The Harbor Restaurant owners are suing the City of Santa Barbara over allegedly unfair high rent, and the city’s attorneys filed a response in Superior Court essentially asking the judge to dismiss the case.

The city filed a demurrer on Jan. 12 contending that “the complaint is meritless and appears to be a thinly disguised attempt to gain leverage in renegotiating the lease.” 

Eugenio “Gene” Sanchez and Carolina Jimenez purchased the Stearns Wharf restaurant business, and Longboard’s Grill upstairs, in 2021. John and Olesya Thyne became co-owners in 2023. 

The building is owned and leased by the city, and the current lease was signed in 2002. 

In the lawsuit filed by John Thyne, who is also an attorney, the business accuses the city of “unconscionable” lease terms, and argues that economic conditions are “vastly different” now than when the lease was signed. 

The base rent is $36,000 per month plus a percentage of gross receipts: 10% if they’re less than $3 million for the year, or 11% if they’re more than that. 

Thyne argues that the calculated rent is more than 20% of gross receipts, which is unsustainable for a restaurant business. 

The court should reform the lease to make it “economically reasonable,” Thyne argues in the complaint. 

The city’s attorneys argue in court documents that “there is nothing unclear or vague about the lease terms.”

Jonathan Marshall of Slaughter, Reagan and Cole is representing the city in this case, along with the City Attorney’s Office.  

The civil complaint is “somewhat coy” that the plaintiff is not the entity that entered into the lease, but took it over in 2021, Marshall writes. 

The complaint casts blame at the city for allowing new restaurants to open that compete with The Harbor Restaurant, the COVID-19 pandemic, and not solving the issue of homelessness. 

Most of the “unforeseen developments” cited in the complaint — such as new restaurants and the pandemic — had happened by the time the owners purchased the business, Marshall said in his declaration. 

The Santa Barbara Harbor Restaurant Inc. group announced plans for a remodel in December 2023, and was closed for most of 2024 before reopening in September, according to previous Noozhawk reporting. 

The group invested more than $1 million in remodeling and doing building repairs, and the city did not share in the costs, Thyne wrote in the complaint. 

When the lawsuit was filed in December, city representatives said the allegations were “without merit” and that the city “intends to defend this matter vigorously.” 

“The city has not received required rent payments for several months and is pursuing its own legal remedies,” City Administrator Kelly McAdoo said at the time. “This property is a public asset, and the city has an affirmative obligation to manage it in a manner that serves the public interest, not solely the interests of any single tenant.”

In addition to unpaid rent to the city, the business did not pay property taxes for three years because of operational losses, Thyne wrote in court documents.

Santa Barbara County seized about $304,000 from the restaurant’s bank account in September and November 2025, and the owners had to pay payroll out of pocket, Thyne said. 

Santa Barbara City Attorney John Doimas has filed a demand for a jury trial and disqualification/challenge to the assigned judge on the case. 

It was reassigned from Judge Colleen Sterne to Judge Donna Geck of the Superior Court. 

A case management conference is scheduled for April 17, and a hearing on the demurrer is scheduled for May 15.