Wednesday, August 26, 2015

Mamma Mia! Where did all that water come from? - Court to sort it out

Italian Restaurant MB sues landlord for mental anguish and more than $2mil in damages stemming from water intrusion attributed to poor building maintenance 

MB files lawsuit against building owner over water intrusion and "catastrophic" damages to first-floor restaurant space; seeks two million plus in compensation, not to mention mental anguish damages.

MB (mia bella) on the corner of Main and Preston has been closed for about three months.

Historic Kiam Building with MB restaurant at ground level  
There was no lockout notice on the door, and the reason for the cessation of business was unclear. What could be found on the door was a bright orange sticker from a city inspector giving notice of an ordinance violation.

The story is starting to get a little clearer, but not by much.

On August 25, 2015, MB MAIN, LLC filed a lawsuit against the landlord, M.T. MERCANTILE COMPANY accusing it of being the cause of its problems. A second company is also listed as plaintiff: MIABELLAFRANCHISE, LLC, but the rest of pleading reflects that only the MB MAIN entity is bringing the lawsuit, and that it does so as the tenant under the commercial lease for the restaurant space at 320 Main signed in December last year.

But that's were the story gets a little intriguing.

In the fact section, MB MAIN, LLC says that it signed the commercial lease for approximately 3200 sqf of space to run it as an upscale Italian Restaurant, and that it paid "$42,600 in "rental left unpaid by the previous tenant", in addition to agreeing to pay monthly rent of $10,500 going forward. It goes on to allege that "Plaintiff was also required to repair damage to the basement of the building although it was not part of Plaintiff's leased premises." The petition further states that MB MAIN had already invested over $150,000 in the property when it took possession of the premises.

It thus appears that MB MAIN LLC, the company that is suing the owner of the historic building wasn't the entity that had been operating the mia bella trattoria in past years, but had only taken it over recently. But the lawsuit does not provide any details on the matter. Nor does it identify the prior owner or operator by name. Perhaps it was MIABELLA FRANCHISE, LLC, whose name appears in the case style, though misspelled.

So what prompted the lawsuit?

MB Main LLC says that it was forced to close the restaurant on June 1, 2015 because the landlord failed to make necessary repairs to the building, thereby letting water enter through the sewers and through the upper floors, and that the water intrusions resulted in catastrophic damage to the leased space on the first floor as well as to the basement containing electrical equipment.

According to MB MAIN, the landlord refused to take responsibility for the repairs for lack of money and lack of insurance. Additionally, MB MAIN concludes that, based on the extensive damage, the upper floors and the basement of the building had not been properly maintained over the course of many years,
The House of Easy Credit next door was
apparently of no use 

Although MB MAIN's original petition also contains a reference to injunctive relief in its title, it only seeks money damages, asserting two causes of actions: That the landlord breached the lease agreement signed December 15, 2014, and was negligent in failing to make necessary repairs to the building.

Notwithstanding its title, the sloppily drafted pleading does not ask for immediate or permanent injunctive relief and contains a number of other errors. Since the lawsuit was just filed, of course, the landlord's version of the facts is not available. As a general rule, facts in pleadings are just allegations. Suffice it to say, a tenant suing the landlord, rather than the other way round, is rare. Not quite the equivalent of a man-bites-dog story, but a story nonetheless.

And the bottom line?

MB MAIN seeks past, present, and future damages of $2,000,000. But that's not all. In its separate list of damages, MB characterizes the two million dollar figure as being for "lost profits" and enumerates additional damages: Loss of $125,000 in equipment, loss of $150,000 in opportunity cost; and loss of business goodwill, for which it does not provide a monetary estimate. It also asks for an award of attorney's fees on the breach of contract claim.

Strangely enough, given that MB is a limited liability company and therefore a business entity, rather than a natural person - it also seeks unspecified damages for "mental anguish". There is no mention of rescinding the lease. And no request that the judge order the landlord to make the necessary repairs. In the lawsuit, MB says that it was forced to shut down, but it is not clear whether it has taken the initiate to have any of the water damage issues fixed.

On its website, mia bella says the location on Main Street is temporarily closed for repairs.

This is not your typical breach-of-lease case, and it looks like the trattoria will be in limbo for some time to come while the wheels of justice are grinding slowly. Which they likely will in a case in which immediate injunctive relief is not even properly requested, not to mention granted. Short of setting up shop elsewhere, MB MAIN's focus will be on the docket, more so than on the menu, and on whether the quality of the meals and the service exceeds prevailing Main Street standards.

At least the Italian eatery that describes itself as "well-known" and "upscale" will be litigating its case in a court with commensurate credentials, judicially speaking. With a claim for more than $200,000 in damages, it couldn't be heard in one of the four county civil courts at law, which generally operate at a faster clip, but are courts of limited jurisdiction; -- courts at the lower level of the hierarchy.

Mia Bella will have her day in court, but it likely won't be any time soon.

HCAD Data for 320 Main 
HCAD shows that the building was erected in 1900. It currently has an appraised value slightly above $1 mil. Assuming that is close to market value, it would barely cover half of the damages MB wants to collect. There is of course no way to predict the outcome of the lawsuit. 

Building details for Kiam Building from HCAD 

Preston Street: Houston is Inspired Mural, Majestic Metro, and Kiam Building 
mia bella trattoria -  320 Main St, Houston, TX 77002
mia bella - frontal view across main (HI-RES photo from 2013)
Street Address: 320 Main St, Houston, TX 77002 
mia bella trattoria -  320 Main St, Houston, TX 77002
Mia Bella's location in the Downtown Houston Historic District 

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