Has a trial date been set for the ATAX, LLC lawsuit mentioned in the Zoomin Groomin FDD?
Zoomin_Groomin Franchise · 2025 FDDAnswer from 2025 FDD Document
Ira Lubert and John Martinson v. John T. Hewitt, ATAX, LLC, and Loyalty, LLC (Case No 250503829) filed May 30, 2025, in the Court of Common Pleas of Philadelphia County, Pennsylvania. The Plaintiffs are investors in ATAX, LLC, and claim that they were solicited to invest in ATAX as a qualified opportunity zone business (QOZB), yet it did not qualify as a QOZB. Further, Plaintiffs claim that, as a result of the non-QOZB status, the defendants promised certain changes, some of which defendants have not made, specifically an amendment to ATAX's Operating Agreement and certain financial controls. The Plaintiffs also allege that Hewitt, with the assistance of certain Loyalty employees, made cash withdrawals from ATAX and paid those funds to himself, to Loyalty, and to other Loyalty brand companies without ATAX Board approval. The Plaintiffs sue for (1) Fraud Against Defendant Hewitt, (2) Aiding and Abetting Fraud (Against Defendant Loyalty), (3) Breach of Fiduciary Duty (Against Defendants Hewitt and Loyalty), (4) Conversion (Against Defendants Hewitt and Loyalty), (5) Breach of Contract (Against Defendants Hewitt, Loyalty, and ATAX), (6) Unjust Enrichment (Against Defendants Hewitt and Loyalty), (7) Breach of Virginia Stock Corporation Act (Against Defendants Hewitt and Loyalty), and (8) Violation of Pennsylvania Voidable Transfers Act (Against Defendants Hewitt and Loyalty). Plaintiffs seek a judgment, an order rescinding their investments, redemption of their ownership interests at a fair value, monetary damages in an amount to be determined at trial, fees, and interest. Defendants offered to buy out the Plaintiffs' investments for a profit that would be beneficial to Plaintiffs. Defendants intend to file an Answer generally denying the allegations and vigorously contesting the claims made. No trial date has been set.
Source: Item 3 — LITIGATION (FDD pages 11–16)
What This Means (2025 FDD)
According to Zoomin Groomin's 2025 Franchise Disclosure Document, no trial date has been set for the lawsuit involving ATAX, LLC. The lawsuit, filed on May 30, 2025, in the Court of Common Pleas of Philadelphia County, Pennsylvania, involves investors claiming they were solicited to invest in ATAX as a qualified opportunity zone business (QOZB), but it did not qualify as such. The plaintiffs allege that promises were not kept, specifically regarding amendments to ATAX's Operating Agreement and certain financial controls. They also claim that John Hewitt, along with Loyalty employees, made unauthorized cash withdrawals from ATAX.
The plaintiffs are suing for several claims, including fraud, breach of fiduciary duty, breach of contract, and unjust enrichment. They are seeking a judgment, rescission of their investments, redemption of their ownership interests, monetary damages to be determined at trial, fees, and interest. Zoomin Groomin states that the defendants, including ATAX, LLC, intend to file an answer denying the allegations and contesting the claims.
For a potential Zoomin Groomin franchisee, this pending litigation introduces an element of uncertainty. While the lawsuit does not directly involve Zoomin Groomin, it does involve John Hewitt, the Chief Executive Officer and Chairman of Loyalty, which could indirectly affect the franchise system. It is important to monitor the progress of this litigation and understand any potential impact it may have on the financial stability or leadership of Zoomin Groomin's parent company. Prospective franchisees should seek further clarification from Zoomin Groomin regarding the potential implications of this lawsuit.