1. Business

Doughnut dilemma: Legal battle between Mini Doughnut Factory founders and investors shuts down shops

The doughnut company with shops in Tampa and St. Pete is being sued by its lead investor, who says its founders breached a contract in addition to owing him nearly $1 million.
Published Jan. 2

Some of Tampa Bay's cutest pastries are off the market, as a legal battle rages in Hillsborough County Circuit Court over the future of the Mini Doughnut Factory.

Both its locations in South Tampa and St. Petersburg have closed "due to restructuring," according to notes posted on their doors.

Since at least May, founders Patrick and Zezura Ruddell have been at odds with investors, according to court records. On Dec. 19, Tampa real estate agent and investor Lee Kearney filed two lawsuits against the Ruddells: One said the couple was in default and owed Kearney and his associated companies roughly $875,000 and the second accused the couple of mismanaging the doughnut shops and breaking legal agreements to the point that Kearney had to take over.

"While my client's goal is to keep this business running, this step to temporarily close the company's locations was necessary to protect the assets of the company," Kearney's lawyer Michael C. Hildebrandt II said in a statement. "My client will be striving to get the locations back open as soon as possible but that requires cooperation from the Ruddells."

And the Ruddells, according to Hildebrandt, are "unwilling to cooperate."

Kearney's lawsuits lay out months of back-and-forth and include a signed mediation agreement between the Ruddells and investors about how the business should be run. It requires things such as the Ruddells filing for a Small Business Administration loan and logging their on-site working hours. Failure to meet the terms of the agreement would result in Kearney taking over management, it says.

Patrick Ruddell did not return a request for comment.

Problems seemed to appear early into the investing partnerships. Kearney and another investor, Christopher Mercer — who has since resigned, leaving his shares to Kearney — had given the Ruddells two promissory notes that totaled more than $1 million so the couple could open the second doughnut shop in St. Petersburg. But the lawsuit says that shop on 4th Street N opened six months behind schedule in December 2017 and costs ran twice what was budgeted.

In July 2018, another blow: The Mini Doughnut Factory was sued by a Chicago shop with nearly the same name, the Mini Donut Factory, claiming it had the rights on its use. The Tampa company had planned on growing into a chain with franchises. It had filed a suit of its own earlier in the year against another Tampa doughnut shop to remove "mini" from its name.

By June 19, the mediation agreement was signed declaring that if the Ruddells failed to meet their end, their stake in the company would drop to 49 percent, according to Kearney's lawsuit. At of the start of November, the Mini Doughnut Factory had barely $19,000 in its bank account, according to Kearney's records.

By Nov. 23, the doughnut company was unable to pay its bills and could not afford to pay the Ruddells their management salaries, according to Kearney's suit. The Ruddells on Dec. 5 requested a severance package of $150,000 to turn over control, according to an email referenced in the court filing.

"If the former management (the Ruddells) would have cooperated with the transition and followed through with their agreements and promises they made in the Settlement Agreement, the company would not have had to close the locations and would not be in the position where it is today," Hildebrandt said.

Kearney said through his attorney that gifts cards will be accepted when the store reopens, though the timing of a reopening was still unclear Wednesday. Those who want gift cards refunded can contact the company at

Contact Sara DiNatale at Follow @sara_dinatale.


  1. Ken Jones, CEO of Third Lake Capital, has sold WingHouse for $18 million to a Jacksonville restaurant company. [Times 2016]
    Tampa’s Third Like Capital now major shareholder in restaurant’s new owners.
  2. The Don CeSar Hotel is caught up in a lawsuit over liquid nitrogen being served and causing injuries at its restaurant. [Times (2011)]
    They say the other side has made inflammatory and misleading statements to the media.
  3. This Mobil Coast gas station at 16055 State Road 52 in Land O Lakes is one of 10 cited in a Florida Department of Environmental Protection lawsuit where inspectors said they found lapses in regularly required tests, maintenance, documentation or other oversight by Brandon-based Automated Petroleum and Energy or its related companies. On Wednesday, the company said the station had already been put back in compliance with state regulations. (Photo via Google street view) Google street view
    The Florida Department of Environmental Protection contends Automated Petroleum and Energy Company failed to do required maintenance or testing at 10 gas stations in the Tampa Bay area and beyond.
  4. FILE - In this July 31, 2019, file photo workers clean the outside facade of State Farm Stadium in Glendale, Ariz. On Wednesday, Oct. 16, the Federal Reserve releases its latest ‘Beige Book’ survey of economic conditions. ROSS D. FRANKLIN  |  AP
    “Persistent trade tensions and slower global growth” were weighing on the economy, the Federal Reserve reported.
  5. A South Florida developer plans a condo tower on the parking lot between the Northern Trust building, left, and the Hilton St. Petersburg Bayfront. SUSAN TAYLOR MARTIN  |  Susan Taylor Martin
    South Florida company plans a 35-story tower next to a Hilton hotel.
  6. Tech Data's headquarters in Clearwater. The company is one of the largest in the Tampa Bay area. TD AGENCY  |  Courtesy of Tech Data
    The Largo company’s stock price soared Wednesday following the report, which the news service based on information from “people familiar with the matter.”
  7. Yesterday• Business
    Col. Jennifer Crossman smiles as Boomer, a 5-year-old dog, sits in the passenger seat of her car during the firefighter challenge at MacDill Air Force Base in Tampa. [Times (2016)] Tampa Bay Times
    Uber customers can now be connected with willing animal chauffeurs — for a fee.
  8. An image from the web site of Realtor Michael Schaffer's real estate company. [Realty Resources] WWW.TAMPABAYHOMEREALTOR.COM/TEAM  |  Screen grab
    Michael Schaffer still has active listings
  9. Duke Energy Co. workers are competing in a line worker competition in Kansas this week. | [Courtesy of Duke Energy Florida] Duke Energy Florida
    Four Duke Energy Florida competitors are from Tampa Bay, as well as two coaches.
  10. Alexandra Toigo, 32 and Sabrina Pourghassem, 23, pose for a photo at Hofbrauhaus St. Petersburg holding their signature beer mugs during Oktoberfest 2018. "LUIS SANTANA  |  TIMES"  |  Tampa Bay Times
    The beer hall’s property owners filed a lawsuit saying the restaurant missed its rent starting in August.