A new restaurant scheduled to open at Goleta Beach has been delayed because of extensive building renovations, and now, the business is at the center of a lawsuit filed against its operators.
The Santa Barbara County Board of Supervisors first signed off on the new restaurant at 5905 Sandspit Road — which is county property — last October after the closure of the building’s former occupant, The Beachside Bar-Café, in early 2021.
However, in April, SeaLegs and PRJKT Concessions Inc. owner Alicia Whitney filed a lawsuit against Khashen and Dies alleging breach of contract and fraud related to the Goleta Beach concessionaire contract.
PRJKT operates seven restaurants in Huntington Beach.
According to Whitney’s attorney, John Thyne III, Whitney prepared the response to the county’s request for proposals for concessionaires at the Goleta Beach location, under the agreement that Khashen and Dies would pay a licensing fee of 6% of gross sales.
“The promise of a licensing agreement is why [Whitney] spent so much time, energy and money to win the contract for concession at Goleta Beach, beating out some great local operators, including Brophy Bros.,” Thyne said. “She did a lot of work and put her reputation on the line.”
Khashen and Dies allegedly never signed a licensing agreement with Whitney, according to the lawsuit, and later changed the name of the restaurant to The Ellwood and removed SeaLegs branding.
“In response to her request (for a licensing agreement), (Khashen) presented a bare bones licensing agreement for 6% of gross sales that he found online,” Thyne said. “(Whitney’s) attorney in Orange County, Sunil Brahmbhatt, presented a more appropriate licensing agreement that (Khashen and Dies) ignored for months until they eventually told (Whitney) that they would not sign it and would instead open a different restaurant at Goleta Beach called ‘Ellwood.’”
According to the lawsuit, Khashen and Dies have not communicated with Whitney about the licensing agreement since January, after they informed her of the name change and Whitney discovered that Khashen had signed the Concession Agreement with the county as the CEO of PRJKT Restaurant Group — which Whitney is actually CEO of — and PRJKT SB, Inc.
“The Ellwood name itself came from one of the founding members of the Goleta community, Ellwood Cooper,” Khashen told Noozhawk about the name change. “We also pay homage to the historical Ellwood Queen tree with our logo.”
The lawsuit filed in Santa Barbara County Superior Court alleges breach of contract, fraud, constructive fraud, breach of fiduciary duty and misappropriation of trade secrets.
Khashen and Dies’ attorney, Van Nuys-based Adam Rapaport, has since filed a demurrer to the complaint that says Whitney’s claims are insufficient, uncertain or vague, particularly since any agreements were only oral contracts.
“In regard to recent litigation that has been filed, we want to make it clear that we emphatically disagree with the blasphemous claims brought by my former business partner in Orange County,” Khashen said. “We are confident that a fair resolution will eventually be reached, and we are looking forward to putting the matter behind us so we can give the Goleta/Santa Barbara community this gathering place they deserve.”
A hearing addressing the demurrer was held on Monday, where a judge ruled that the breach of fiduciary duty claim is viable but that the rest of the claims would need to be amended.
“We will decide soon whether to file an amended complaint with the original claims or to focus on the breach of fiduciary duty claim,” Thyne told Noozhawk.
Santa Barbara County is not involved with the lawsuit, and county parks supervisor Jeff Lindgren said the lawsuit is not impacting construction work on the restaurant building.
“The building is getting a new roof, new sewer line, new restrooms, and being almost completely rebuilt,” Lindgren said. “The current timeline to open is January 2023.”
The county is helping with renovations, which have become greater than originally planned.
In June, Khashen told Noozhawk that there was more significant structural damage to the building than expected, given that it is an 80-year-old building.
“It’s important to us that the public understands that this legal matter has not contributed to our delayed opening, which is solely due to supply chain construction issues, and we are moving forward with the project as planned,” Khashen said. “We are confident The Ellwood will be a glowing reflection of the very special Goleta and Santa Barbara communities and look forward to serving its members for decades to come.”