Greater Falls Pharmacy in Bellows Falls is closing its doors on Sept. 29.
Robert F. Smith/The Commons
Greater Falls Pharmacy in Bellows Falls is closing its doors on Sept. 29.

Judge’s ruling clears closing of pharmacy

Court denies motion for restraining order in Greater Falls Pharmacy case; previous owners vow to open anew

BELLOWS FALLS — A judge's denial of a motion for a restraining order has likely sealed the fate of yet another independent Vermont pharmacy - but its former owners, who sought the judicial intervention, say they will open a new pharmacy once they regain control of their commercial space.

Greater Falls Pharmacy at 78 Atkinson St. will close at the end of the day on Friday, Sept. 29, and the current operators will be filing for bankruptcy.

On Sept. 15, Vermont Superior Court Judge David Barra denied a motion by former owner Marc Cote, who sought a restraining order against the pharmacy on Sept. 8 when current owners Michelle and Donald Laurendeau announced the closing.

The Cotes had asked the court to order the Laurendeaus to retract any public statements directing customers to other pharmacies, all public statements about closing the pharmacy, and that they take no further action to close accounts, fire employees, cancel vendor contracts, or terminate the pharmacy's professional licenses without Cote's permission.

In a response filed on Sept. 13, Patrick M. Ankuda, the attorney for the Laurendeaus and the pharmacy, sought a 30-day continuance for the Cotes' motion "so that the Defendants may move forward with their bankruptcy filing and not incur further expenses litigating this case."

Ankuda cited state regulations governing closing of pharmacies that actually mandate the urgent notification to customers and the public, calling the Laurendeaus' actions "perfectly legal and required by regulations."

"In this case, Marc Cote is a creditor of the Defendant, Greater Falls Pharmacy, and he and his counsel know that he is not the only creditor of the Pharmacy," Ankuda wrote. "The Pharmacy vendors and other suppliers wear the same shoes as Mr. Cote.

"Moreover, Mr. Cote has no controlling interest in the Pharmacy and cannot dictate the terms of closure. The Board of Pharmacy controls by its regulations and Defendant, Greater Falls Pharmacy, is acting in compliance therewith," Ankuda continued.

He also argued that the court "cannot enjoin Greater Falls Pharmacy from closing and/or filing for bankruptcy."

In denying the motion, the court stated that to grant a temporary restraining order, it must consider "the likelihood of success on the merits, the threat of irreparable harm to the movant, the potential harm to the other parties, and the public interest."

The finding also states that a restraining order is an "extraordinary remedy, especially when sought without notice or evidentiary hearing."

The judge denied the motion for the restraining order, stating that "the court is not persuaded on the pleadings alone that plaintiff has established either that he has a likelihood of success, or that there would be irreparable harm if the defendant is not prohibited from taking the challenged actions to close the pharmacy, apparently as a prelude to bankruptcy."

A history of litigation

The Cotes opened the pharmacy in 2003 and ran it profitably for 15 years. In 2018, with Marc deciding he'd like to slow down his work schedule, the Cotes sold the pharmacy to the Laurendeaus, both longtime employees.

According to the Cotes, they were willing to finance 100% of the sale under two conditions: that Marc Cote stay involved part-time for the next 12 years at the pharmacy to help with the transition to new owners, and that he have access to the pharmacy's books and records in order to keep track of how it was performing.

According to the Cotes, the pharmacy collateral - the business, its inventory, and the customer base - would return to them if the Laurendeaus failed to keep the pharmacy operating.

That arrangement began to deteriorate very quickly after the sale. Although there had been no formal agreement about how the scrapbooking part of the business, run by Gina Cote, would continue to operate, the Cotes thought they would still be involved with that.

When it looked like the Scrapbook Nook portion of the operation would be changing or perhaps even discontinued, the Cotes took some of the scrapbooking materials from the pharmacy. According to the Cotes, the Laurendeaus used that as a reason for terminating Marc Cote on Oct. 2, 2018, just 45 days after the sale agreement.

Cote said he was terminated by email, without any personal discussion of the situation with the Laurendeaus.

In 2019, the Cotes began their efforts to get access to the pharmacy's business records. They were unsuccessful.

Beginning in 2020, the Cotes filed court claims, soon matched with the Laurendeaus' counterclaims of fraud, breach of contract, violation of the Vermont Securities Act, defamation, and tortious interference. The court docket has spiraled to 362 entries.

"I wanted my business to continue as a local independent pharmacy, and I wanted to be part of the business," Marc Cote said in a statement to The Commons. "That's why I worked out a deal where I could sell and have less responsibility, but continue as the pharmacist in charge part time."

Cote said he thought that that arrangement would also be helpful to the new owners.

"I would be there to mentor and advise the new owners and oversee the financial health of the business," he said. "The pharmacy industry is constantly changing and my 30 years navigating these changes was an invaluable resource that could have prevented this extreme measure."

But that arrangement never worked out.

Since 2018, the Laurendeaus have continued to regularly make their payments on the business loan, as well as staying current on their rent for the pharmacy space to Gina Cote, who owns the building. But they did not allow access to the financial records.

The Cotes say that they were never notified that the pharmacy would be closing or that the Laurendeaus had planned to file for bankruptcy. They found out about it only when they were told that a notice was posted on the pharmacy door on Sept. 8 notifying customers of imminent closing and advising them to find a new pharmacy.

The Cotes filed the restraining order that same day.

A new chapter?

Now that the restraining order has been denied and the bankruptcy action filed, nothing can be done to save the business until the bankruptcy is settled.

But the Cotes have not given up hope.

"As soon as we get our building back," they told The Commons, "we will get ready to reopen, with a new name, a new business model, and with serving our community with optimal pharmacy care at the heart."

The Cotes have made clear that the value of the pharmacy is primarily in its customer base, and have argued that their lawyer should have been notified as soon as the business started losing money.

Now, they hope it's not too late to build a new business, but they also noted that by the time the bankruptcy is over the customers may very well be gone.

Additionally, the Cotes are still owed a considerable amount of money on the pharmacy sale that they financed, and will likely only be repaid pennies on the dollar from the bankruptcy.

The Laurendeaus declined to comment for this article.

This News item by Robert F. Smith was written for The Commons.

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