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Seal Beach Sues Ruby's Diner

The city alleges the Newport Beach-based business failed to maintain the building at the end of the pier and failed to do major promised renovations.

Seal Beach filed a lawsuit against Ruby’s Diner – the former operator of the now-shuttered restaurant at the end of the pier – accusing the business of leaving $570,000 worth of maintenance and renovations undone, according to court records.  

However, a Ruby’s Diner spokesman said the eatery worked well with the city and followed their contracts to the letter.

Ruby's Diner, which first opened at the end of the pier in 1987, shut down in January. Some residents were crestfallen, and, more recently, the former general manager filed paperwork in the hopes of re-opening the business as a franchise.

According to the complaint filed by Seal Beach’s City Attorney, Ruby’s agreed to make $400,000 worth of improvements to the site in its 2002 lease. However, in a section titled “The Remodel that Never Happened,” City Attorney Quinn Barrow alleges the renovations weren’t done.

He goes on to say that Ruby’s cost the city $170,000 worth of work because it “failed to performed the necessary maintenance to the facility.”

Tad Belshe, Ruby's executive vice president of operations, disagrees.

“The city has stated that they believe we have not fulfilled the obligation of the lease, and we believe we have,“ said Tad Belshe Ruby’s executive vice president of operations.  “We have had our (legal) counsel review the lease and believe we have fulfilled the obligation of the lease, so there’s a difference opinion here."

 “We maintained the building. We did all sorts of different repairs,” Belshe added. “Someone one on the city's side believes the language (of the contract) is stating one thing, and our full belief is that it's another."

City staff and City Council members did not return calls for comment late Friday evening.

According to court records, the city filed the original suit in March 29.  

