Owners of High Sierra Grill, a restaurant and bar at the Santa Barbara Municipal Airport from 2015 until 2019, filed a claim for damages against the City of Santa Barbara alleging the City constituted numerous contractual breaches resulting in substantial financial losses.
High Sierra Grill had a 10-year lease with the City, with options to renew for three additional five-year terms. Under California law, the restaurant was allowed to assign its lease to a third party for the remainder of the lease term.
The restaurant owners repeatedly requested that the City approve an assignment of its lease to the restaurant’s manager, Warren Butler, and his company Flightline Restaurant. Butler intended to take over the restaurant lease, purchase High Sierra Grill’s assets and revamp the property into an airport-themed restaurant.
The City was aware that High Sierra Grill was struggling financially. The claim states that the City intentionally dragged its feet on approving the lease assignment to Flightline because it wanted to move forward with alternative plans for the restaurant site. “It could only repurpose the property if High Sierra Grill shut its doors,” says A. Barry Cappello, managing partner with Cappello & Noël LLP who represents High Sierra Grill as well as Flightline, which also filed a claim for damages against the City.
“He went out of his way to comply with everything the City asked of him. When he met all its demands, the City manufactured false pretexts to deny the assignment.”
“Warren Butler poured tens of thousands of dollars into the restaurant including managing it for several years awaiting City approval of the lease assignment,” says Cappello. “He went out of his way to comply with everything the City asked of him. When he met all its demands, the City manufactured false pretexts to deny the assignment. The High Sierra Grill owners lost thousands of dollars waiting for the City to approve the assignment to Butler. The City’s conduct was commercially unreasonable, a breach of contract and the covenant of good faith. It is liable for several million dollars in damages to both parties.”
Update: A complaint was filed against the City of Santa Barbara on December 11, 2019.
