Tea Guys of Whately owes $2M for breach of contract, judge rules

The Tea Guys factory building, pictured on Christian Lane in Whately in November 2023, is now the site of Klondike Sound LLC.

The Tea Guys factory building, pictured on Christian Lane in Whately in November 2023, is now the site of Klondike Sound LLC. STAFF FILE PHOTO/PAUL FRANZ

By DOMENIC POLI

Staff Writer

Published: 04-15-2024 9:41 AM

WHATELY — Tea Guys LLC must pay more than $2 million to a Baltimore tea company due to a breach of contract, a Franklin County Superior Court judge has ruled.

The small business in Whately was sued last summer by Zest Tea LLC and had two bank accounts frozen up to $5.67 million — the amount Zest Tea sought in damages. This represented the $1.87 million Zest Tea alleges it lost, a figure that could have been tripled under state law if Tea Guys had been found guilty of unfair business practices, as well as other costs, including attorney fees.

Judge Karen Goodwin ruled in February that Tea Guys, owned and operated by Oliver Rich, owes $2,026,616 to Zest Tea, which is owned by James Fayal. Rich’s whereabouts are unknown and attempts by the court, Zest Tea’s attorney and the Recorder to contact him have been unsuccessful. Tea Guys appears to be out of business, though its website is still functional.

Robert Dambrov, the Springfield attorney representing Zest Tea, said his client “doesn’t feel any better, because he doesn’t have any money [from Tea Guys].”

“We tried to reach out to Mr. Rich to talk settlement, but we got no response,” Dambrov said in a phone interview on Friday.

Dambrov said the judgment accrues 12% in interest each year. He explained there is a court procedure Rich can use if he cannot pay the amount he has been ordered to.

“Then the court decides what to do about it,” Dambrov said.

Dambrov alleged that Tea Guys breached a memorandum of understanding shortly after Fayal signed it on Jan. 19, 2023, by failing to comply with its obligations to make vendor payments and shipments. Zest Tea manufactures and sells beverages, including a line of tea bags and loose-leaf teas, ready-to-drink canned beverages and hydration powders.

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According to the civil complaint Dambrov filed on July 13, 2023, his client entered into an agreement to license to Tea Guys the portion of his business that sells tea bags into the retail channel. He reported that Zest Tea did this at least in part because there had been supply chain issues across the industry at the time “and Tea Guys represented, and appeared, to have ample capacity and know-how to operate the retail channel.”

“While verbally agreeing upon a basic licensing structure and discussing the terms for a written agreement,” Dambrov wrote, “Zest shipped its existing component inventory to Tea Guys and provided them with pick lists as well as the total cost of that inventory.”

The agreement generally covered licensing revenue, existing inventory purchases and expectations for both parties’ intellectual property.

No posts have been made on the Tea Guys Facebook or Instagram pages since Dec. 2, 2022. That post, a Christmas meme, has comments from customers complaining they have not received orders they have paid for. The company’s website now states the “business is currently closed for shipping and pickup,” after the Recorder published an article about the unfulfilled orders in November 2023.

The former Tea Guys factory at 110 Christian Lane in Whately is now the site of Klondike Sound LLC, which handles live event production.