Company agreed to pay $250,000 in full settlement of the legal proceedings.  In early 2010, Cala breached the terms of the settlement agreement, relieving the Company of any further obligations under the settlement agreement.  The Company made total payments of $40,000 under the settlement agreement prior to the breach by Cala.  Accordingly, the remaining balance of $210,000 under the settlement agreement was reflected in settlement agreements payable at September 28, 2014 and December 29, 2013.

On February 25, 2011, a legal proceeding entitled Duval Station Investment, LLC v. Hot Wing Concepts, Inc. d/b/a Dick’s Wings and Grill, and American Restaurant Concepts, Inc. was filed with the Fourth Judicial Circuit Court in and for Duval County, Florida.  In the complaint, the plaintiff alleged damages for breach of guaranty.  On October 4, 2011, a final judgment was entered by the court in favor of the plaintiff in the amount of $161,747, and on November 11, 2011 a final judgment for attorneys’ fees and costs was entered in favor of the plaintiff in the amount of $33,000.  These judgments, together with accrued interest of $2,369 thereon, resulted in a total loss from legal proceedings of $197,116 during the year ended December 25, 2011.  This loss was reflected in settlement agreements payable at September 28, 2014 and December 29, 2013.  Interest expense in the amount of $2,610 and $7,830 was accrued on the outstanding balance of the settlement agreement payable during the three- and nine-month periods ended September 28, 2014, respectively.  The interest expense was credited to settlement agreements payable.

On November 30, 2012, a mediation settlement agreement was entered into by and among Summercove, Inc. d/b/a Capodice & Associates, as plaintiff, and the Company, Michael Rosenberger and Robert Shaw, as defendants, with respect to a legal proceeding entitled Summercove, Inc. d/b/a/ Capodice & Associates v. American Restaurant Concepts, Inc. d/b/a Dick’s Wings & Grill, et al., filed in the Circuit Court for Sarasota County, Florida.  Under the terms of the agreement, the Company and Messrs. Rosenberger and Shaw agreed to pay a total of $35,000 in seven monthly installments of $5,000 commencing December 5, 2012.  This settlement, together with accrued mediator costs of $1,190, resulted in a total loss from legal proceedings of $36,190 during the year ended December 30, 2012.  This loss was reflected in settlement agreements payable at December 30, 2012.  The Company paid $5,000 of the settlement amount during the year ended December 30, 2012, and paid the remaining balance of $31,190 during the nine-month period ended September 29, 2013.