Seal Beach is suing Ruby’s Diner, Inc., for breach of contract over the maintenance of the restaurant space at the end of the city pier.
The lawsuit, which was filed on March 29, is the latest twist in the story of Ruby’s versus Seal Beach.
Tad Belshe, a representative of Ruby’s Diner, Inc., said that the company doesn’t usually comment about lawsuits in progress.
However, he also said that Seal Beach claims Ruby’s did not fulfill its obligations under the lease for the pier space. Ruby’s officials, however, maintain they have fulfilled their obligations under the lease.
Seal Beach issues statement on lawsuit
Seal Beach issued a press release about the lawsuit on Tuesday, April 23.
“On March 29, 2013, the City of Seal Beach filed a lawsuit against Ruby’s Inc. to recover $570,000 for upgrades, repairs, and maintenance Ruby’s failed to do on the Pier as required by the terms of its lease,” said the press release. “The City’s lease with Ruby’s, a long-time restaurant operator on the Pier, recently ended and the City filed suit because its attempts to recover the funds from Ruby’s for the upgrades and maintenance were unsuccessful.”
According to City Manager Jill Ingram, Seal Beach turns to litigation only as a last resort, and only after the city’s attempts to resolve the matter without going to court had failed.
“The City had an agreement with Ruby’s and we expected them to do what they promised,” Ingram said. “We don’t think the residents of Seal Beach should foot the bill for more than half-a-million dollars in upgrades and maintenance that Ruby’s signed a contract and said they would do.”
In addition to the $400,000 Seal Beach has accused Ruby’s Diner, Inc., of failing to make, the complaint also alleges that Ruby’s failed to do regular maintenance and upkeep on the pier.
Seal Beach has put those those accumulated costs total $170,000.
Seal Beach is now assessing the condition of the property for health and safety reasons, according to Tuesday’s press release.
According to Seal Beach, the building will not be ready for occupancy until after the city completes its assessment.
Art Haack, president and CEO of Christy Food Service, which has submitted a proposal to bring a Ruby’s franchise restaurant back to the pier, was apparently undaunted by the news of the lawsuit.
“Christy Food Service Corporation is an independent company,” Haack said. “I was invited into the ‘RFP’ (request for proposal) process and participated in the process as an independent company. It is my proposal to the city of Seal Beach and I’m so hopeful the city officials will like what my company, Christy Food Service, is offering,” Haack said.
Belshe said the lawsuit and the Christy Food Service proposal were two distinct issues.
Belshe said one is a discussion about a lease and the other is about a franchisee wanting to be back on the pier.
Haack was general manager of the Seal Beach Ruby’s Diner that was on the pier until it closed in January.
Belshe said that even if the restaurant in question were a Ruby’s corporation-owned restaurant, rather than a franchise, he would want to see a Ruby’s Diner return to the pier.
Haack has submitted the only proposal to bring a family restaurant to the pier space. Seal Beach officials wanted five proposals.
The deadline for proposals was extended once. Christy Food Service withdrew its submission following the extension, and then resubmitted a revised proposal.
Seal Beach Community Development Director Jim Basham said on Monday, April 22, that no decision had been made on whether to extend the deadline again.
As for the breach lawsuit, the dispute is over whether Ruby’s made improvements to the property.
Ruby’s lease with the city expired last year.
Under the lease, Ruby’s could continue in the location while negotiations took place, but Ruby’s would have to pay 150 percent of the rent.
Negotiations between Ruby’s Diner, Inc., and city representatives apparently broke down.
Citing the city’s plans to request proposals for the pier space, Ruby’s formally notified the city in a December 2012 letter that they were leaving in 30 days.
The diner closed its doors on Jan. 6.Two days before that, on Jan. 4, 2013, Seal Beach sent a notice of breach of contract letter to Dough Cavanaugh, president and CEO of Ruby’s Diner.
The notice of breach included a demand that Ruby’s pay $400,000 for improvements that Seal Beach officials say were never made, including improvements to the restrooms.
The deadline for the payment passed.
In February, at a public discussion, District One Councilwoman Ellery Deaton said Ruby’s corporate decided not to extend the lease.
She said the restaurant was supposed to install an outdoor dining area and indoor restrooms, neither of which was done.
The Seal Beach Ruby’s did at one time request a conditional use permit to add outdoor dining to the restaurant site. The Planning Commission granted the permit. Three years later, the permit expired. Ruby’s requested an extension and it was granted.
Deaton was a member of the Planning Commission when the extension was granted.
The City Council discussed the Ruby’s lawsuit in closed session prior to the regular Monday, April 22 council meeting.
The city e-mailed the Sun a statement Tuesday, April 23, but it arrived too late to be included in the print edition.
