Federal lawsuit alleges Jungle Java owners conspired to launch competitor, violated franchise agreement
Play cafe chain Jungle Java Inc. filed a lawsuit in federal court Tuesday alleging that the owners of its Ann Arbor area store violated their franchise agreement by misusing trademarks and proprietary business information, failing to pay certain fees and conspiring to launch a direct competitor.
Jungle Java’s 27-page lawsuit alleges that the franchise owners’ opening of Mocha Mountain — a new play cafe now operating in the same Jackson Road space as the former Jungle Java store — is a “willful, malicious, fraudulent and deliberate” violation of the owners’ franchise agreement.
Eric Yelsma, an owner of Jungle Java's former Ann Arbor area franchise, is named in a lawsuit alleging that the franchise owners conspired to start a competitor called Mocha Mountain. He's seen here inside Jungle Java's location on Jackson Road in this 2007 photo.
File photo | Ann Arbor News
The suit comes as the Yelsmas are being targeted in a separate lawsuit by Denver-based Native American Bank, accusing them of defaulting on an Oct. 25, 2006 loan agreement. The suit said the original loan was for $500,000 plus interest and that the defendants still owe more than $349,000.
Now, Jungle Java, represented by Ann Arbor attorneys Paul Fransway and Bernard Fuhs of Butzel Long, is accusing the defendants of “wrongfully and unlawfully competing with Jungle Java” by launching Mocha Mountain. The suit was filed in the southern division of the U.S. District Court’s Eastern District of Michigan.
Fransway, reached today by AnnArbor.com, declined to comment beyond the information contained in the lawsuit.
The Yelmas were not available to comment, and contact information for the Clarksons was not immediately accessible. Jungle Java’s corporate ownership did not respond to multiple requests seeking comment.
Conlin said Mocha Mountain is owned by the same people who owned and operated the Jungle Java franchise. Conlin, who said he has no ownership interest in either Playgrounds LLC or Mocha Mountain LLC, said he was “shocked” to learn today that he was named in the lawsuit.
“I have no part in it at all,” he said. “I’ll file a motion immediately to get me dismissed” off of the suit.
Canton-based Jungle Java, which operates stores in Canton, Farmington Hills and Clinton Township, is seeking damages and wants the court to force Mocha Mountain to close.
Mocha Mountain, now operating in the Jackson Road space formerly occupied by Jungle Java, is a target of a lawsuit by Jungle Java's corporate ownership.
Laura Blodgett | For AnnArbor.com
Jungle Java’s attorneys also filed a separate emergency motion seeking an expedited process of depositions and discovery of information related to the case.
According a document accompanying that request, Jungle Java notified the franchise owners on April 29 that their agreement would be terminated if they did not pay $4,783.96 in required fees and submit certain business documents required under the original franchise agreement.
On May 1, Mocha Mountain started operations in the same space as Jungle Java, using the same play structure and similar marketing materials, according to the suit.
Doug Conlin, general manager of Mocha Mountain and William’s nephew, confirmed in an interview with AnnArbor.com that Mocha Mountain started operations on May 1.
On May 11, Jungle Java notified Playgrounds LLC that it had officially terminated the franchise agreement.
According the lawsuit, the franchise agreement included a non-compete clause preventing the owners from starting a competing business after the franchise agreement expired. It also required the franchisees to return Jungle Java business materials to the corporate owners and give the corporate owners a chance to purchase the business’ equipment and assume the store lease, according to the suit.
The lawsuit lays out a number of accusations, including that three days after the franchise agreement was terminated, the defendants “wrongfully accessed and used the Jungle Java e-mail system and solicited a Jungle Java customer.”
In that May 14 email, which is included as part of an exhibit in the lawsuit, someone, responding to a concerned Jungle Java customer, wrote: “Dear Lorri and two very sad girls, Even though Jungle Java has closed, our doors are still open. Just under a different name. We now go by the company name ‘Mocha Mountain’ and still have all the great food and play areas that you love.”
The corporate office of Jungle Java last week sent an email to customers saying that its Ann Arbor location "has gone out of business and is no longer in operation."
The email indicated that "any passes, coupons, party deposits or any other JJ items of that nature may be redeemed at any other Jungle Java location."
The company, founded in 2002 by Denise Mehl, gives parents a place to have coffee and chat with other parents while their children have fun in the play place. Mehl could not be reached for comment.
The building housing the play cafe is delinquent on $123,167.17 in property taxes, according to Washtenaw County records. William Conlin said the unpaid taxes were a function of the tough economy and are immaterial to the dispute between Jungle Java and Mocha Mountain.
