Business Partners File Fraud Lawsuit Against Jersey City’s Grove Square

Grove Corner Bar Chris Fry
Grove Corner Bar in Jersey City as seen on Wednesday, November 29, 2017. Photo by Chris Fry/Jersey Digs.

A conglomerate of restaurants located near the Grove Street PATH station is being taken to court for allegedly lying about ongoing problems with their businesses, troubles that include health code violations, maintenance issues, and ongoing tax liabilities.

Grove Square Management, who are based out of East Hanover, recently filed a complaint in Morris County Superior Court against Square Two Holdings LLC and Jeff Favia. Square Two and Favia currently operate five restaurants at 116 Newark Avenue under the Grove Square banner named Bistro Jeffrey’s, Corner Bar, Wine & Whiskey Bar, The Underground, and Favia Pizza.

Grove Square Management claims in the filing that Square Two and Favia entered into an agreement with them last September to transfer over management and operations of the restaurants to them. As part of the deal, the suit says Favia agreed to provide advice on running the restaurants, but Grove Square Management was to have “decision-making authority on all aspects of the business.”

After taking over the eateries, Grove Square Management says it became obvious that Favia “made numerous misrepresentations about the condition of the Grove Square restaurants.” The company claims that one of the most significant was Favia’s failure to disclose necessary repairs that were needed at the property, which ended up costing Grove Square about $100,000, according to the complaint.

In addition, the lawsuit claims that Favia intentionally concealed “past violations with the New Jersey Division of Alcoholic Beverage Control” and “ongoing violations with the State of New Jersey authorities regarding sales tax and payroll tax.” The company also says that Favia “failed to disclose ongoing health code violations” at the restaurants and problems with the city regarding a permit for their outdoor patio area.

Grove Square claims they eventually discovered “rampant ongoing employee theft” while managing the restaurants and a “lack of qualified management, chefs, or waitstaff.” The company’s job was made more difficult, according to the filing, by Favia “repeatedly and materially interfer[ing] with the operations,” conduct that included “becoming belligerent towards customers and employees” and interfering with discussions with the property’s landlord.

Grove Square claims that Favia’s misrepresentation of the businesses, in addition to his conduct, hurt their profitability and caused them to suffer $250,000 in losses between January and April of this year. The company says that to stop the bleeding, they agreed to amend the management agreement in May to permit Favia to operate the restaurant again “for an undetermined period of time” in exchange for the company being paid a percentage of the profits.

The agreement allegedly stated that at some point, management would be turned back over to Grove Square. But the company claims that not only has Favia “retained all the significant profits generated” since taking the businesses back over, he admitted to them in June that “he never had any intention of amending the Management Agreement, and that such intentional misrepresentation by him was a ruse to re-take management operations” of the restaurants.

Square Two has not yet returned our request for comment on the allegations in the lawsuit, which was filed on October 2. Grove Square Management seeks damages from Square Two and Favia for breach of contract, fraud, and unjust enrichment. A court date hasn’t been set, and all of the restaurants under the company’s umbrella have continued to remain open.



Have something to add to this story? Email [email protected].

Click here to sign up for Jersey Digs' free emails and news alerts. Stay up-to-date by following Jersey Digs on Twitter and Instagram, and liking us on Facebook.

No posts to display