Norwich — A bitter family dispute and the declining scrap metal market have led to the closure of Shetucket Iron & Metal scrapyard, a family-owned Norwich business that had been in operation for 97 years.

The scrapyard at 7 New Wharf Road on Norwich Harbor closed two weeks ago, but several lawsuits involving the principals and Seder family members are ongoing in New London Superior Court, including one challenge of an agreement to dissolve the company and sell its assets and property.

The disputes center around equal company directors, Walter Seder of Norwich and his nephew Stephen Seder of Bozrah. Stephen Seder is the son of Edward Seder, a former partner who died in 2014.

After nearly a year of court complaints, counterclaims and motions in three civil suits in New London Superior Court, the two principals signed and filed a stipulated agreement on June 28 asking the court to order the company be dissolved and assets sold.

The stipulation called for the principals' attorneys, Mark Block for Stephen Seder and Paul Geraghty representing Walter Seder, be appointed “custodians” of Shetucket Iron & Metal's assets, that they obtain a property appraisal and “dispose of all of the assets of the corporation by public sale.”

A second stipulated agreement, also filed on June 28, asked the court to order a partition of the real estate by sale.

The agreement lists percentages of ownership, with Walter and his estranged wife, Marlene, owning 50 percent, and three of Edward Seder's children — sons Stephen and Michael and daughter, Joan — owning 16.66 percent each.

But the proposed agreements could be thwarted by new motions recently filed. 

Marlene Seder is asking the court to “vacate” the stipulated agreements, because the company assets are part of a pending divorce proceeding. She objected to a provision that would allow Walter Seder to purchase the company assets at the appraised value if he wished.

On Wednesday, Stephen Seder filed a motion seeking a contempt of court order against Walter Seder, alleging that Walter Seder continued to operate the company and refused to turn over its keys and financial books to the two custodian attorneys.

“At this point in time, the prompt appointment of a third party receiver to take control of the assets and wind up the affairs of the company is necessary,” Stephen Seder's contempt motion stated.

Both Walter Seder and Stephen Seder declined to comment on the lawsuits last week.

Reached at the Shetucket phone number, Walter Seder confirmed that the business is closed “after 97 years in business.” He called it the oldest family-owned business in Norwich.

Their attorneys likewise declined to comment substantially on the disputes.

Geraghty, representing Walter Seder, said the sharp drop in the scrap metal market, which hurt the company's finances, exacerbated the long-standing dispute between Walter and Stephen Seder.

“It's unfortunate that a business that has been going on that long is discontinuing,” Geraghty said. “The scrap metal market has been going through the floor, so it's difficult to compete.”

“It's unfortunate, but the business is going to be dissolved,” Block said.

City lukewarm on property

Over the years, the Seders have made overtures to the city to sell the waterfront property either for a public park, boat launch or waterfront development.

But high price tags, the cost of relocating the business and the specter of a steep environmental cleanup bill ended discussions.

In 2003, the city commissioned an environmental study of the scrapyard property by GEI Consultants Inc. of Colchester.

The 1-inch thick report on file at the city planning office gives the history of the New Wharf Road property — a lumberyard for about 70 years before the scrapyard moved there in the early 1960s — and an assessment of existing contamination.

According to the summary, ground contamination was detected “from the 0 to 2-foot interval generally throughout the site.” Contamination is more extensive in a vehicle service area, up to 6 feet deep, the report said.

The report does not provide cleanup costs.

Mayor Deberey Hinchey said other obstacles, including the steep access road and railroad crossing and the swift water currents in the area at the mouth of the Shetucket River, would make a boat launch difficult there.

“I wouldn't say that the city is not interested,” Hinchey said. “We're always interested in securing the waterfront and seeing what we can do to enhance it."

"The issue for me is what can we do with it? What are the economic development implications? I wouldn't totally close the door, but there's environmental issues, and there's legal issues," she said. "Before you even start thinking about that property, you've got to deal with the railroad. The access road is difficult. Right now, it's not something I'd be willing to take on.”

Shetucket Iron & Metal owes approximately $170,000 in back property taxes, city Corporation Counsel Michael Driscoll said, and the city has filed a foreclosure suit also in New London Superior Court.

Driscoll said the city is monitoring the legal disputes because of the taxes owed.

People's Bank, Chelsea Groton Bank and American Express also have filed suit against Shetucket and its principals for defaulted mortgages and credit accounts.

Stephen Seder said in one court filing that he presented an offer by Connecticut Scrap LLC to purchase Shetucket Iron & Metal that he claimed “would have provided sufficient revenue to pay all outside creditors of Shetucket Iron & Metal Company.”

Walter Seder admitted he rejected the offer.

According to the various lawsuits and counterclaims, Stephen Seder accused Walter Seder of “hijacking” the company, taking sole control of operations and finances, creating a second company, Thames Holding Co. LLC, to deposit company revenue and pay bills out of reach of Stephen Seder.

Walter Seder countered that Stephen Seder allegedly misappropriated company funds, used funds for personal expenses and failed to pay bills.

Walter Seder claimed he used his own personal funds to pay company debts. He also argued that Stephen Seder announced during a meeting that he was “retiring” and left the meeting.

No court hearings are scheduled in the various cases — some of which have been consolidated.

Attorney Block on Wednesday filed a request seeking a court argument on the motion by Marlene Seder to cancel the stipulated agreement to dissolve the company and sell the assets.

“Issues are too complex for presentation in written form and may require testimony of the parties and documents to be presented in evidence,” Block wrote.

c.bessette@theday.com