Restaurant News & Reviews

Lawyer claims fraud, contract breach against ex-Localis owner over nearly $1.2 million

A Sacramento lawyer recently filed a lawsuit seeking nearly $1.2 million in damages, claiming a prominent area restaurateur breached a 2015 contract agreeing to the sale of two restaurants, Sacramento County Superior Court documents show.

Melissa Sanchez, who founded and operates Harvest Law Group, in a complaint filed Sept. 19 alleges that defendants Chris Jarosz and two associated companies defrauded Sanchez following her sale of two restaurants to Jarosz, and in April 2017 the defendants breached a written asset agreement that had been effective since Oct. 29, 2015.

A copy of the asset purchase agreement shows the two locations are Capital Dime on L Street and Trick Pony at the corner of 20th and S streets, both in Sacramento. Capital Dime became Saddle Rock, which shuttered in early 2017; the site is now home to 1801 L Apartments. Trick Pony became Localis.

The purchase agreement from 2015 states Capital Dime and Trick Pony had been operated by the two companies listed as defendants — Saddle Rock, LLC and Localis, LLC — as well as a third company, since July 2014. Both restaurants were in “considerable debt” due to the “defendant’s poor management” of the restaurants, Sanchez’s complaint alleges.

The rest of the agreement, which was signed by both parties Aug. 14, 2015, lays out the terms of the sale. It includes an assumption of liabilities by the buying companies, including $1,165,343.77 in debts.

The debt was never paid by Saddle Rock or Localis, Sanchez claims.

“In fact, as a result of the debts not being paid, Plaintiff’s bank account has been leveraged, she has been forced into a tax repayment plan, has been sued and has attorney fees, sanctions and penalties,” the lawsuit says.

The causes of action for the lawsuit are breach of contract and fraud, the complaint says.

“The major breach of the agreement occurred in April of 2017, when Plaintiff was informed that her entire bank account was being levied by the California Board of Equalization” for non-payment of taxes, the complaint says.

Sanchez alleges that her demands for payments or a status on the debt were ignored. Sanchez told The Bee she had been in regular contact with Jarosz before April 2017; after the breach reportedly occurred, he has not returned her emails or phone calls, she said.

“Plaintiff believes that Defendants entered the agreement with no intent to pay the debts, and that Defendants knew they would not pay the debts, intentionally misleading Plaintiff,” the lawsuit claims.

Jarosz is a noted restaurateur and a founding partner of Broderick Roadhouse, which operates eateries in midtown, West Sacramento, Carmichael, Roseville and Walnut Creek.

He sold Localis in September 2016 to chef Chris Barnum-Dann, who said he had been inundated with calls since the lawsuit was filed. Barnum-Dann and attorney Jeb Burton face a seperate $2 million lawsuit from one of the restaurant’s early investors but are not directly linked to Sanchez’s suit.

“This has zero to do with the current Localis, this has nothing to do with me. It has everything to do with Chris Jarosz,” Barnum-Dann said. “I’m not trying to bring other people down, I just don’t want to be brought down for something I didn’t do.”

Sanchez had no prior experience with restaurants before 2014 and entered operations as an investor, Sanchez said in an interview with The Bee.

“It was my first and last restaurant project because of this experience with Chris.”

Following a story published Tuesday morning in the Sacramento Business Journal, Sanchez said people involved in the restaurant industry started reaching out to her.

“I’ve received numerous messages from people via LinkedIn who were like, ‘Oh, I had the same issue with this guy, but I never did anything about it. Is it too late?’” Sanchez said. “So I’m not the only one.”

Jarosz did not immediately respond to The Bee’s requests for comment.

Sanchez is seeking the amount of the debt plus late fees and penalties for a total of $1,185,268 in total damages, court documents show. But she said money isn’t the primary motivator.

“The real motivation is really letting people in the community know that this happened,” Sanchez said.

A hearing regarding the case is scheduled for March 28, 2019 if the lawsuit is not settled before then.

Sanchez has a bachelor’s degree from UC Davis and studied law at Columbia. She was admitted to the Bar in 2008 and in 2009 founded Harvest Law Group, which focuses on cannabis compliance issues.

This July, Eater magazine named Localis one of the best restaurants in all of California.

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