A fired supplier of peppers to Southern California Subway stores lost an appeal last month to overturn a judge’s order to pay $502,000 in damages in a case that began with leaky jars and loose lids.

A panel in 2nd Appellate District ruled that Indel Food Products Inc. could have done more to prevent leaks in its one-gallon glass jars, such as turning them over or buying a vacuum detector.

Indel, a Mexican pepper producer based in El Paso, Texas, had been supplying banana pepper rings and jalape & #324;os to local Subway stores under a 1999 agreement. Two local companies, L.A. Foods LLC and The Food Connection Inc., referred the business to Indel because they were too small to supply Subway’s growing demand for the peppers.

The two former suppliers had initially signed agreements with Indel that required the new supplier to pay them commissions while they served as resellers. After Subway insisted it would only deal with one supplier, Indel signed new agreements with the two companies to continue paying them commissions.

In late 1999, Subway began complaining that Indel deliveries were arriving late and in leaky containers. Meanwhile, L.A. Foods and The Food Connection sued Indel for unpaid commissions. As part of the lawsuit’s settlement agreement, Indel promised the two companies it would “make all capital improvements necessary to avoid termination” and “use its good faith best efforts to perform under the supply agreement” with Subway, court papers say.

Still, deliveries to half of Subway’s 55 distribution centers continued to be late. A group representing 800 Subway stores asked the chain to fire Indel as a supplier, which it did soon afterward.

In a second suit, L.A. Foods and The Food Connection claimed Indel breached the settlement agreement.

A Los Angeles judge granted both companies $502,000 in damages, attorneys’ fees and costs.