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Amano Chocolate fights bitter legal battle with investors

Published February 13, 2014 12:08 pm

Lawsuit • After negotiations break down, investors start their own chocolate business.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Chocolate, normally something sweet, has turned bitter, as one of Utah's most well-known chocolatiers fights in court with former business investors and a potential competitor.

Art Pollard, founder and president of Amano Artisan Chocolate in Orem, is being sued for, among other things, fraud and breach of contract, according to a complaint filed in the 4th Judicial District Court in Utah County.

Morgan and Charlene Coleman, along with Morgan's parents, Michael and Jackie Coleman, allege that from January through April 2013 they invested nearly $108,000 to create a "New Amano" partnership with Pollard. The investment occurred before any formal agreements were signed, said the Coleman's attorney Mark Nelson.

According to the complaint, the Colemans discovered "thousands of dollars worth of other obligations" that Pollard failed to disclose during negotiations including a $10,000 loan, a $70,000 debt owed the company that molds and packages Amano chocolate bars and a lawsuit with a former employee.

"Essentially Art strung the Colemans along," the complaint states, "having the Colemans pay all the bills with New Amano money, without ever intending to partner."

Pollard insists he acted in good faith, giving the Colemans access to all his financial records, emails and supplier lists. He even let Phil Davis — whom the Colemans hired to increase Amano sales — watch him make his artisan chocolate.

But Pollard stopped negotiating, he said, when it became clear the Colemans did not want him to remain majority owner of Amano.

"In the new contract they got 51 percent of the company and I had no control," said Pollard, adding that he also became suspicious that the Colemans and Davis were only interested in learning Amano's recipes and chocolate-making techniques to start their own company.

Which they recently did. Coleman and Davis Artisan Chocolate in Provo is expected to have chocolate for retail sale in about six months, Morgan Coleman told The Tribune.

"I basically gave them a road map to build their own chocolate company," said Pollard, whom many consider Utah's premier artisan chocolate maker. Since he launched his company in February 2007, Pollard's single-bean chocolate bars have earned numerous international awards, and he was the first U.S. maker to use the rare Venezuelan Chuao bean, a coup that elevated him into the upper echelon of international chocolate makers.

While the downturned economy hurt Amano's high-end chocolate business, Pollard said the company took its biggest blow in 2012, when a sales employee placed a large order of chocolate for which she had no buyers. The employee was fired, but Pollard was left with the chocolate and the debt.

Hoping to make ends meet, he closed the retail store that was adjacent to his Orem factory and laid off the company's pastry chef.

He also contemplated a Kickstarter campaign, but when the Colemans, who were fans of Amano chocolate, showed an interest in becoming investors, he pursued that financial opportunity.

It seemed like a good match, as a few years before Pollard commissioned a painting from Michael Coleman, a local artist, that was used on the packaging for Amano's Marobe bar. The Colemans claim Amano has never paid their father for his work.

When they began working together, Pollard and the Colemans also spent $24,000 to purchase a cooling tunnel. The unique piece of equipment would increase Amano's bulk chocolate production, making the high-end product more affordable for chefs to use in their restaurants.

After the negotiations broke down, the Colemans sought and were granted an injunction to prevent Pollard from using the equipment until a jury can decide who rightfully owns it.

In January, a 4th District judge ruled against Pollard on another aspect of the complicated case that includes nine causes of action: Pollard must repay the Colemans nearly $50,000, which was used to settle a debt from a previous Amano investor. The first $965 payment of the five-year loan was due last week.

"They were supposed to come in and help us," Pollard said of the Colemans. Instead, "they have formed a competing chocolate company and are suing me."

kathys@sltrib.com