Doug Conlin, who said he was hired “to come in and do a turnaround,” told AnnArbor.com that the new cafe is maintaining Jungle Java's basic treehouse play structure and will slowly transition to a mountain theme, which will be reflected in the names of the food items and other decor.
“My role is turnaround, get the morale of the employees, get the place cleaned up,” he said. “I’ve been doing my job diligently. Even though it’s not there, it’s getting there.”
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Heather
Fri, Jun 17, 2011 : 12:36 a.m.
BEWARE!! I bought a $50.00 gift certificate for $25.00 for Mocha Mounation which was advertised on 102.9 W4 Country station under Steals and Deals. I've been calling for the last 2 weeks to schedule my sons birthday party and no one is answering phones or returning phone calls. Go figure now I'm out money!!
Katherine
Sat, May 21, 2011 : 8:41 p.m.
I heard that Jungle Java/Mocha Mountain had closed, but when we went there Friday we were surprised to find that they were still open. Something must have transpired though, because there was no WiFi, no food (other than the things in the display case) available for purchase, and no use of the computers (they were writing down orders on a piece of paper, and making change by hand, with the cash drawer on top of the counter). Most perplexing was the fact that there were no staff members there. As a quite regular customer I would definitely recognize all of the staff, and the only person I knew was the new "general manager" Doug Conlin. I truly hope that they did not let the staff go, because that was one of the only things still working right at that establishment. I will no longer be taking my kids there, and I STRONGLY suggest no one else continues to patronize their establishment either. With things in such a state of turmoil there, and a lot that we probably aren't privy to, it makes me no longer able to over look the things that were wrong with the establishment before.
Mark
Sat, May 21, 2011 : 8:47 p.m.
wouldn't surprise me. Anyone that has any knowledge of business happenings in the Ann Arbor area know that the Conlin's have a very bad reputation around the city. Sad situation to drag the teen kids into it, and then leave them without jobs.
Katherine
Sat, May 21, 2011 : 8:36 p.m.
I heard that Jungle Java/Mocha Mountain had closed, but when we went there Friday we were suprised to find that they were still open. Something must have transpired though, because there was no WiFi, no food (other than the things in the display case) available for purchase, and no use of the computers (they were writing down orders on a piece of paper, and making change by hand, with the cash drawer ontop of the counter). Most perplexing was the fact that there were no staff members there. As a quite regular customer I would definitly recognize all of the staff, and the only person I knew was the new "general manager" Doug Conlin. I truly hope that they did not let the staff go, because that was one of the only things still working right at that establishment. I will no longer be taking my kids there, and I STRONGLY suggest no one else continues to patronize their establishment either. With things in such a state of turmoil there, and a lot that we probably aren't privy to, it makes me no longer able to over look the things that were wrong with the establishment before.
JessicaB
Fri, May 20, 2011 : 11:32 p.m.
while the lawyers iron out the legalities, the parents and children who love(d) Jungle Java and would continue to come to a similar type business, are left hanging in the wind. Chelsea's Treehouse is too small and too far away, though a nice place, and Canton isn't terribly convenient. Ann Arbor should be able to make this type of business a success even if it's done through another owner, in another location. I hope we don't lose this business in our area!!
Fredric
Thu, May 19, 2011 : 5:40 p.m.
Having been involved in the Franchise Business for over 40 years, I can say with out any hesitation, This person is in clear violation of the Franchise Agreement Non-compete clause that they signed when they signed the original Jungle Javea Franchise. I suspect that the courts will eventually shut down the other units they are operating under the franchise name or allow the main company to take them over. No question that they are using the equipment, of which some may be made especially for the Franchise as well at methods of operation. No way to get around this, They have violated several laws. I am not a lawyer but have been involved in this over the years , including the take over and continued operation. In fact we just had a similar situation with the 2 Big Boy Restaurants on the west side of Ann Arbor!! Both now open, one as another business and the other sold to a experienced Big Boy owner from NE Detroit. THey are doing a great job too!!
81wolverine
Thu, May 19, 2011 : 12:22 p.m.
