CIVIL DISTRICT COURT FOR THE PARISH OF ORLEANS STATE. OF LOUISIANA - e-4 CASE NO. 15-5 3938 . DIVISION *. ie ‘URSA MAJOR, LLC v. SOUTH MARKET DISTRICT C, LLC and DOMAIN COMPANIES, LLC DEPUTY CLERK PETITION FOR DISSOLUTION OF LEASE BREACH OF CONTRACT AND DAMAGES ‘NOW INTO COURT, through undersigned counsel, comes URSA MAJOR, LLC (Ursa”), a limited liability company organized under the laws of the State of Louisiana and doing business lawfully in the parish of Orleans, and respectfully represents: PARTIES AND JURISDICTION 1 Defendants herein are: a, South Market District C, LLC, (“South Market”) a limited liability company organized under the laws of the State of Louisiana having a registered address of 643 Magazine St., Suite 201, New Orleans, Louisiana 70130; b. Domain Companies, LLC (“Domain”), a limited liability company domiciled in New York having a registered address of 11 Park Place, Suite 1705, New York, New York 10007. 2 Venue is proper as the dispute involves the breach of a lease of immovable property situated in Orleans Parish, 3. This Court enjoys jurisdiction over this matter by agreement between the parties, based on the amount in controversy, and via the domiciles of the respective parties.4 ‘The Defendant, South Market, is ostensibly the landlord under a certain Lease of a certain immovable property located at 611 O’Keefe St., Unit C-2, (the “Property”) in ‘New Orleans, Louisiana 70113. 5. The Plaintif®, Ursa Major, owns and operates a newly-opened restaurant bearing the same name. Ursa Major is a lessee to the Property under a certain lease dated November 26, 2013 (the “Lease”) 6. ‘The principals of Ursa Major are also the owners of “Booty's Street Food”, a New Orleans restaurant that wes named one of New Orleans’ best new restaurants in 2013. 1 ‘The Property is located in a building called the “Paramount” which is the first part of a new development called the “South Market District”. It is a five-block area at the intersection of the Warehouse/Arts District, Central Business District, and Sports/Entertainment District, The area is being promoted as a mixed-use, transit- oriented development combining apartments with eclectic shops, cafes and restaurants, and entertainment venues. 8 ‘The Domain Companies, LLC is a New York-based real estate firm that is the developer of the “South Market District.” 9. Throughout all of its dealings, Domain and South Market have appeared to act as, one entity, including but not limited to, correspondence acting as Landlord with Ursa Major as the Tenant under the Lease. 10. Upon information and belief, South Market is owned by Domain South Market, LLC, a Louisiana limited liability company. i. Upon information and belief, Domain South Merket, LLC is owned by The Domain Companies, LLC, a New York limited liability company.12. Matthew Schwartz exeouted the Lease on behalf of South Market, is believed to be one of the principals of the Domain Companies, LLC, and is the registered agent of ‘The Domain Companies of Louisiana, LLC. 13 Upon information and belief, Matthew Schwartz has managerial authority for both South Market and Domain Companies, 14. South Market and Domain share the same mailing address: 11 Park Place, Suite 1705, New York, New York 10007. 15. Matthew Schwartz has corresponded with Ursa Major on “Domain Companies” letterhead end in his apparent capacity as a member of South Market 16. Upon information and belief, South Market and Domain are a single business enterprise or the “alter ego” of one another. 17. In 2013, the principal of Ursa Major, Mr. Nick Vivion, was approached by Mr. Shelly Wills, acting on behalf of Domain Companies. Mr. Wills presented the idea of Mr. Vivion opening a restaurant in the Paramount, 18. ‘Mr. Wills’ pitch to Vivion was that Ursa Major would be one of many restaurants to be opening in the Paramount, calling the area “a new restaurant row” which would include a Vietnamese café, a national chain pizza restaurant, and a café and bakery from the Besh restaurant group. Mr. Wills represented to Vivion that all of the restaurants ‘would open at approximately the same time in order to maximize the excitement and impact. 19, On November 26, 2013, Ursa Major entered into the Lease with South Market. ‘The lease provides for a ten (10) year first term, with an option to extend. The lease also provided for an estimated completion date of October 15, 2014.20. South Market was required to perform certain improvements to the Property as defined in the “Desoription of Landlord's Work” and attached as Exhibit to the Lease 21. ‘Upon completion of the Landlord's Work as defined in the Lease, South Market ‘was obligated to deliver possession of the Property to Ursa Major for the completion of its Tenant Improvements, which was also defined in an exhibit to the Lease. 