BELLOWS FALLS — In the latest legal confrontation in a long string of civil claims and counterclaims surrounding one of the last independent pharmacies in the area, the former owners of Greater Falls Pharmacy are seeking judicial intervention to keep the current owners from closing the business.
On Sept. 8, Michelle and Donald Laurendeau, who have operated the pharmacy since 2018, announced on the pharmacy Facebook page that, "due to the changing pharmacy environment and the impact these changes have had on our business," the Atkinson Street pharmacy would be closing on Friday, Sept. 29.
However, on the same afternoon as the Laurendeaus' announcement, former pharmacy owners Marc and Eugenia Cote filed a temporary restraining order and a preliminary injunction against the Laurendeaus through their attorney, Alexandrea Nelson, of Burlington's Sheehey Furlong & Behm P.C., requesting a court order preventing the couple from proceeding with the closure.
The Cotes assert that their agreement with the Laurendeaus when they sold the business to them in 2018, is being violated by the decision to close the pharmacy.
The Cotes say they want to take the business back and keep it in operation.
To that end, the restraining order requests that the Laurendeaus "retract all public statements directing customers to other pharmacies and all public statements that [the Laurendeaus] intend to close the pharmacy on Sept. 29."
In their announcement, the Laurendeaus thanked their customers "for selecting us as your pharmacy and for supporting us for so many years" and said they would "continue to operate through [Sept. 29], filling prescriptions and transferring patient records through this date."
"Records will not be taken over by any other pharmacy so patients are encouraged to let us know where you would like your prescriptions transferred prior to our close," they continued. "You can also reach out to your provider to have them send prescriptions to your new pharmacy of choice."
The Cotes said they were caught by surprise by the announcement. They had owned the pharmacy for 15 years prior to selling it to the Laurendeaus - who they described as their longtime employees and friends - in 2018.
According to the court filings, the Cotes agreed to provide 100% of the seller financing when the Laurendeaus purchased the pharmacy, with the business as collateral, according to the court documents.
"Gina and I were shocked and saddened to hear that the owners of the Greater Falls Pharmacy have decided to close the pharmacy's doors," Marc Cote said in a written statement to The Commons.
"Not only is this decision harmful to the Bellows Falls community, but it is also in direct violation of our agreements with the current owners," Cote said. "We have petitioned the Court to stop the pharmacy's closure. We are hopeful the pharmacy will remain open and serve the Bellows Falls community for many years to come."
Background of the restraining order
The court filing is the latest salvo in a docket that goes back to 2020 and is filled with claims and counterclaims alleging fraud, violations of the Vermont Securities Act, defamation, and tortious interference.
According to the restraining order, the most recent litigation arises out of the Cotes' sale of the pharmacy to the Laurendeaus in October 2018.
The court papers state that though Cote had a 12-year contractual term of employment with the pharmacy as part of the transaction, the Laurendeaus terminated his employment 43 days into the contract.
It continues, stating that they "subsequently refused Mr. Cote's request to monitor GFP's financials and the collateral securing the loan Mr. Cote provided to the Laurendeaus to purchase GFP."
Cote currently works at the Rite Aid pharmacy in Brattleboro.
According to the promissory note of the 2018 sale of the pharmacy, the Laurendeaus, as borrowers, agreed to pay Cote $893,280 plus interest. Collateral for the loan included "all of the Pharmacy's real, personal, tangible, and intangible property, including all accounts receivable."
The restraining order states that a core question about the situation is whether the Laurendeaus are in breach of the agreement they made with Cote, and if so, whether Cote is entitled to a default judgment that would enable him to retake possession of the pharmacy.
The security agreement for the sale required the Laurendeaus to maintain and protect the pharmacy's collateral, keeping it in "good order and repair," and they were not allowed to "materially alter the business" without Cote's permission.
Thus, Cote requested that the court order the Laurendeaus to retract any public statements directing customers to other pharmacies and all public statements about closing the pharmacy.
Cote also asked the court to prohibit the Laurendeaus from taking further action to close accounts, fire employees, cancel vendor contracts or terminate the pharmacy's professional licenses without his permission.
In an affidavit submitted as part of the filing, Cote described customer relationships as "an intangible but critical asset of pharmacies in general and GFP in particular."
"Once a customer chooses to transfer their records to another pharmacy, it is all but impossible to convince that customer to return their business to the first pharmacy," Cote said. "It is also impossible to calculate the loss in terms of that customer's future business."
Similarly, Cote said that "over its years in business, GFP has built up immeasurable customer goodwill as a family-run pharmacy in Bellows Falls, Vermont."
"Customer relationships and goodwill are critical to the success of a pharmacy," the court filing said. "If GFP stops filling prescriptions and closes its doors, Mr. Cote's collateral under the security agreement will be destroyed. It is well established that the loss of client relationships and goodwill can constitute irreparable harm. [...] If the pharmacy loses its customers, Mr. Cote also loses the ability to save the business."
The order asserts that Cote has the right under the security agreement to "take possession of the Collateral," that is the pharmacy and its customers, "in the event of any default by the Debtor under any of the other Loan Documents."
Feeling that action has to be taken as soon as possible to maintain the pharmacy's business, the Cotes are requesting the court to hold a hearing on the matter as soon as the "Court's schedule will permit."
The Laurendeaus declined to comment to The Commons on the lawsuit or the issues surrounding their intent to close the pharmacy.
Additional reporting by Jeff Potter.
This News item by Robert F. Smith was written for The Commons.