Family Business Dispute Causes Restaurants to Close After Decades in Operation

Family-owned restaurants that have operated in the same location for as long as anyone in the neighborhood can remember are a source of feelings of community for the customers, and even more so for the owners.  This is why so many children of the 80s agree that the book Little Nino’s Pizzeria, by Karen Barbour, made for the most memorable episode of Reading Rainbow.  The book is an example of how big business dreams can clash with the delicate equilibrium, years in the making, of operating a small family business.  Unfortunately, instances where a small family business outgrows its original location and business partners’ endeavor to hit the big time do not always resolve as neatly as they do in the book.  Sometimes this scenario leads to heavy financial losses and strained family relationships.  If you are a partner in a family business, and you and your family members disagree about plans to expand the business, contact a Los Angeles business litigation lawyer.

Defendant Took Out Business Loan Without Family Members’ Knowledge

Two restaurants in the Los Angeles area closed in November 2023, after decades of serving food to locals and visitors in the know.  The owners of the first restaurant are a mother and her son and daughter.  The restaurant had such a long track record of success that, if its owners chose to, it could easily obtain large amounts in business loan funding.  The son wanted to buy a second restaurant that was up for sale after more than 40 years in business so that he could operate it with a business partner unrelated to the family that owned the first restaurant.  He told his mother and sister about the plan, but they wanted no part of it.  They told him that, if he wanted to buy the second restaurant, he must do it with his own personal funds; they did not want the fortunes of the second restaurant to be connected in any way to the fortunes of the first restaurant.

Against his mother and sister’s wishes, the son used the first restaurant as a means to get a business loan for over $300,000.  He used the loan to buy the second restaurant, as well as a third, newer one.  The son and his non-family business partner operated the two newly purchased restaurants successfully until the COVID-19 pandemic hit, and the three restaurants faced the same problems that most restaurants in the world faced.  Eventually, the mother and sister found out, and they sued the son; the court ruled in their favor and ordered the son to compensate his mother and sister $360,000 for the financial losses he had caused them to incur.  By November 2023, all three restaurants had closed.

Speak With a Los Angeles Business Dispute Lawyer

A Los Angeles business litigation lawyer can help you if a dispute over a family business is causing a rift in your family.  Contact Litigation, P.C. in Los Angeles, California to discuss your situation or call (424)284-2401.

Source:

latimes.com/california/story/2023-12-01/cafe-tropical-owner-sued-by-mother-as-restaurant-closes