Seal Beach officials say Ruby’s Diner breached its contract with the city.
A representative of the restaurant chain said they did not breach the lease and that the chain is working on a proposal to put Ruby’s back on the pier.
On Friday, Jan. 4, the city of Seal Beach sent a “notice of breach” letter to Doug Cavanaugh, president and CEO of the Ruby’s Restaurant Group. The letter was signed by City Manager Jill Ingram.
“The city will conduct a detailed inspection after Ruby’s vacates the premises and will invoice Ruby’s for the cost of any maintenance and repair that has not occurred through the term of the lease as required by Section 10.1 of the Lease Agreement (‘Lease’),” Ingram wrote.
“We do not believe we are in breach of our lease agreement,” said Tad Belshe, a spokesman for Ruby’s Diner.
Ruby’s Diner left its location at the end of the Seal Beach Pier on Thursday, Jan. 10.
The diner was last open to the public on Sunday, Jan. 6.
The restaurant chain notified the city it was ending its rental agreement with Seal Beach on Dec. 10.
The lease agreement had expired in October and the iconic restaurant on the pier had been paying rent on a month-to-month basis while negotiations over a new lease continued.
The agreement included a 150 percent rent increase for the duration of the month-to-month arrangement.
In the “notice of breach,” the city is asking Ruby’s to spend $400,000 on improvements to the building that the company has just left.
“Please be further advised that pursuant to Section 9 of the Lease, Ruby’s remains obligated to provide $400,000.00 in improvements to the Premises in addition to any other unfulfilled obligations it has under the Lease,” Ingram wrote.
Belshe said the company believes it has made the improvements.
Ingram’s letter disputes that position.
“In response to the city’s requests, you asserted that Ruby’s had until the end of the Lease term to fulfill its obligations to improve and remodel the Premises,” she wrote.
“Now that Ruby’s has provided its notice to terminate the Lease, please remit $400,000 to the city no later than January 24, 2013 to compensate the city for Ruby’s failure to make the required improvements.”
However, Belshe said the company has performed the improvements.
“If you look at our lease, we have performed to what our lease required,” Belshe said.
He said Ruby’s Diner is working on a new proposal to the city.
“We hope to be back in Seal Beach,” Belshe said.
One of the reasons that Ruby’s CEO and President Doug Cavanaugh cited for ending the lease agreement was that Seal Beach had issued a request for proposals for the space on the pier.
“We understand that the city has decided to put the lease for the Seal Beach Pier out for RFP (requests for proposals,” wrote Cavanaugh in his Dec. 10 letter.
Assistant City Manager Sean Crumby recently said the city would like another family restaurant to go back in Ruby’s place.
He said the city has been contacted by “several” family restaurants.