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Diane April 20, 2013 at 04:24 AM
Wow, maybe the City doesn't realize the hardship and cost of maintaining a restaurant on a Pier. And really the City has no room to talk regarding the Pier itself. Just a few weeks back I decided to take a walk on this Pier, and it was the filthiest Pier I have ever seen. Not like the Huntington Beach Pier, where I see them cleaning daily, due to the mess all the birds create. Cut Ruby's some slack.
M. Michaelsen April 20, 2013 at 04:29 AM
The city management should be ashamed of itself. This is absurd. Do you really think you will prevail? Your leadership is a train wreck and the proof is in the fact that no one has applied for the space and you have no idea what else to do. Embarrassing at a minimum.
Earick Ward April 20, 2013 at 02:32 PM
Good grief!
Dr. Zillman April 20, 2013 at 03:54 PM
As a 20 year resident of old town Seal Beach, I can say that the Ruby's building appeared to be in a continual state of deterioration. So much so, that at one point the window glass was actually falling out of the window frames. At some point the owners were forced to replace them. We always wondered as to why a franchise would leave a premiere location in such a state of continual disrepair. Perhaps the restaurant was not doing well, and they were on the fence as far as renovating it. But unless you can see the books, you are only speculating. Conventional logic would tell you that if it was doing as great as some say, they would have renovated the building on a fast track. Something doesn't add up here, and we do not have all the facts.
Shelly G April 20, 2013 at 04:30 PM
@ Dr. Zillman, I for one will state that Ruy's did many improvements to their restaurant. They replaced windows, light fixtures, wood all around the building, booths, chair legs, chair bottoms, vent hoods, wall repairs, they improved the restrooms, including but not limited to installing custom ordered mirrors for the restrooms even when they knew they were closing. The building was not in decay. It was and is by no means in new condition, but a continual state of deterioration, please be more specific. The City is grasping here. No other bids and they don't want Ruby's. The application process was extended, no other bids in except Rubys, now there's talk of extending the application process again. What does this tell you! Please tell me how hard the city really worked with Ruby's to keep them here. I would like to hear that one.
Shelly G April 20, 2013 at 04:35 PM
Oh and by the way, Ruby's submitted proposals for improvements to be approved that were never approved. In addition, their lease was up and they were in negotiations. It I was a Restaurant owner, I for one would not put $400,000 (if true) worth of improvements into a building I was being forced to move out of.
Dr. Zillman April 20, 2013 at 04:42 PM
"The building was not in decay." It depends on one's definition of "decay." Have you been to other Ruby's franchises? Huntington Beach pier location? I am in complete support of a Ruby's or other restaurant on our pier, but the items you listed have little to do with the exterior's appearance. The City has what I would describe as a "cocky" attitude about replacing Ruby's. Still waiting for the flood of applicants that haven't materialized. Again, something doesn't add up.
enea ostrich April 20, 2013 at 06:06 PM
I know one thing about cities--they need revenue. Fact: Seal Beach is losing each day no one is interested--that's not the fault of the applicant for the Pier. One thing I know about business--it's shrewd and unrewarding on piers, especially in storms. If someone is willing to stay in business and actually puts lots of money into it "before" they are closed, that says something important and worth looking into if you are in dispute about more improvements. I have been to Ruby's in the past year before the closing and I never felt threatened health wise--never felt threatened that the building was going to come down on me. Now City Hall itself--it has several violations in code--perhaps? Dear, dear Seal Beach--take care of your own back yard before you nit pick on businesses. The best damn lawyer in the world will not recover your bad publicity on this--just won't.
Shelly G April 20, 2013 at 06:19 PM
I agree with you and perhaps the other Ruby's had/has more support from The City of Huntington Beach than our Ruby's had from our city. Both Piers sustained damage in 1983. So I would imagine the building are about the same age. I do agree that something is fishy and doesn't add up. I just know what Ruby's has done and some of what was proposed. They have really tried and submitted proposal after proposal including proposals for improvements. I still believe that The City has stalled this and has a grudge of some sorts. In the Sun Newspaper's, Charles Kelly in all his writings regarding Ruby's kept stating they broke their lease. This is not true at all. Ruby's lease expired and they operated for months on a month to month basis and at a very high increased rent. They gave proper notice when negotiations broke down. They also left the place clean as they were hoping to re-open.
Shelly G April 20, 2013 at 07:18 PM
I agree and maybe if our wonderful business friendly City offered a share of the improvements for that end of the pier and the building, we would be back in business and all parties would prevail in the end! Just a thought...
CDC April 20, 2013 at 08:54 PM
$570,000 LOL!!!! That crrapyy little salt box of a building can be rebuilt for half that! As usual the city of Seal Beach is fishing for more money to line their pockets with. A VERY business unfriendly and racist city from what the local businesses have told me. The people living inside the borders of Seal Beach need to vote themselves a new city counsel ASAP! Look at Rossmoor, they get zero money from the new HUGE shopping center taxes that Seal Beach stole from us, yet Rossmoor runs a super tight budget and is in the black. Seal Beach spends money like a drunken sailor and is constantly in the red. Where does all that tax money go?????? People in Seal Beach need to throw their crooked officials out.
CDC April 20, 2013 at 09:00 PM
