Edgewood Bakery in dispute, ownership in question

Edgewood Bakery in dispute, ownership in question
Carol and Tom Rykalsky inside the Murray Hill bakery.

Lawsuit pits new owners against Jags owner Khan

There’s good news for lovers of the Edgewood Bakery’s tasty powdered sugar-topped treats and wedding cakes. A lawsuit over who owns the Murray Hill institution isn’t stopping the confections assembly line – at least for now.

Carol Rykalsky, who along with her husband, Tom purchased the bakery in June from longtime owners Gary and Sandy Polletta, said she and her husband are committed to keeping the 68-year-old bakery a family-owned operation.

The Rykalskys are the fourth local family to operate the bakery.

The Rykalskys are the fourth local family to operate the bakery.

“We are actually the fourth family owner-operators and what I am getting from the community is that they want to keep it that way,” Carol Rykalsky said. “No, I never thought for one moment that we were going to close.”

The Rykalskys, doing business as U.S. Culinary & Beverage, bought the Edgewood Bakery for $625,000 with funds provided by Stache Investments Corp. The president of Stache Investments is Jacksonville Jaguars owner Shad Khan. The couple began working with Stache following the inaugural OneSpark festival in 2013 after the company’s representatives expressed interest in financially backing U.S. Culinary’s healthy vegetable purees, slushes and muffins for school children.

But that relationship soured in October when Stache announced it was unhappy with the bakery operations due to what it claimed were poor business practices by the Rykalskys. The dispute deepened in November when process servers representing Stache handed out termination notices to many of the bakery’s workers. That was followed by the lawsuit filed in December by Stache in Duval County Circuit Court urging the court to place the bakery in receivership until the lawsuit is settled.

“Mr. Rykalsky and his associates claim that they are the majority owners of the bakery and over the past several weeks have rejected Stache’s claim that it is the rightful majority owner, despite clear evidence supporting Stache’s position,” Jim Woodcock, Khan’s personal spokesman, said in a statement to the media.

“To resolve this dispute, Stache is now asking a court to determine who is the majority owner.”

But U.S. Culinary filed a countersuit, arguing it had met all requirements in its agreement with Stache and asking the court to block the takeover. Carol Rykalsky says a key issue is whether Tom Rykalsky understood that documents signed during the closing on the sale included a mortgage held by Stache.

Rykalsky maintains her husband received poor legal advice.

“When an attorney showed up here to purchase the bakery from the Pollettas, who are very kind people, what we thought was happening was a loan from Stache. We thought we would go into a bank later (for a mortgage). The attorney that was representing us did not tell us that there was a mortgage document in there.

“At the top of the paper it says ‘instrument’ and Tom did sign a mortgage under the advisement of an attorney that was supposed to be here representing us,” she said.

Rykalskys take over
Up until the lawsuit, the community had welcomed them with open arms, Rykalsky said. The Pollettas introduced them as the new owners at meetings of the Westside Business Leaders Association and the Jacksonville Chamber of Commerce’s Westside Division.

“I don’t believe at the time they had any indication that anything like this would happen either,” Rykalsky said. “Sandy on many occasions said if she had to handpick two people to take over the bakery she couldn’t have found two better people than me and Tom.”

The Rykalskys and their business partner Mike Zimmerman are hopeful a mediator can resolve the matter before it gets to court. An initial hearing is set for Jan. 9 before Judge James Daniel, but a motion was filed asking for an extension and that motion will be heard Jan. 5.

“We have other investors to buy Mr. Khan’s shares back from him,” Rykalsky said. “We are hoping somehow that the message gets to Mr. Khan that we are more than willing to negotiate and that if he wants to get out of his investment, we have people who will do that for him.”

When news of the lawsuit broke, concern immediately grew among brides planning to use the Edgewood Bakery wedding cakes whether their order would be filled. However, no one has demanded a refund, she said.

“We continue to do consultations every week; we continue to take on new contracts and we’ll fulfill those. If anything (the demand) has increased,” said Rykalsky. “A couple of (the brides’ mothers) are a little hesitant, and are saying they are going to have to follow this (lawsuit) closely.”

About 45 people work for the bakery or for U.S. Culinary, which has an assembly line at the bakery where it makes muffins and brownies using vegetable puree to eliminate vegetable fats. The lawsuit “definitely impacted” the assembly line process because Stache is refusing to allow access to baking ingredients stored in one of is local warehouses, Rykalsky stated.

“But we are doing the best we can to meet those contracts,” she said.

Community support
Based on the response from customers and fellow business owners, the couple strongly believes Murray Hill residents will continue supporting them, Rykalsky said.

“The other business owners on the street, they are calling, they’re saying we support you, we are glad you are here in the neighborhood and we hope you are here for another 20 or 30 years,” she said.

Community members have left positive comments at the bakery since Rykalsky began putting out comment cards in December. “Great products, friendly service,” she said, while reading one of the sheets. “Can’t say I’ve ever been disappointed,” another one said.

The Murray Hill Preservation Society, while not taking sides in the lawsuit, says it would like to see the matter resolved as quickly as possible.

“Edgewood Bakery is a cornerstone of our community,” said Gayle Rice, the association’s president. “We hope both sides can come to a swift and amicable solution that will allow for this Murray Hill institution to continue operation in the family-owned tradition as it has since 1947.”

Woodcock said Khan, the internationally known billionaire businessman, “regrets needing to take this step” and will leave the matter to the courts to determine an outcome.

“In the meantime, this matter does not change Mr. Khan’s goal – doing his part to support local entrepreneurs and ensure that the Edgewood Bakery survives and thrives as a Jacksonville neighborhood icon for many years to come,” Woodcock said.

Whoever wins the lawsuit will inherit an Edgewood Bakery that’s benefitted from the increased media attention. “We have people driving over from Atlantic Beach and wanting to speak to me personally (after hearing about the lawsuit),” Rykalsky said. “We’re kind of expanding and kind of making a name for Edgewood Bakery and for Murray Hill that maybe it wouldn’t have gotten out, you know, without all this.

“Maybe you need a catalyst so that people get over here and try us.”

By Greg Walsh
Resident Community News

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