High stakes in Ruth’s Chris Aspen trial as judge deliberates
ASPEN – The fate of Ruth’s Chris Steak House is now in the hands of a district judge, who will decide whether the struggling, upscale restaurant must remain committed to the seven years left on its downtown Aspen lease, which commands $35,412 a month. A three-day trial wrapped up Wednesday in Pitkin County District Court, where Ruth’s Chris was pitted against its landlord, Galena Corner LLC, in a dispute over outdoor dining at the old Guido’s Swiss Inn space, located at the corner of Cooper Avenue and Galena Street.The trial came after Colorado Steakhouse LLC, a subsidiary of Ruth’s Chris chain, sued Galena Corner LLC, controlled by the Aspen firm M & W Properties, for breach of contract in April 2008. The restaurant wants the court to terminate its lease because of the alleged breach of contract, which would free it up from paying the remaining seven-plus years on its lease, signed in September 2006.”It’s one of the biggest leases I’ve entered into in my life,” testified Tony Mazza, a partner with M & W Properties, which owns and manages a number of downtown Aspen properties, on Wednesday. M & W owns the master lease to the corner building, which is owned by Guidos Swiss Inn LTD Partners.District Judge Denise Lynch took the case under advisement, saying she expects to deliver a “quick” ruling. At issue is whether Ruth’s Chris’ lease allows it to use the north patio facing Cooper Avenue. At trial, attorneys for Ruth’s Chris argued that its lease entitled it to the patio, but its ground level neighbor, Royal Street Fine Art, used the spot to store some of its inventory. Ruth’s Chris management discovered Royal Street was using the disputed space in April 2007, prompting Colorado Steakhouse to sue a year later. In fact, the Ruth’s Chris lease said that it was allowed to use the patio in question. “[Ruth’s Chris] shall also have exclusive use of the north-facing patio at the Galena Street side of the building for outdoor dining,” reads the lease, a document on which Ruth’s Chris attorney Kathryn Hopping hinged her closing arguments. But, Aspen attorney Matt Ferguson argued, the lease was worded incorrectly because of a scrivener’s error. During the lease negotiations and up to the time that Ruth’s Chris opened on Jan. 17, 2007, operators of the restaurant were aware that the north patio was not for their use, Ferguson argued. Ferguson suggested that Ruth’s Chris operators, realizing the restaurant was not meeting its financial expectations, are trying to getting out of the lease by litigating over the patio. He said the plan was not hatched over night, but instead “evolved.””As this dispute festered it became clear the restaurant wasn’t doing well,” Ferguson said. He added: “This case is really is about getting out of the lease.”However, Hopping, as well as Tom Becnel – a Ruth’s Chris principal, Florida developer and part-time Snowmass resident – said the wording of the lease was clear about use of the north patio. “The inclusion of the north patio was of utmost importance” to Ruth’s Chris business, Hopping said, citing the “visibility and free advertising” the outdoor dining deck would bring to the eatery.Hopping conceded that the restaurant has fell shy of Becnel’s expectations. Indeed, Mazza testified that Becnel, after investing $1.5 million into the location’s renovation, envisioned Ruth’s Chris drawing between $5 million and $5.5 million annually. According to testimony, the restaurant lost more than $1 million in 2007, and an estimated $700,000 in 2008.Still, Hopping argued that even though the wording of the lease was clear and was signed by all parties involved, the landlords forbid Ruth’s Chris to use the patio. “The defendants say [Ruth’s Chris] used this elaborate ruse to avoid obligations of the lease because the restaurant is doing poorly,” she said. “It’s not true … This lease was negligently drafted and executed by Mr. Mazza. The defendants must bear the burden of that mistake.”In addition to having its lease terminated because of the alleged breach of contract, Colorado Steakhouse also is seeking $151,000 in email@example.com
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