October 9, 2008

Gladstone’s Wins $7.8M in Valet Lawsuit

By Karen Robes Meeks

LONG BEACH -- A jury decided Wednesday that the developer of the Pike at Rainbow Harbor did not honor a lease provision to provide valet parking to the operators of Gladstone's Long Beach and awarded the waterfront restaurant $7.8 million in damages.

The Long Beach Superior Court jury ruled against Developers Diversified Realty Corp., finding the Pike developer in breach of contract and responsible for fraud.

An attorney for DDR said he was not in a position to comment on the case.

Supporters of Long Beach 4 Fish, the operators of the 330 S. Pine Ave. restaurant, hugged each other and their attorneys after the verdict, which came after six weeks of arguments and testimony by a number of people, including city officials.

"Gladstone's has been trying for four years now - since it opened its doors - to try to resolve this problem," said Gary A. Waldron, attorney for the restaurant operators.

Waldron said he "hopes this will send a message to DDR that they have a situation that they really need to attend to and resolve, for the benefit of the city and for the benefit of not only Gladstone's but the other restaurants at the Pike."

Before setting out to build its 425-seat restaurant by the water, Gladstone's operators negotiated in its lease with DDR that the developer would provide curbside valet services.

Instead, DDR provided limited valet service and oftentimes services were so understaffed that parking enforcement officers and police were needed to deal with the influx of people waiting to park.

Gladstone's tried to resolve the situation by trying to operate its own valet and purchasing three trams to shuttle guests to the main entrance.

Gladstone's said DDR's failure to deal with the parking issue adversely affected business.

"Promises were made prior to Gladstone's entering into its lease that valet parking would be immediately adjacent to the restaurant and restaurants such as Gladstone's," Waldron said. "That's an important feature people look to, the convenience of valet parking."

Despite the favorable verdict, it does not guarantee that Gladstone's will get the valet service it desires or more parking. The jury could only award monetary damages in this case, Waldron said.

"One would hope that this would let them know that the people of Long Beach - as reflected through the jury - are concerned that they are not honoring their obligation," he said. "They're not living up to their word and that they would take that to heart and do that."

Some jurors commented that the city should share some of the blame for the Pike's parking issues and should have helped to resolve them.

"I didn't necessarily side with DDR but I felt the responsibility sat more on the shoulders of the city than DDR," said one female juror, who declined to give her name. "I didn't feel that DDR should pay for the city's actions or inaction."

Gladstone's did not name the city a defendant in its lawsuit.

"Gladstone's viewed the city as an organization that had limited responsibility," Waldron said. "Although the parking circle itself is city property, the parking structure, the adjacent lot, the provision of valet services are all obligations of DDR."

City Attorney Bob Shannon said the city has been unhappy with DDR, which had taken "a very aggressive attitude with the city," in cross-examining several city witnesses.

"To try to attribute some responsibility to the city is really to divert the issue," he said. "DDR is responsible."

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