Boathouse owner has no case, according to city
The owner of a Santa Monica Pier restaurant that was forcibly closed by the city has filed a $50 million lawsuit, claiming she was unfairly kicked out.
Boathouse owner Naia Sheffield filed the lawsuit Monday against the City of Santa Monica and the Pier Restoration Corp.
The suit alleges that the city and the PRC, which handles leases on the pier, reneged on a 25-year lease Sheffield negotiated in 1993.
Sheffield is demanding a jury trial, claiming breach of contract.
Deputy city attorney Tony Serritella said the city feels the Boathouse doesn’t have a case. That’s based on a ruling handed down by Santa Monica Superior Court Judge Diana Wheatley, who evicted the Boathouse.
“The city showed they never made such representations to the Boathouse,” Serritella said.
The Boathouse, which was a fixture on the pier for 50 years, closed its doors permanently April 15, after Los Angeles County Sheriff’s deputies changed the locks as part of the court-ordered eviction.
The city, which owns the pier, ended its month-to-month lease with the Boathouse last July to make way for movie-themed chain restaurant, Bubba Gump Shrimp.
Sheffield claims she was forced to enter into the month-to-month lease in 1998 to keep possession of the restaurant. But John Gilchrist, the PRC’s executive director in 1993, had offered Sheffield a 20-year lease with an option to renew for another 10 years, the suit claims.
For five years, Sheffield was assured that the delays were bureaucratic red tape by the PRC. However, the terms of the lease previously negotiated still stood, the suit claims.
“She honestly and faithfully believed what John Gilchrist and others told her,” said Kelly Bixby, the Boathouse’s attorney.
It wasn’t until June of 1998 that Sheffield was informed by the PRC that it was looking for other businesses to lease the space, though the Boathouse would be included in the selection process.
The PRC solicited bids from other restaurants — a process Sheffield claims she was left out of intentionally.
In an attempt to be part of the selection process, Sheffield provided a proposal that included a $2 million renovation of the restaurant, which would have used the famous Route 66 transnational highway as a theme. Route 66 used to end at the pier.
But the PRC frowned upon aspects of Sheffield’s theme — specifically the historical perspective of the American Indian motorcycle, similar to what currently is on display at the Guggenhiem Museum in Las Vegas.
The lease was awarded to Bubba Gump. Its 25-year lease with the city was supposed to begin on Oct. 1, 2001, which has financially harmed the city because Bubba Gump’s plans to open in the spring of 2003 have been delayed, city officials claim.
Bubba Gump is expected to pay $10,417 in base rent a month, plus $1,889 annually for common maintenance and 2.5 percent of the restaurant’s food, beverage and retail gross sales.
The Boathouse paid $5,429 in monthly rent; $168 for annual promotional fees and 8 percent of its gross revenues in excess of $688,088 in annual sales.
The PRC has been criticized by many, including Santa Monica Mayor Mike Feinstein, for engaging in behind-the-scenes political maneuvering.
The selection of Bubba Gump Shrimp seems to go against the PRC’s own leasing guidelines, which were approved last year. The guidelines specifically state that preference should be given to tenants on the pier that are locally-owned businesses. The guidelines say chain restaurants are not wanted.
Bixby said the claim for $50 million is calculated based on assumptions that the business could make $1 million annually during the 25-year lease. Also included in the figure is the current market value of the restaurant at that location and a return on any investment in the building. “$50 million is not a stretch of the imagination,” he said. “The most important is the inherent value of the building in and of itself.”
The suit filed Monday is similar to the one Sheffield filed in U.S. District Court. The case was dismissed in March because the statute of limitations had run out for some of the claims. But according to Bixby, the federal judge said the Boathouse may still have a case for the breach of contract claim.
Meanwhile, the city has filed a motion to recoup $24,479 in attorney fees relating to the eviction case, which was first filed by the city last July when Sheffield refused to leave.
Originally published in the Santa Monica Daily Press print edition on May 22, 2002. Read the original PDF.