As a former franchise owner (not Jungle Java) the non-compete clause is pretty standard and clear. These former Jungle Java owners will NOT win the lawsuit if it goes to court - except in the unlikely scenario the Franchisor was not fulfilling it's obligations somehow. I can't imagine why they didn't think Jungle Jave Inc. would sue them if they opened up a competing business in the same building right away. In commercial leases, the tenant pays all the property taxes. The fact that there's a $123,167 delinquency tells me these people simply weren't making some or all of their rent/tax payments to their landlord (Conlin). I don't see where that excuses him from not paying the back taxes like others have pointed out. Eventually, if the taxes aren't paid, Conlin will lose the building. Still the baffling thing here to me is why the business owners (Yelsma and Clarkson) believe that their new business is somehow going to be viable whereas their Jungle Java one was clearly a financial trainwreck. Same location. Same people running it. Same landlord they owe a boatload of money to. Don't get it.
Left is Right
Fri, May 20, 2011 : 5:09 a.m.
Viable business model? In my experience, these places are best characterized as "germ exchanges." Most parents have caught on.
Appstache
Thu, May 19, 2011 : 2:40 p.m.
They're downsizing, last I heard. Moving locations in Chelsea. I'd imagine they aren't doing the best either. In reality Mocha Mountain (formerly Jungle Java Ann Arbor) has the best location, save for the building issues (leakage, darkness, etc.) with the biggest structure. It's no wonder some areas look like they have dust on it, either, do you know how fast dust collects with 100+ scampers running around a confined area constantly? My family will continue to go to Mocha Mountain for as long as we can. The kids keep finding new friends to play with and that's not an easy thing to do now-a-days.
Brian Shensky
Thu, May 19, 2011 : 12:58 p.m.
+1 to Appstache Kids Play Cafe in Plymouth recently closed as well, presumably due to the same "hard times". Is the "indoor play cafe" a viable business venture? Are the margins so very thin that franchise fees eat completely away at what little profit they make? How is Chelsea's Treehouse doing it?
Appstache
Thu, May 19, 2011 : 12:47 p.m.
What these past two articles fail to state is that Eric Yelsma (as he was the only owner actually attempting to save Jungle Java) was in the process of selling the business to Bill Conlin BEFORE it became Mocha Mountain. When those plans fell through it was too far to go back, which lead to the state they are in now, violating their agreement with Jungle Java Corporate. This article makes the owners out to be almost criminal-like, when in reality it's just another case of good people, hard times, big business. It was never Yelsma's intention to run a competitor, that's just how Jungle Java is trying to spin it, to get their maximum publicity and fee in court.
bruno_uno
Thu, May 19, 2011 : 3:06 a.m.
Who cares what the name is, the last time I was in there it was a total dump. Stuffing coming out of cushions, duct tape all over structures and tears in the netting. Waste of money. I cannot believe how much money is being wasted on this!! I am sure the attorneys are happy!
Silly Sally
Thu, May 19, 2011 : 11:52 a.m.
I was there 2 months ago, and it was fine. More importantly, the small kids just loved it. I hope that it does well.
nunya
Wed, May 18, 2011 : 11:22 p.m.
There is certainly a conflict that needs resolution. But, many of the comments seem to imply there is a controversy brewing. To me this appears to be a situation where business partners attempted to operate a small business at a significant investment. Competition along with economic down turn caused a failure to meet their obligations. They are obviously trying to do whatever they can to keep this going. Meanwhile, the Jungle Java people are also trying to keep their business going. I suspect the only way to really solve this problem is if we all grab our kids and spend some money at their establishment. I am sure all parties (including Mr. Conlin, who'd probably like his rent paid) would be happy if the business can become successful. And no, before anyone asks, I have never met any of these folks.
GoblueBeatOSU
Wed, May 18, 2011 : 8:50 p.m.
Interesting as Clarkson was involved in the Pittsfield Twp. Recall effort a few years back. I'm sure some people in Pittsfield are having a good laugh over this. Interesting how the same people keep making headlines.
gw
Wed, May 18, 2011 : 7:27 p.m.
I would not say that unpaid taxes "benefit the county". The county will eventually collect fees and interest yes, but you infer that if we all got behind on our taxes it would somehow help the government.
John B.
Wed, May 18, 2011 : 6:43 p.m.
... and now we get the rest of the story. Interesting (to say the least).
Smiley
Wed, May 18, 2011 : 5:48 p.m.
The Java-Mocha situation is interesting. However, I would like to know more about attorney William Conlin not paying his property taxes. Could counsel please cite an authority for the "unpaid taxes were a function of the tough economy" defense? I, and many others (I'm sure), would love to also take advantage of the benefits provided by this defense.
John B.
Wed, May 18, 2011 : 6:44 p.m.
Agreed. I'd also like to get jobs for my relatives out of the deal, while not paying those taxes!