At any other American restaurant, legal wrangling over a $235,000 contract dispute would be unlikely to elicit the attention of a city?s high society. But a pending case in Orleans Parish Civil District Court is now the subject of whispered conversations, sometimes over lunch at the very restaurant in question.
Galatoire?s, the storied 107-year-old institution of the city?s Carnival class, and its shuttered bistro in Baton Rouge are at the heart of civil trial that began last week before Civil District Court Judge Kern Reese.
?It?s a classic New Orleans food fight,? said F. Brobson Lutz Jr., a New Orleans doctor and regular among of the restaurant?s high-brow lunch crowd. ?Legal food fights, especially involving money, are a long-time spectator sport in New Orleans.?
Titled Galatoire?s Restaurant LLC versus Melvin Rodrigue, the suit pits the restaurant?s former owners against Rodrigue, their former employee and the eatery?s current president and chief operating officer.
Galatoire?s LLC, which sold the restaurants in 2009, sued Rodrigue over $234,927 it claims he owes from their joint investment in Galatoire?s now-shuttered Bistro in Baton Rouge.
Galatoire?s Birsto opened on Perkins Road on the outskirts of Baton Rouge in December 2005, just after Hurricane Katrina and a month before the iconic French Quarter location reopened.
Galatoire?s and Rodrigue took out bank loans for $1.38 million and split the start-up costs ? with Galatoire?s on the hook for 85 percent and Rodrigue in for 15 percent.
Opening the restaurant was a controversial decision. Months before Hurricane Katrina, the members of Galatoires LLC ? more than 30 descendants founder Jean Galatoire ? voted against it.
After the storm, a smaller group, the Board of Managers, decided in favor ? figuring that the French Quarter restaurant might be closed for a significant period of time, according to court records. To recoup lost profits and retain the restaurant?s famously loyal wait staff, the Board decided to proceed with the Baton Rouge plans, Rodrigue?s lawyer, P.J. Stakelum said.
Galatoire?s lawyer, Paul Bullington, declined to comment on pending litigation.
The Baton Rouge bistro bugged Galatorie?s well-heeled clientele, who worried it might prove a distraction and stall the renovations of the beloved French Quarter location. That did not happen, and the Baton Rouge bistro was, at first, successful.
But the city?s post-Katrina population surge began receding as families moved back to New Orleans. And the bistro?s location, far from the heart of the city, proved difficult.
The group took out more bank loans ? several hundred thousand ? to stay afloat, Stakelum said. Those were split between Galatoire?s and Rodrigue as well, only Galatorie?s was in for 70 percent and Rodrigue in for 30. The Baton Rouge restaurant trudged along.
Then in late 2008, the Galatoire?s lunch crowd was captivated by another rumor ? that after 104 years in the Galatoire family, the owners were looking to sell.
Rodrigue began organizing a group of investors to purchase both restaurants and the building housing the one on Bourbon Street.
Meanwhile, in September 2008, Galatoires Restaurant LLC and Rodrigue signed the contract at the center of the pending lawsuit.
The agreement split their debt: Up to $1.38 million, the original start-up costs, Galatoires would pay back 85 percent and Rodrigue would take 15 percent. Any debt above $1.38 million would be split, 70-30, between them.
In October 2008, Rodrigue?s investment group called Bourbon Investments, of which he was a member, offered $6 million for the restaurant and another $5 million for the Bourbon Street property, about $3 million than the appraised value.
His understanding was that the buyer would take on his portion of the debt, his attorney said.
But the deal deadlocked over protests from several of the family owners, miffed by Rodrigue?s involvement in the group. Acting as the chief operating officer while leading the investment group seeking to acquire is akin to ?the fox guarding the henhouse,? one said, suggesting he had the potential to run the restaurant down so he could later buy it.
In the end, in December 2009, Jefferson Parish business and then-mayoral candidate John Georges partnered with Destrehan business Todd Trosclair to buy both restaurants along with the building in the French Quarter for an undisclosed sum. Several Galatoire?s descendants remained partial owners.
To facilitate the sale, Galatoire?s paid the debt owed from the Baton Rouge bistro, including Rodrigue?s share.
The group filed the lawsuit against him in December 2010, claiming he owes them $235,000 ? the total of his 15 percent investment in the start-up loans, and 30 percent investment in the loans to keep the failing restaurant afloat.
Rodrigue claims, though, that he understood that the buyers would take on his portion of the debt. The original group he?d coordinated had agreed to do so, his lawyer said, and his assumption was that Galatoire?s should have billed the eventual buyer for his chunk.
The Baton Rouge bistro, meanwhile, closed in 2011, with promised to reopen in a location closer to downtown. The new restaurant broke ground in May at the Acadian Village Shopping Center with plans to open by the holiday season. The opening was delayed until next month, according to a report this week in the Baton Rouge Business Report.
Stakelum has suggested at the trial that began last week that lawsuit isn?t about money, rather it?s a vendetta against Rodrigue for the failed Baton Rouge bistro, which some blame for forcing the Galatoires to sell.
The trial is not scheduled to resume until Jan. 31.
Source: http://www.nola.com/dining/index.ssf/2012/12/legal_fight_over_failed_galato.html
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