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State accuses Buffalo Biodiesel of court-backed intimidation

New York Attorney General Eric T. Schneiderman has cracked down on a local company he said has been using the Buffalo court system to “bully and intimidate” small businesses across the state.

Buffalo Biodiesel collects used cooking oil from restaurants and converts it to biofuel. But the Attorney General’s office said the company abused the court system and targeted small-business customers in order to obtain easy cash through default court judgments.

Since 2013, Buffalo Biodiesel has filed more than 600 lawsuits against mom-and-pop restaurants for breaches of contract the small-business owners say never occurred.

Many of the restaurants said they were not notified about the lawsuits and didn’t respond to them. That often resulted in default judgments that ordered the restaurants to pay Buffalo Biodiesel thousands of dollars each. Others said the suits were less expensive to settle than fight.

Some businesses sued by the company, many of them outside the Western New York area, said they couldn’t afford representation.

Several local businesses were affected by the lawsuits, including Sammy’s Pizzeria in Niagara Falls, Toni Pepperoni in Amherst and Moe’s Southwest Grill.

Sammy’s Pizzeria, a more than 50-year-old family restaurant on Hyde Park Boulevard in Niagara Falls, was sued in 2014. That company was ordered to pay $23,769.57.

Toni Pepperoni, a family-owned pizza buffet and Italian restaurant on Maple Road in Amherst, was sued last year. It was ordered to pay $16,849.10

Moe’s Southwest Grill, a Georgia-based company with franchises owned by local families, was ordered to pay $21,441.01 last year.

“Our legal system rightfully allows for parties to sue when a breach of contract occurs, but that right should not be used as a license to unjustly bully and intimidate small businesses,” Schneiderman said.

An investigation by the Buffalo Regional Office of the Attorney General showed the lawsuits were improperly filed in Buffalo City Court, without required documentation and lacking specific details about the supposed contract breaches.

The City of Tonawanda biofuel company has agreed to repay the small businesses all of the money it has collected from them in default judgments. It will also withdraw all applications it has made for default judgments against other companies and has agreed to vacate any default judgments against businesses that weren’t represented in court.

In the future, the biodiesel company said it will notify businesses of its intent to sue them before filing any court action, giving them the opportunity to resolve matters before lawsuits are filed.

Buffalo Biodiesel did not return calls for comment.