A federal judge has ruled that the founder of Power House Subs breached a non-compete clause that went into effect when he sold his company six years ago, but soon resigned from the new firm to start another sub business called Subpreme Fundraising and Catering.

Judge William A. Stickman IV of Pennsylvania’s Western District, in a ruling this week, ordered the Power House founder Michael McDonnell and other family members, including a brother, a sister and brother-in-law, to pay $32,657 in lost revenue that is owed to REVZIP LLC, and Power House Subs Corp., plus attorneys fees accumulated by those corporations during the testy six-year court battle.

Stickman indicated in his 53-page opinion that the law would have permitted him to increase damages by another $45,000 but he declined to do so, noting the $32,657 represents the lost and future profits by the successor companies after Subpreme started up and allegedly took away an estimated 10 fundraising projects from Power House before receiving a cease-and-desist order.

Stickman stated the damages awarded to the plaintiffs may not seem large in size but noted, “The judgment award is enough to compensate (REVZIP and the present Power House corporation).

“The court finds that its award of lost profits …adequately addresses plaintiffs’ harm …PHCorp has had six years to establish its customer base and information. Any customer information that defendants retain is six years old.”

McDonnell was also ordered to deliver his Power House Subs phone to PHCorp within 14 days and to destroy all records he had that contained trade secrets or confidential information.

Power House Subs was opened by McDonnell on Feb. 3, 2017.

The business not only sold subs on a daily basis but also was deep into preparing subs for fundraising projects.

The business was received well by the public and Power House Subs quickly expanded to three shops located in Altoona, Tyrone and Duncansville.

McDonnell maintained he was bringing in income of $55,000 weekly, but he had aspirations of growing his business, which is why he accepted an offer in the fall of 2018 to sell Power House Subs to EMG Corp. of Tyrone, which was an affiliate of Elevation Holdings LLC of Tyrone.

The PHCorporation was a joint venture that involved Elevation, McDonnell and Ryan DelBaggio, a Tyrone businessman who is now the owner of the Power House Subs in Altoona.

Power House Corp. was initially owned by Elevation (65%), McDonnell (15%) DelBaggio (15%) and Johns Wesley Cook (5% percent).

REVZIP LLC eventually acquired Elevation’s majority ownership. REVZIP included Tyrone businessmen John Russell, William Russell, Brice Mertiff and Delbaggio.

McDonnell has indicated that he was enthused about expanding his Power House business and he and members of his family (a brother Christopher and brother-in-law Jacob Bearer) remained as employees.

As Stickman explained, McDonnell signed various documents as a result of the sale, including an Asset Purchase agreement, an Operating Agreement and a License Noncompetition Agreement.

The no-compete agreement meant that upon his termination with the new company, he could not operate a competing business for a period of two years within a radius of 25 miles from an existing Power House business.

McDonnell quickly became dissatisfied with his new position and on Aug. 8,

2019, he separated from PHCorp and created Subpreme Fundraising.

The business, located in Hollidaysburg, changed its name to Supreme Fundraising and Catering, with Jacob Bearer listed as the owner.

Bearer’s wife, Dana, obtained a loan from a friend to help get the business started.

The competing business began soliciting customers, including those doing business with PHCorp and REVZIP.

The Tyrone-based companies filed a lawsuit, charging McDonnell and his family members for breaching the no-compete clause and the other agreements.

The dispute soon became bitter with McDonnell publicly charging he had been falsely led and that his signature had been forged on the Asset Purchase Agreement.

The case finally came to trial in August 2023 before District Judge Kim R. Gibson.

Gibson however became ill and died earlier this year.

At that point, Stickman was assigned to the case.

He gave each side a chance to submit any new information that was relevant.

He found that McDonnell took steps to compete with PHCorp, which was a violation of the operating agreement.

He found that McDonnell was the driving force behind the formation of Supreme Fundraising.

“The court finds that after he received a cease-and-desist order, (McDonnell) attempted to use his family members as a smoke screen to conceal his continued violations of the Operating Agreement,” Stickman concluded.

McDonnell argued that the operating agreement was not enforceable because it was not signed in good faith.

“Lack of good faith is not a defense to contract enforcement or an independent cause of action,” Stickman ruled.

The judge also determined that McDonnell breached the Asset Purchase Agreement by refusing to turn over his Power House cellphone upon his termination.

And Stickman ruled that McDonnell violated the Licensed Noncompetition Agreement.

He also concluded McDonnell was Supreme’s “operator and driving force,” a finding with which McDonnell disagrees.

Mike and Chris McDonnell used Power House’s customer list to solicit fundraisers, Stickman wrote.

In the aftermath of the Stickman opinion, Mike McDonnell was upset, but he said he will not be filing an appeal with the 3rd U.S. Circuit Court of Appeals.

Then, he clarified,”This is not over by a longshot … I need to hold people accountable.”

Mike McDonnell has filed a lawsuit in the Blair County Court of Common Pleas where he hopes to get the sale of his business nullified, or receive adequate compensation for it.

And, he said he intends to pursue a grievance against the attorney for REVZIP, who is a member of the Michigan state bar.

He blames the attorney, Briar Siljander, for many of the problems that occurred with the sale of his business.

McDonnell for much of the case has represented himself.

He, too, intends to file a request for attorney fees for himself — based on what he said were “their attorney’s misdeeds.”

As far as his family, he stated, “Nobody is happy. I get my company stolen from me.”

He expects Siljander to seek dismissal of his state case and said he will fight such a motion if it is filed.

Blair County Judge Jackie Bernard is presiding over his Blair County case.

McDonnell was asked if he intends to go into the sub business again.

He first thought now however is to continue his pursuit of justice “for the fraud against me.”

Delbaggio, presently operating the Power House Subs in Altoona, took a low key approach to the Stickman decision.

“We got the verdict on the case. I’m just glad it’s over after six long years. Justice has been served. The truth came out. We’re just glad to put this behind us. Out of respect for the McDonnell family, we won’t comment any further.

Attorney Siljander could not be reached for comment.

McDonnell noted that he now earns his living as an Uber driver, and he stated that’s what he will continue doing.

“I’ll be ubering,” he said.