A soured business partnership between celebrity chef Gordon Ramsay and a co-investor in a failed West Coast restaurant venture has ignited simmering tensions into fiery litigation in the Commercial Division.
New York-based investor Rowen Seibel is suing the British chef and restaurateur for fraud and breach of fiduciary duty, among other claims, over the shuttering of a Ramsay-run restaurant located in The Grove entertainment complex in Los Angeles.
Although The Fat Cow, as the establishment was named, was branded as a “casual, family-friendly American comfort food restaurant,” little comfort was lost behind the scenes, based on heated allegations in Rowen Seibel v. Gordon Ramsay, 651046/2014, a case assigned to Justice Marcy Friedman.
Ramsay and Seibel co-invested in the short-lived restaurant, which opened in 2012 and closed two years later amid poor reviews. A class action suit also was filed by restaurant staff for alleged violations of California’s labor laws and a trademark dispute lingered with a Miami Beach restaurant that bears the same name in Spanish, “Las Vacas Gordas.”
In April, Seibel filed a $10 million suit against Ramsay, accusing the chef of hooking him as a co-investor only to deliberately select a problematic trademark, produce lackluster products and set the restaurant up to fail so he could use the $800,000 capital investment to reopen another eatery in the same location under his sole ownership.
Skewering those claims as “utter nonsense” in a recent motion to dismiss the entire complaint, Ramsay, the famously cantankerous host of such reality shows as “Hell’s Kitchen” and “Kitchen Nightmares,” has fired back with a new suit of his own, seeking judicial dissolution of the entities formed to bring The Fat Cow into existence.
“Having inveigled Mr. Ramsay to include him in The Fat Cow, Seibel took control of the restaurant and proved egregiously inept in its management,” states the complaint in GR US Licensing v. Rowen Seibel, 651618/2014. The action claims that the entities no longer serve any purpose, that management is deadlocked and that Ramsay seeks “protection” from further involvement with Seibel.
In happier times, the individuals joined forces in 2011 to open three restaurants in Las Vegas. That same year, they formed FCLA, a Delaware limited partnership, to operate The Fat Cow. Seigel alleges that Ramsay said he needed an investment partner because he had “significant cash flow problems” and wanted someone to share in the expenses and risks.
In his suit, Seigel contends that through year-end of 2013, the restaurant was still generating positive cash flow and that “there was no valid business reason to close,” despite the unresolved trademark dispute and the restaurant employees’ class action suit.
Seigel further alleges that in January 2014, Ramsay filed an application with the U.S. Patent and Trademark Office to use the name, “Gordon Ramsay at the Grove” at the same address—proof that he tried to unilaterally force The Fat Cow’s demise to pursue a new venture in violation of the parties’ agreement.
While Ramsay denies planning to open a new restaurant at The Grove, he also argues that nothing under Delaware law, which governs most of the claims due to the incorporation of FCLA in that state, prevents him and his limited partnership arm, GR US Licensing, from doing so, since the law has “repeatedly upheld the rights of partners to compete with their partnership where the partnership agreement so permits.”
“There was no fiduciary obligation to refrain from starting their own new business whether or not in competition with The Fat Cow,” his motion to dismiss states.
Ramsay also contends that Seibel cannot maintain claims such as breach of the duty of care or of loyalty since he cannot meet the “very heavy burden” of proving a claim that requires a showing of “serious gross negligence.” For instance, Ramsay argues that the complaint alleges no facts that the misguided choice of name, which created so much headache over the trademark issue, was “willful” or “in bad faith.”
Seibel’s suit brings claims of breach of fiduciary duty, conversion and unjust enrichment, fraud and misappropriation.
Ramsay is represented by Paul Montclare and J. Matthew Williams, partners at Mitchell Silberberg & Knupp. Seibel is represented by Paul Sweeney, partner at Certilman Balin Adler & Hyman.