The former owner of Tougher Industries has lost in federal court the first of several cases over the near demise of the heating and air conditioning company.
In Albany on Monday, U.S. District Court Senior Judge Lawrence Kahn ordered Steven Shaw to pay $100,000 plus interest to the three business partners from whom he bought Tougher in 2005. The judge also directed Shaw to deliver at least $1.65 million to a surety as collateral for certain bonding obligations.
In November 2006 — about three weeks after Tougher filed for Chapter 11 reorganization in U.S. Bankruptcy Court in Albany — Richard Abramo, Robert Brown and John Tomassetti sued Shaw over breach of contract allegations.
Shaw and the trio of investors acquired the downtown Albany HVAC company — once one of the largest in the Northeast with over 200 employees — from PSEG Energy Technologies in 2003. They each acquired a 25 percent share in the business. Shaw brought his partners’ shares in 2005.
Although Shaw fulfilled the 2005 stock purchase agreement’s provision to pay an initial lump sum of $150,000, he allegedly failed to make four additional monthly $25,000 payments. By October 2006, both Shaw and his former partners needed to make a $480,000 collateral deposit to cover outstanding risks to a surety. The trio of investors argued Shaw was responsible for that pledge, which went unmade and grew to $1.65 million.
“We think it was not the right decision, and there were some factual and legal issues the court overlooked,” said Shaw attorney Justin Heller. He said Shaw will appeal Kahn’s summary judgment to the 2nd U.S. Circuit Court of Appeals in New York.