Facts

This case arises out of a restaurant equipment lease for the Yard House Denver location. Defendant Six Pack Holdings, LLC (Six Pack) was Yard House's financial partner on Denver and five other Yard House locations. In connection with the Denver location, Six Pack obtained an equipment lease for approximately $406,000 of restaurant equipment.

TriStar's initial lease documents did not include a provision permitting Six Pack to buy out of the lease early, which Six Pack required as part of the deal. Pursuant to Six Pack's request, TriStar forwarded Addendum A to Six Pack that provided such a right at a discounted stream of payments. After making payments on the lease for two years, Six Pack requested a payoff figure for the lease and was informed that TriStar expected an additional payment for the equipment's fair market value, which TriStar estimated to be forty percent of the equipment's cost, or approximately $160,000. Defendants ultimately tendered what they understood to be the Early Buyout Price, based on the discounted stream of payments owed. TriStar rejected the tender given its expectation that it was entitled to an additional payment for the equipment's fair market value.

Settlement Discussions

Before depositions and final trial preparations began, defendants made a 998 offer of the discounted stream of payments, plus $60,000. Plaintiff never responded to this offer, and never made any counteroffer. Parties attended an early Mandatory Settlement Conference, which was not successful.

Result

Judge Choate ruled in favor of defendants as to the complaint, as well as on their cross complaint, specifically finding that TriStar's President, Mike Sanchez, committed fraud in connection with Addendum A and what he concluded was Addendum A's deliberate ambiguity on the issue of fair market value. Defendants' motion for attorney's fees was granted, resulting in an award of $196,785.53 in attorney's fees, expert witness fees and costs.

Other Information

EXPERT TESTIMONY - Plaintiff sought to have Andrew Alper, Esq., a Los Angeles-based leasing attorney, testify as an expert on market conditions at the time of the execution of the lease, reasonable rate of return for such financing and other related matters. The court excluded such testimony as being largely irrelevant to construction of language of Addendum to lease, and duplicative of testimony obtained from TriStar's President. Defendants had retained Ken Goodman, a leasing expert with over thirty years in the leasing business, to testify as to the meaning of the Addendum, but Mr. Goodman did not testify in light of the Court's exclusion of Alper's proffered testimony.

Length

5 days