DeSha's restaurant files response, fights termination of lease

DeSha's, which has been a Lexington staple since 1985 at the corner of Victorian Square, wants to remain a tenant there. It filed a motion in court contesting claims by the square's new owners.
DeSha's, which has been a Lexington staple since 1985 at the corner of Victorian Square, wants to remain a tenant there. It filed a motion in court contesting claims by the square's new owners. Lexington Herald-Leader

DeSha's restaurant is fighting back after Victorian Square moved to terminate its lease and vacate the property by Dec. 31.

Victorian Square LLC filed a motion in Fayette Circuit Court on May 3 seeking a declaratory judgment that the restaurant had persistently failed to pay rent and other charges. A motion filed earlier this week on behalf of Nick Sanders, CEO of Tavern Restaurant Group, claimed many of Victorian Square's allegations are misleading or inaccurate.

The Tavern Restaurant Group Inc., which owns and operates deSha's, filed a motion saying they have paid rent in a timely manner. The motion said the recent recession was financially hard on the restaurant, as it was on many other businesses. Because of this, on occasion the Tavern Restaurant Group didn't make its rental payments by their due dates, according to the restaurant's motion.

"However, TRG had been a reliable tenant for decades and these rental issues were worked out in a commercially reasonable manner with (the current owner of Victorian Square) and its predecessor, Victorian Square Associates LLC," according to the motion.

Nancy Parrott, director of communications for the Tavern Restaurant Group, said when the new landlord came last August, the previous renewal terms in the lease were loosely written and felt Victorian Square didn't have to honor them. However, the Tavern Restaurant Group thinks the new landlord should have to honor the terms.

In August 2012, Victorian Square was bought by The Webb Companies and Jeffrey R. Anderson Real Estate Inc., of Cincinnati, for $1.7 million.

When the sale was announced, Mark Fallon, vice president of real-estate leasing for Anderson, said there were plans to make Victorian Square a downtown destination by adding several high-volume restaurants.

Parrott said the company doesn't know what the plans are for Victorian Square, particularly deSha's.

"We're not sure because Nick hasn't been able to have a conversation with them about why they don't want to renew the lease," Parrott said.

Parrott said the original lease was up for renewal after 10 years. Since the initial lease, the terms have been up for renewal every five years.

The current lease grants the Tavern Restaurant Group the right to extend the term of the lease for two additional five-year periods, Parrott said in an email. To extend the lease, the company is required to provide Victorian Square with written notice 90 days prior to the end of the lease term. The Tavern Restaurant Group wants Victorian Square to honor the first renewal term of five years, with the understanding that the decision to renew the second five-year term would be a mutual business decision to be negotiated in the best interest of both companies at that time, Parrott said.

Parrott said Victorian Square "claims that the extension agreement was poorly drafted and does not meet certain legal technicalities. Therefore, Victorian Square claims it does not have to honor the current renewal terms of the existing lease."

As for the rental payments, the motion filed by deSha's says the restaurant settled all lease-related issues that Victorian Square and the Tavern Restaurant Group entered into on Oct. 22, 2012. One of the provisions in the agreement was that rent would be paid through an "automatic debit" to assure that it would get paid.

The Tavern Restaurant Group has made all rental and other payments in a timely manner since the settlement, the motion says. Parrott said deSha's currently makes all payments via a wire transfer each month.

According to the motion, neither Victorian Square nor its bank was unable to implement that payment method, and direct wire transfers have been used to make payments.

The email also stated that Sanders wants deSha's to be part of the new plan for Victorian Square.

Victorian Square attorney Thomas Miller filed a response to the motion Thursday afternoon that said to enter a new lease with deSha's, Victorian Square would require safeguards to make sure payments were made.

Miller said the only reason they brought up the points of deSha's late rent payments in the past was to show why they needed safeguards; not to say deSha's was a bad tenant.

Miller said if the restaurant wanted the right to renew, they should have put a specific lease amount for the period of time after Dec. 31.

The response also said both parties must agree to all terms, which they currently do not.

A judge is scheduled to hear the case on June 18.

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