"Ruby's building appeared to be in a continual state of deterioration" Salt air will do that to any building super fast.
CDC April 20, 2013 at 09:12 PM
I would love to see the $170,000 worth of bills. This scam alone is enough to fire the city counsel. Somebody is padding their pockets or contracting to friends at insane prices. I could replace all windows with plastic frames and double pane glass, new door frames/doors, and paint the place for one eighth of that price!!!! Has the city of Seal Beach heard of Home Depot or Lowes???? Who are they subcontracting this maintenance work? The ex-mayor of Bell?
CDC April 20, 2013 at 09:32 PM
Hey Seal Beach City Council, you need to hire this guy for 10,000 bucks. At $170,000, that is 17 makeovers! http://www.foodnetwork.com/restaurant-impossible/index.html
BG Stine April 20, 2013 at 10:02 PM
This smells of city officials covering their asses. Someone in city hall figured restaurants would be beating down its door to get that location. Then crickets, nada, bupkiss. Extend the RFP deadline. Still crickets, nada, bupkiss. Still only one person wants YOUR pier. So to save face the City sues Ruby's. Best defense is an offense right? Lawsuits: what a great way to get other restaurateurs excited about working with the City of Seal Beach! Yea, I'd want to invest start-up fees, construction costs, exorbitant City fees to work day to day with these bimbos. Face it City Hall, YOU screwed up. Get rid of that genius who thought the grass was going to be greener with someone new in this economy, drop the lawsuit (which you only filed as a bargaining chip) and give Ruby's - a local favorite - back to us the residents of Seal Beach, YOUR bosses!!!
enea ostrich April 21, 2013 at 01:31 AM
Yes, the factor if what residents think seems to bypass city talk. If this hadn't been followed exclusively by Charles who I respect, I wouldn't even raise an eyebrow on this article.
Shelly G April 21, 2013 at 04:21 AM
Well Said!
M. Michaelsen April 21, 2013 at 12:50 PM
+1. Well said.
BG Stine April 21, 2013 at 01:41 PM
Without some type of shuttle, any restaurant at the end of the pier will be watching dollars slip into the sea. One third of Seal Beach lives in Leisure World, a retirement community. Most of the residents are over 60. A 300 yard walk for dinner isn't going to happen.
Shelly G April 21, 2013 at 01:51 PM
Ruby's actually talked of a shuttle/tram to the end of the Pier. That may have been shot down as well.
enea ostrich April 21, 2013 at 03:24 PM
I am all for a restaurant at the end of the pier as we all know, but a shuttle just is not workable. Wear and tear on a wood pier is one good reason. Another is maintenance. If this were a building and it was escalators then that is different. This isn't Disneyland...this is the Pier we are talking about. Most people who can't walk use a wheelchair. That seems reasonable. Perhaps one day the city would provide some type of wheelchair service but that would mean a Cadillac budget. That is not feasible. I don't see that H.B has .one either.
Marc Loopesko April 21, 2013 at 05:29 PM
so let me try to understand what you all are saying - - If I sign a lease contract and it states that I will do 'x' amount of repairs to the building and then I don't and I leave at the end of my lease, it's OK to not go after me for those repair costs that I did not perform and make the tax payers of SB pay for me instead......?
enea ostrich April 21, 2013 at 06:40 PM
The bottom line is that the owner's lawyer and the city attorney are at odds right now. The owner's lawyer believes everything in the contract was satisfied, including the repairs that were done prior to closing. If the city doesn't agree, well, they have that right and they looked to their attorney for direction as they always do in legal matters. If the attorney recommended suing the owner, that's exactly what they would do of course. My whole point here in this discussion is that it's not good publicity from the beginning, way before this announcement in this article. The story began with the announcement of Ruby's closing and the next story was on the owner trying to apply for a new proposal and yet another article stating that the city saw a few more prospects for tenants. It ends with a legal mess and I don't think that is productive for our city, that's all. If you want people flock to your space for business, get rid of the first tenant you don't want, get rid of the legalities--THEN proceed to the repairs yourself because you won't be able to get a tenant in there in the meantime unless they are willing to pay for those repairs themselves (who in their right mind wants to pay $570,000 for repairs when the actual cost could be less if they did it themselves?).
Shelly G April 21, 2013 at 11:23 PM
I totally agree. The City continues to bring negative publicity upon this town. No other restaurant business in their right mind is going to want to come here. I would also like to know where they get their figures from as far as repairs to be done by Ruby's. I cannot imagine $400.00 or $570.00 in repairs that were the responsibility of Ruby's. Is that what the City states it would take to make the building rent-able? Did Ruby's cause this in damages? I can't imagine the City would have allowed any restaurant to operate if the building was in such a state of disrepair. Why wouldn't that mean it wasn't up to code and dangerous? I'd really like the truth. This monetary figure may have been a figure the parties used in negotiations that fell through. Another thought, what about the bike taxis like they have down in San Diego. They could go back and forth and pick people up. Any thoughts on that one?
CDC April 22, 2013 at 09:10 PM
More shops at the base of the pier would be better. Just a lot of cement there now.
CDC April 22, 2013 at 09:15 PM
Dude, you can rebuild that whole one room shanty restaurant for less than 170,000 The city is playing games. The next business that uses it may not BE a restaurant and will want the kitchen torn out. Wake up! You must work for the city? Enjoy your entitlements while you can. It is the businesses that keep Seal Beach rocking, not City Hall.

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