Lawsuit has cost city and restaurant owner thousands
The owner of a local restaurant kicked off the Santa Monica Pier to make way for a chain eatery has dropped her $50 million lawsuit against City Hall.
Boathouse owner Naia Sheffield in 2001 sued both City Hall and the Pier Restoration Corp., claiming her restaurant was unfairly evicted from the pier to make way for Bubba Gump Shrimp.
After countless hours and thousands of dollars spent, Sheffield realized earlier this year that it was too expensive to fight City Hall.
“They exhausted all of my money,” she said, referring questions to her attorney, Kelly Bixby. “I’m not supposed to talk about it.”
Bixby couldn’t be reached for comment.
Deputy City Attorney Tony Serritella said Sheffield had offered to withdraw the lawsuit if City Hall would drop its claims for attorney fees amounting close to $29,000 and back rent of $38,000.
Santa Monica Superior Court Judge Diana Wheatley in 2002 ordered Sheffield to pay the fees and rent. But Sheffield appealed to Los Angeles Superior Court before recently dropping the appeal.
The suit alleged that the city and the PRC, which handles leases on the pier, reneged on a 25-year lease Sheffield negotiated in 1993. The Boathouse, a 50-year-old restaurant on the pier, closed its doors permanently in April of 2002, after the Los Angeles County Sheriff’s deputies changed the locks on Sheffield’s family restaurant as part of a court-ordered eviction levied by City Hall.
The city, which owns the pier, canceled its month-to-month lease with the Boathouse in July 2001 to make way for movie-themed chain restaurant Bubba Gump Shrimp, which is expected to open next year.
Sheffield claims she was forced to enter into the monthly 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, but the terms of the longer, negotiated lease would be honored.
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. It said the Boathouse would be included in that selection process.
The PRC solicited bids from other restaurants — a process from which Sheffield claims she was bypassed. Sheffield persisted, proposing a $2 million renovation of the restaurant which would have had a theme of the famous Route 66 transnational highway. The highway once ended at the pier.
But the PRC frowned upon other aspects of Sheffield’s theme — specifically the historical perspective of the American Indian motorcycle, similar to what is on display at the Guggenhiem Museum today.
So the lease went to Bubba Gump. Its 25-year lease with the city was supposed to begin on Oct. 1, 2001. Bubba Gump originally planned to open its restaurant last spring, but city officials blame Sheffield and the Boathouse for delaying those plans.
“They held up the whole finalization of turning possession over to Bubba Gump close to a year or more,” Serritella said. “It was a lot of legal maneuvering to get the city in the proper posture for possession.”
Sheffield originally filed the suit in federal court, claiming her civil rights were violated. She also claimed that City Hall had broken its promise — breach of contract. A judge tossed out the civil rights argument but allowed the breach of contract case to stand. The suit then moved to Superior Court, where it became an eviction case pitting City Hall against the Boathouse. But the court hearing such evictions has a $25,000 monetary claim limit.
Serritella estimates that attorney fees were closer to $50,000 but City Hall only sought half of that amount so the case wouldn’t be delayed by moving to another court which could hear claims for over $25,000. He added that City Hall lost much more than the cost of attorney fees and back rent. The PRC had to hire its own attorney and pay higher insurance premiums, he said, adding that City Hall is out several months of rent it could have had if Bubba Gump had moved in on time.
It now appears after hundreds of hours spent on the case — the file is close to five feet thick — both sides decided to cut their losses.
“The city of course is pleased that the Boathouse litigation has finally been resolved and Bubba Gump is in possession of the property and going forward with their plans,” Serritella said.
The PRC has been criticized by many, including former Mayor Mike Feinstein, for engaging in behind-the-scenes political maneuvering for years. A controversial series of non-decisions by which the city refused to honor its own mandate to change the membership of the PRC may have led to the Boathouse’s demise.
The selection of Bubba Gump Shrimp seemed to contradict the PRC’s own leasing guidelines, which give preference to pier tenants that are locally-owned businesses. The guidelines indicate that chain restaurants aren’t preferred.
Originally published in the Santa Monica Daily Press print edition on September 12, 2003. Read the original PDF.