22 Under section 3.3 of the Lease, Ursa Major was obligated to open its business one hundred twenty (120) days after the earlier of 1) South Market’s delivery of the Property to Ursa. Major, or 2) the date South Market notified Ursa Major that the Property was “ready for occupancy”. 23. ‘The “estimated completion date” as set forth in the Lease was October 14, 2014. In anticipation of this, Ursa negotiated a blackout period for opening in the month of December, with a projected opening date of January 2, 2015. 24. In November of 2014, Domain Companies issued a press release stating that all of the restaurants, including Ursa Major, were slated fo open in the first quarter of 2015. 28. In reliance on the representations by South Market and Domain Companies that the Property would be delivered for occupancy in the fall of 2014, Ursa Major hired staff and management in anticipation of opening in January of 2015. 26. Unfortunately, South Market and the Domain Companies did not deliver the Property as originally promised to Ursa Major in a timely fashion. 27. Delays in construction of the Paramount were extensive. Throughout the full of 2014, the progression of work performed by Domain’s contractors dragged on and was fraught with setbacks.28. On January 26, 2015, South Market certified to Ursa Major that it had completed its scope of work and was ready to deliver possession of the Property for the completion of the tenant improvements. 29. In actuality, the Property delivered to Ursa Major was not in the condition as promised by South Market, nor was the Property truly “ready” for occupancy. 30. Ursa Major’s ability to perform its scope of improvements was hindered and delayed by South Market's contractors who were finishing their scope of work (despite possession being “tendered” to Ursa Major) 31, The original idea of a grand opening of “restaurant row” as “pitched” to Ursa ‘Major by the Domain Companies did not materialize. Upon information and belief, the other restaurants that were supposed to open at the same time as Ursa Major delayed their openings or dropped out of dealing with Domain Companies altogether. 32. Despite the fact that there was ongoing construction all around the Paramount (including port-o-poities just outside the restaurant), and the fact that no other businesses had opened, Domain Companies (through agent Chris Papamichael) insisted upon Ursa Major opening its doors on its own. ae Ursa Major was faced with opening during the summer in New Orleans, well known to be a very slow time for restaurants, particularly new businesses. Matt Schwartz, from Domain would later tell Ursa Major that he was allowing John Besh to open his restaurant in August or September because “nobody goes to restaurants in the summer in ‘New Orleans.” 34. Ursa Major nonetheless dedicated its efforts and committed expenses to marketing the opening. The grand opening was advertised in local press such as the NewOrleans Advocate, and on social media such as Thrillist and Eeter. Ursa Major also received positive previews, appearing in the New York Times prior to its opening. 35 Ursa Major was the first full service restaurant to open in the Paramount, opening on May 30, 2015. 36, Jn the week prior to opening, an overwhelming grease smell began emanating from the grease trap in the scullery of the kitchen. The grease trap, installed by Domain, also flooded part of the restaurant prior to opening. 37. Simultaneously, an equally disgusting sewer smell began to back-up and permeate throughout the entire restaurant. 38. ‘The combination of these two odors rendered the Property completely unfit for any business, much less a food business. Employees were sickened, and patrons were disgusted. 39. During its first week of operation, both the grease smell and the sewer odors were repeatedly present in the restaurant—ruining Ursa Major's operation and creating an awful first impression to the guests who were dining there. 40. On May 30, 2015, Ursa Major reported to Melissa Mendez, the property manager, that the sewage smell was overwhelming. Ms. Mendez instructed Ursa Major to “get through the weekend and then she would get plumbers out to fix it.” 4L Having received no assistance or investigation from Domain after that first weekend of being open, on June 9, 2015, Ursa Major notified South Market of the seriousness of the situation. Ursa Major advised its landlord: “people are going to start talking and never come back...this is affecting staff and guest perception related to management's ability to run a safe, clean, and successfull foodservice operation.”42. When South Market failed to immediately address the issue, Ursa Major followed up with another communication to its landlord on June 11, 2015, advising: “Lam extremely concemed that this is not being taken the slightest bit seriously by anyone not under my employ...The lack of support of any plan whatsoever from your team is crippling my ability to do business... How am I meant to pay my rent when my customers complain that their clothing smells after visiting...” 