Four months after the High Sierra Grill closed its doors at the Santa Barbara Airport because the city of Santa Barbara wouldn’t allow a lease transfer to the Flightline Restaurant, the two businesses have filed complaints against the city.
“Flightline is informed and believes that the city and its employees engaged in resistance and delay tactics in order to pressure High Sierra Grill to the point where HSG would have to shut down business, so the city could take over and move forward with alternative plans for the airport,” wrote Attorney A. Barry Cappello, in a claim filed against the city on Nov. 25.
The complaints name Airport Director Henry Thompson, former Airport Director Hazel Johns, and business development manager Deanna Zachrisson
“Warren Butler poured tens of thousands of dollars into the restaurant including managing it for several years awaiting City approval of the lease assignment,” Cappello said in a statement. “He went out of his way to comply with everything the City asked of him. When he met all its demands, the City manufactured false pretexts to deny the assignment. The High Sierra Grill owners lost thousands of dollars waiting for the City to approve the assignment to Butler. The City’s conduct was commercially unreasonable, a breach of contract and the covenant of good faith. It is liable for several million dollars in damages to both parties.”
The complaints, which the city has 45 days to respond to, are a precursors to lawsuits that the law firm plans to file in Santa Barbara County Superior Court.
Zachrisson did not respond specifically to the claim, but told Noozhawk that the businesses have removed kitchen equipment, including condensers on the roof, “so it appears to us that they are not intending to re-open.”
“The city plans to issue a notice to pay back rent owed since July totaling nearly $70,000, or release possession of the restaurant so that we can lease it to another restaurateur,” Zachrisson said.
The saga began to unfold this past summer.
The claim states that High Sierra Grill brought Warren Butler in to manage the restaurant in 2017. Butler obtained financing to run the restaurant, and planned to turn it into an aviation-themed dining establishment.
The city of Santa Barbara, however, denied the lease transfer.
Butler is a veteran of several restaurant endeavors and has managed eateries such as Wolfgang Puck, Bubba Gump Shrimp Co. and Morton’s Steakhouse. Locally, he owned the Marmalade Cafe and Stateside Cafe.
He partnered with John Blankenship, a former U.S. Navy pilot who started the Pierre Claeyssens Veterans Foundation, to deck out the new restaurant with planes, photograms, helmets, masks and a variety of military aircraft memorabilia. Butler raised more than $500,000 to take over the lease
High Sierra was in the sixth year of a 10-year lease, with three five-year options to extend. The lease payments to the city are about $15,000 per month.
As originally reported in Noozhawk, the city declined to transfer the lease because Butler had an agreement to borrow the money from ACI Jet, a fixed-based operator that serves airports in San Luis Obispo, Orange County, Paso Robles and Oceano.
City officials were worried that ACI Jet wants to acquire the lease so that it would give itself a competitive advantage when the Santa Barbara Airport puts out a request in 2021 for proposals for new fixed-base operators.
The airport already has two FBOs — Signature Flight Support and Atlantic. According to the terms of then-proposed lease transfer, ACI Jet would receive 51 percent ownership of Flightline “if its investment appears to be in jeopardy.”
The complaint states that “the city’s conduct . . .constituted numerous contractual breaches and contract-related wrongs, including but not limited to: breach of the lease and/or breach of the covenant of good faith and fair dealing. It also alleges interference with Flightline’s contractual relations; inducing breach of contract, and interference with prospective economic relations.”
“Flightline has suffered damages, including but not limited to loss of the lease assignment and future profits. . . and other damages,” the complaint states. “Flightline is evaluating its damages and reserves the right to list further damages.”
As for High Sierra Grill, the complaint alleges “numerous contractual breaches and contract-related wrongs, including but not limited to: breach of the lease; breach of the covenant of good faith and fair dealing; failure of consideration, mistake, fraud and other actions allowing for rescission of the lease; interference with HSG’s contractual relations,” among other allegations.
— Noozhawk staff writer Joshua Molina can be reached at jmolina@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.
