City taxpayers actually lost at least $750,000 because of the city’s refusal to assign a lease to the Flightline Restaurant to operate at Santa Barbara Airport, according to Flightline owner/restaurateur Warren Butler.
In addition to the $225,000 the city agreed to pay to settle a lawsuit Flightline filed against Santa Barbara, Mr. Butler said the city paid $250,000 to hire a Ventura attorney to represent it, and lost more than $250,000 in revenue/rent it could have earned had the restaurant been allowed to operate these past three years.
“They started the process and kept holding things up and delaying it by not assigning it” to Flightline, instead of acting in a ”quick, reasonable and timely manner and not trying to change the lease.”
Mr. Butler said he took over operating the then-High Sierra Grill in 2017 with plans to rename it to Flightline and change the concept to one that celebrated the city’s rich aviation history.
“The whole aviation community loved what we were doing,” he said. The city not only ended up losing money, he said, but cost residents “by what they took away from the community. We were going to be a gem, something special.”
Instead, the Flightline restaurant closed, and now sits in a dilapidated, unleasable condition, he said.
The city agreed to pay $225,000 to Flightline Restaurant as part of a Nov. 15 settlement agreement to avoid going to trial which included a mutual release from further litigation by either side,
The city agreed to settle after Superior Court Judge Donna Geck rejected the city’s request for a summary judgment against Flightline and instead said the case could go to trial.
“The city decided they wanted to settle and not go forward,” Mr. Butler said. “The bottom line is the judge ruled in our favor and said these guys have a legitimate case against the city and what they’ve done.”
This all began back on March 26, 2015 when High Sierra Grill entered into a lease agreement with the city to operate a restaurant at 512 Norman Firestone Road in Santa Barbara, the former site of the Elephant Bar restaurant. Plaintiffs Manuel Perales, Mario Medina, and Paul Ybarra executed personal guarantees for the restaurant.
The 10-year lease had three five-year extensions for a total of 25 years the restaurant could have operated. Mr. Butler contended the city could have reaped close to $1 million in revenue over that time period.
In 2018, the plaintiffs requested their lease be assigned to Flightline Restaurant.
But on or about Aug. 19, 2019, the city formally denied the request. As a result, High Sierra Grill closed the restaurant it was operating.
“They were not acting in good faith by going forward in terms of assigning the lease,” Mr. Butler said.
He said some city officials wanted instead to develop the side of the airport where the restaurant stood as part of the airport Master Plan.
“In the end they wanted to get out of it,” he said. “They tried every trick in the book. They delayed it for years and threw one curve after another.”
On or about Dec. 11, 2019, the plaintiffs filed a lawsuit against the city, alleging Breach of Written Lease, Breach of the Covenant of Good Faith and Fair Dealing, Interference with Contract, Intentional Interference with Prospective Economic Advantage, Interference with Contract, Intentional Interference with Prospective Economic advantage, and breach of the Covenant of Good Faith and Fair Dealing.
Then, on or about April 8, 2020, the city filed its cross-complaint for rent and
damages, seeking unpaid rent and other sums allegedly due.
The plaintiffs alleged the city acted unreasonably in denying its request to assign the lease to Flightline. The city denied it was being unreasonable.
The ensuing litigation and amended complaints lasted three years before the city agreed to settle the dispute.
“They had to settle because they knew what had been done was not legal and they were going to lose,” Mr. Butler said.