43. The landlord, through Chris Papamichael responded via email suggesting that the grease trap seal would be repaired and that the plumbing issue would be investigated 44, Upon information and belief, PMC Mechanical Company, Inc. (“PMC”) was the engineering firm hired by Domain and South Market to manage and construct the systems, including the plumbing for the Property (and the Paramount). 45. In June of 2015, principal of PMC, Chuck Sardi, asserted that the sewer smell was caused by Ursa Major’s “plumbing design” and the selection of toilet equipment 46. This position was adopted by Chris Papamichael, acting on behalf of South Marke/Domain, who suggested that the sewer gas smell was caused by Ursa Major's high-efficiency toilets and an alleged “design flaw.” 47 In actuality, it was discovered that a forty (40°) foot sagging sewer pipe underneath Ursa Major’s restaurant had a massive “dip” that was trapping water and sewage and causing a back-up of the sewer odor. 48. On the night of June 11, 2015, the lobby of the Paramount (several hundred feet down the street from Ursa Major, but in the same building) was filled with the same sewage gas smells that were experienced in the restaurant,49. On June 12, 2015, Melissa Mendez, Paramount Property Manager, came into Ursa Major to inspect the sewage smell. She had to excuse herself because the gases in the air and in the restaurant were “burning her eyes.” 50. On June 12, 2015, Steve Carter, the plumbing operations manager and agentlemployee of PMC, admitted to Ursa Major that the defective installation of the underground pipe was the cause of the plumbing issues, not the “high-efficiency toilets” selected by Ursa Major. Mr. Carter further advised that a crane and other heavy equipment had driven over the exposed plumbing before the concrete was poured, crushing the plumbing system. Mr. Carter also told the tenant that the pipe was incorrectly laid, without wire hangers every four (47) feet apart as called for in the plans. 51. On June 17, 2015, Ursa Major was forced to close in order for Domain/South ‘Market to conduct an “emergency air quality test.” Upon information and belief, PMC employees were present during the test and attempted to interfere with the collection of data—propping open doors fo allow fresh air in. In spite of this attempted interference by PMG, the test results showed nearly double the amount of methane normally found in the air. 52, Thus, it was clear that Chris Papamicheel, acting on behalf of South ‘Market/Domain, had misled its tenant, Ursa Major. 33. Thereafter, PMC purportedly began a tunneling operation under the slab of Paramount and the Property to inspect the underground plumbing, 54. Ursa Major was forced to close for two (2) days during its third week of being opened. Two major websites (Thrillist and Eater.com) covered Ursa Major’s “opening” calling it the “number 2 best new bar in the city, and one of the best new restaurants of the year.” Unfortunately, this coverage was released on days which the restaurant was closed due to the plumbing and grease trap problems.55. Ursa Major subsequently discovered that the grease trap had been installed improperly. Specifically, the seals were not installed correctly, and an eighteen (18”) inch piece of plastic, wrapped in insuletion was left in the trap by Domain/South Market's contractor, causing the grease smell to escape and permeate the entirety of the restaurant, and causing the grease trap to repeatedly flood a portion of the restaurant. 56. During this time, the sewer smell was constant at Ursa Major. On June 24, 2015, during an especially overwhelming episode of the smell, it was again reported by Ursa Major to the landlord, South Market. 57. PMC was again dispatched by Domain/South Market to investigate the issue. Upon information and belief, PMC began performing repairs to the underground plumbing system. 