Ruth’s Chris verdict reversed by appeals court

ASPEN – The Colorado Court of Appeals on Thursday reversed a district judge’s ruling that the owners of the former Ruth’s Chris Steakhouse in Aspen must pay $35,412 a month in rent for a lease that doesn’t expire until 2016.The appellate court’s ruling means the case will go back to Pitkin County District Court, where a trial held in July 2009 resulted in Judge Denise Lynch siding with master-lease holder Galena Corner LLC, controlled by Aspen firm M & W Properties.The Ruth’s Chris franchise signed a 10-year lease in Aspen in 2006, opening its doors in 2007 under the ownership of Colorado Steakhouse LLC. It occupied the old Guido’s Inn space, located at the corner of Cooper Avenue and Galena Street. The spot is now occupied by Casa Tua Aspen, a private club. Aspen attorney Matthew Ferguson of Garfield & Hecht said he was surprised by the ruling. Ferguson represented Galena Corner LLC at the 2009 trial, where the issue was whether Ruth’s Chris’ lease allowed 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. Management at Ruth’s Chris discovered Royal Street was using the disputed space in April 2007, prompting Colorado Steakhouse to sue its landlord.A judgment in the favor of Colorado Steakhouse would have freed it up from paying the remaining seven-plus years on its lease. The restaurant also sought $157,657 in damages for what it alleged it overpaid in rent. But Judge Lynch ruled in the landlord’s favor.The Court of Appeals, however, determined that Lynch erred when she ruled the lease for the space was ambiguous and sided with Galena Corner LLC. The appellate court determined that the lease said that Ruth’s Chris had “exclusive use of the north facing patio.” Even so, Ferguson said the lawsuit was filed by Ruth’s Chris simply as a strategy to get out of its lease. At trial, Colorado Steakhouse principal Tom Becnel testified the restaurant lost more than $1 million in 2007 and an estimated $700,000 in 2008.In October 2009, two weeks after Lynch delivered her ruling, the restaurant closed its doors. “We’re disappointed in the Court of Appeals’ decision given the amount of evidence shown at trial,” Ferguson said. “This [lawsuit] was a business ploy to get out of the lease free.”Ferguson said that depending on what the trial court does, “we will certainly look at an appeal to the Supreme Court. We’re surprised by the decision and we disagree with it.”Denver attorney Kathryn Hopping, who represents Colorado Steakhouse, said, “We’re pleased with the results. We feel it has completely vindicated our client’s position.”rcarroll@aspentimes.com