A bitter dispute between the present and former owners of PowerHouse Subs, which at one point had three shops in Blair County, is nearing trial according to an order issued recently by Blair County Judge Jackie A. Bernard.

After a late September status conference, the judge indicated that both sides involved in the ongoing legal fray, which began nearly five years ago, have completed discovery and the taking of depositions from possible witnesses.

Both sides, including PowerHouse founder Michael McDonnell, and the new owners, Tyrone businessmen John Russell, William Russell, Ryan DelBaggio, Brice Mertiff and their respective companies, have agreed they prefer a trial by judge as opposed to a jury.

But, there is one step remaining before Bernard will set a trial date.

She is insisting that the parties participate in mediation in an attempt to settle the dispute prior to a trial.

Mediation is a process in which parties agree to review the case with an attorney who will attempt to bring about an agreed-upon settlement, thereby bringing the case to an end.

Bernard has proposed a list of pro bono mediators that include three veteran civil litigators: attorneys David Halpern, Marylou Maierhofer and Walter Wall, all from Blair County.

“At the appropriate time, the court will be making contact with these mediators to determine if they are available and willing to accept the assignment,” Bernard stated in her order.

The judge continued: “In the event that the matter does move to mediation, the court will look to the parties to participate accordingly and in compliance with any directive provided by the mediator in terms of submission of confidential statements and that both parties will conduct themselves reasonably with an eye towards compromising.”

The order indicates McDonnell, after the lengthy legal battle over control of PowerHouse that began in late 2019, is hesitant to change his position “despite mediation.”

Bernard responded that she appreciated McDonnell’s candor but said “It is the court’s expectation that any pro bono mediation will be timely conducted.”

McDonnell, a businessman from Hollidaysburg, founded the small chain of sub shops that included operations in Altoona, Tyrone and Duncansville.

In 2019, he signed an asset purchase agreement and an operating agreement with John Russell of Tyrone.

In past interviews, he said he signed the agreements hoping that the new owners would grow the chain by opening shops in major metropolitan areas.

In signing the agreements, he was offered a position with the new ownership in which he would receive $100,000 per year, plus bonuses, and it was his understanding that family members who worked for him would continue to be employed.

Bernard, in her ruling that his lawsuit could move forward, pointed out the deal eventually “went sour.”

McDonnell left PowerHouse, contending he had been “lied to and tricked” into selling his business.

He and family members formed a competing company and the new owners filed a federal lawsuit to bar McDonnell’s new business because the initial sale papers contained a noncompete agreement.

Acting as his own attorney, McDonnell challenged the federal claim.

The case came to trial before U.S. District Judge Kim R. Gibson in Johnstown in August 2023.

The federal judge has yet to make a ruling.

Meanwhile, McDonnell filed a lawsuit in the Blair County Court of Common Pleas seeking to regain control of PowerHouse and asking compensation of almost $1 million, which he claims encompasses lost wages and bonuses he is owed by the present ownership.

The situation is unusual in that both state and federal courts are involved.

However, Bernard determined there is no legal bar against filing cases at both levels, she stated in her initial opinion.

McDonnell continues to serve as his own attorney and maintained this past week he is ready for trial.

Bernard estimated in her orders that trial could take between three and five days.

The federal case lasted only two days.

Attorney Brian Siljander of Michigan represents the defendants, including the Russells, DelBaggio and Mertiff, as well as their respective companies: PowerHouse Subs Corp. LLC: PowerHouse Subs Investments LLC; Elevation Holdings LLC; Revzip LLC and EMG Brands LLC.

After Bernard’s initial ruling allowed the Blair County case to move forward, Siljander appealed the decision to the Pennsylvania Superior Court.

A three-judge panel dismissed the appeal, noting that the new owners did not follow proper procedure in seeking to overturn Bernard’s ruling.