38. Domair/South Market subsequently assured Ursa Major that the issue had been rectified, This was not the first (nor would it be the last) time Domain/South Market assured Ursa Major that the problem was addressed 59. Ursa Major subsequently promoted and marketed an event for the “New Orleans Concierge Association” to be hosted on June 30, 2015. This event would bring thirty (30) concierges from the major hotels in the city to the restaurant and was planned as a major event fo make a positive impression on them. 60. On the night of the concierge dinner, the restaurant was again overwhelmed by noxious sewer gases. A huge opportunity was lost as a result—and the chance to make a positive fisst impression upon thirty (30) concierges who direct tourists to the restaurants in the city. 61. Ursa Major was forced to close the following day, again, as a result of the ongoing underground plumbing concems.62. Ursa Major subsequently obtained knowledge that the plumbing problems were caused by: a. PMC installing the underground piping incorrectly; b. PMC leaving the plumbing system open during the construction process, allowing cranes to rum over the open plumbing system, causing it to collapse and lose its intended slope; ©. Missing sérews and seals in the plumbing under the bar of the Property, negligently installed by PMC; 4. Wire hangers called for in the plans to suspend the main plumbing on slope were never used by PMC; e. Pipes and plumbing fixtures below the bar area were never even attached to one another, leaving the bar sinks to drain into the ground below the restaurant; £ The entire plumbing system for the restaurant had suffered a total collapse below the concrete slab. 63. Domain/South Market bas nonetheless taken the position that, in spite of the underground plumbing system having to be replaced, the reason for the sewer smell in the restaurant was the design of Ursa Major's high-efficiency toilets. Specifically, Domain/South Market claims that an incorrect pipe between these two high-efficiency toilets was called for in the tenant’s plans. In actuality, the plans call for a different pipe than what was used by Domain/South Market’s contractors, and warns against using the pipe scheme they chose to install. 64, Upon information and belief, the entire plumbing system undemeath Ursa Major had to be replaced and pipes re-hung. The collapse of the system and lack of proper slope contributed to the cause of the plumbing issues at the restaurant, The contractor hired to replace the plumbing system stated “the entire plumbing system for Ursa Major ‘would not have been replaced because of the wrong pipe between two toilets...the system 10needed to be replaced because of the problems underground—the toilet system simply showed the symptoms...the whole plumbing system would have failed at some point.” 65. Throughout the troubleshooting process in June 2015, Domain/South Market forbade Ursa Major from opening during Iunchtime. PMC “recommended lunch activities do not start until the underground work was complete so that work could be completed as expeditiously as possible.” 66 This forced “closing” during lunchtime prevented Ursa Major ftom generating revenue, made all the more critical due to the Defendants’ failures as set forth herein. 67. Underground work was ongoing through July 2015. 68. On Tuly 20, 2015, the sewer gas smell overwhelmed the restaurant again, making it impossible for Ursa Major to serve its guests. This occurred fier Domain/South ‘Market advised the issue was rectified (for the fourth time). 69. It is clear that Domain/South Market is purposefully misleading its tenant, Ursa ‘Major, and is presumed to have done so in the past 70. As a result of the delayed ongoing construction around the Property, Ursa Major has also been unable to open the sidewalk café as originally contemplated. This delay hhas been caused directly by contractors working for South Market)Domain. TL. Upon information and belief, other restaurants slated to open have been delayed in moving forward with operating their businesses because of ongoing issues with the underground plumbing of the Paramount. 2. Upon information and belief, Ursa Major discovered that the scope of the plumbing work performed on the Property was not properly permitted or inspected by the City of New Orleans. ulCAUSES OF ACTI B. ‘Ursa Major seeks relief under its petition on the grounds that the Defendant has breached its warranties as a lessor under Louisiana law and the Lease. As a result, Ursa Major has sustained damages and seeks dissolution of the lease and to be compensated for those damages. 74. The lessor warrants the lessee that the thing is suitable for the purpose for which it was leased and that it is free of vices or defects that prevent its use for that purpose. La.Civ, Code Ann, art. 2696 75. Ifa “defect” rendering the property unfit for its intended use, a tenant is entitled to dissolution and cancellation of the lease. 76 By all appearances, the defect in the plumbing system of the Paramount and the Property is so serious that it renders the restaurant unfit for its intended use. 77. ‘Accordingly, Ursa Major is entitled to dissolution and cancellation of the Lease and to be restored to the position it was in prior to entering into the Lease. 