The ongoing quest to bring a restaurant back to Goleta Beach is now the subject of a lawsuit that claims the current developers broke their contract with a former partner, stole her ideas, and committed fraud along the way.
Alicia Whitney, who founded the Sea Legs restaurant group in Huntington Beach, is suing her former, longtime employee Omar Khashen and his business partner Joe Diggs for breaches of contract and fiduciary duty, misappropriation of trade secrets, and fraud. Khashen and Diggs have been remodeling the former Beachside Cafe into a new establishment since winning the bid nearly one year ago.
The property is owned by the County of Santa Barbara, which evaluated a number of restaurant proposals before awarding the long-term contract to the Sea Legs team of Whitney, Khashen, and Diggs in October 2021. But after using her expertise, concept, and brand to win the project, Whitney alleges that the two men quietly cut her out of the deal.
“She was shocked,” said her Santa Barbara-based attorney John Thyne, when she found out in January 2022 that the project would be called The Ellwood rather than Sea Legs and alleging that documents had been signed without her knowledge.
Communication between the parties ceased in March, and the lawsuit was filed in April. The parties nearly reached a financial resolution at one point, said Thyne.
But Van Nuys-based attorney Adam Rapaport, who is representing Khashen and Diggs, has since countered that Whitney’s claims are insufficient, uncertain, and/or vague. Rapaport argues that the three had entered into an oral, rather than written, contract, which he says is unenforceable.
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The first court hearing is set for September 12 before Judge Colleen Sterne.
In a written statement, Khashen and Diggs said that they “emphatically disagree with the claims” and are “confident and hopeful that a resolution in the matter can be reached that benefits all the parties.”
The lawsuit is unconnected to the recent construction delays, which were the topic of an Independent article last week. “We want the public to understand that this matter is not related to our delayed opening timeline which was brought on by construction setbacks and we are moving forward with the project in full,” said Khashen in his statement. “Most importantly, we are looking forward to finishing up construction on this landmark space and being able to share it with the public. We think this project will be a glowing reflection of the very special Goleta and Santa Barbara communities and look forward to serving its members for decades to come.”
Last week’s article triggered “an overwhelming number of emails from locals showing support for what we are doing,” said Khashen, who thanked the Goleta community “for their kind words and welcoming attitude.”
The county, meanwhile, is “monitoring the legal action but we are not part of the action,” said Jeffrey Lindgren, superintendent of County Parks. “The physical condition of the building is more of an issue for us than anything, and Omar is working on that.”
Whether Whitney will be satisfied with a monetary settlement at this point is unclear.
“She would step back in,” said Thyne, if it came to that. “If they build it out to something different and it fails, that’s a black mark against her. She doesn’t want that. She wants a successful operation up there.”