28. In the alternative, Ursa Major relies on Article 2684 of the Louisiana Civil Code which requires a lessor to deliver the thing forming the subject of the lease at the agreed time and in good condition suitable for the purpose for which it was leased. 79. The Property was not delivered at the agreed time, or in good condition suitable for the purpose for which it wes leased. 80. As a result of South Market breaching the foregoing warranties as lessor, Ursa Major lost an opportunity to make a good first impression on diners during the first crucial months of being open. This included, but was not limited to, the fiasco at the concierges” dinner, lost patrons, being forced to close repeatedly during the first weeks ofbeing open, and the general impression that working and dining at the restaurant possibly posed a health hazard. 81 ‘Ursa Major’s owners and management team have been forced to deal with the ongoing distractions and concems about opening the doors of the restaurant to patrons ‘who may never return if exposed to these toxic smells. 82. Ursa Major has lost the faith of its staff’ and several employees have left as a result of the hazardous work environment caused by noxious sewer gas and grease smells. . 7 83. Word of mouth spreads quickly, especially in New Orleans and particularly with respect to restaurants. The negative impression and publicity of the shaky opening of Ursa Major were caused directly by South Market and have impacted Ursa Major's ability to conduct business, presently and in the future. 84. Should dissolution of the Lease not be awarded, Ursa Major prays for an award of damages, or reformation of the Lease, a rent abatement, or an offset of rent under the Lease and recovery of its damages. 85. Ursa Major prays that damages be awarded for the losses it has sustained as a result of the breach of the Lease by the Defendant, including, but not limited to: 1. Professional fees, costs of engineering plans, drawings, and specifications incurred by Ursa Major for the build-out of the Property; 2. Expenses incurred by Ursa Major in building out the Property; 3. Costs and expenses incurred by Ursa Major in hiring and training employees to work in its business that was to operate out of the Property, and marketing their business; 4, Equipment purchased and leased by Ursa Major for use in the Property; 5. Refund of any and all rent paid to Defendants; 6. Lost profit, past and future; 7. Lost capital invested by the members of the Ursa Major to support the business due to lack of business caused by the Defendants; 38 Damages for loss of reputation; 9. All other damages that may be proven at tial. PRAYER WHEREFORE, URSA MAJOR, LLC prays that this Petition be deemed good and sufficient, and the Defendant be served with a copy of the same, and after due proceedings are had, this Court render judgment as follows: 1 3 Dissolving the Lease between Ursa Major LLC and South Market C, LLC; Awarding damages including the professional fees, costs of engineering plans, drawings, and specifications incurred by Ursa Major for the build- out of the Property; expenses incurred by Ursa Major in building out the Property; costs and expenses incurred by Ursa Major in hiring and training employees to work in its business that was to operate out of the Property; equipment purchased by Ursa Major for use in the Property; refund of any and all rent paid to Defendants; marketing expenses; lost profit, past and future; lost capital invested by the members of the Ursa Major to support the business due to lack of business caused by the Defendants; damages for loss of reputation; attorneys’ fees, costs, and all other damages that may be proven at trial. Alternatively, an order from this Court reforming the Lease or otherwise providing for an abatement or offset of rent paid by Ursa Major. ‘Any and all other legal and/or equitable relief this Court deems appropriate. SSGLAFANT (LAf Bar No. 28219) 4139/Caffal $t., Suite A (504) 8975-4079 (504) 910-4324 (facsimile) Counsel for Ursa Major, LLC 4PLEASE SERVE: South Market C, LLC Through its registered agent: F. Paul Simoneaux c/o Elkins, PLC 201 St. Charles Avenue, Ste. 4400 New Orleans, LA 70170 -and- Via Louisiana’s Long Arm Statute ‘The Domain Companies, LLC 11 Park Place, Suite 1705 New York, New York 10007. 15CIVIL DISTRICT COURT FOR THE PARISH OF ORLEANS ‘STATE OF LOUISIANA CASE NO. DIVISION “_* URSA MAJOR, LLC v. SOUTHMARKET DISTRICT C, LLC and DOMAIN COMPANIES, LLC FILED: DEPUTY CLERK YVERIEICATION state or 7 EKAS county or_(MBcLag BEFORE ME, the undersigned Notary Public, duly commissioned end qualified within and for the Stato of and Pash afraid, pertnally appeased, URSA MAJOR, ‘LLC, appearing herein through ite duly authorized member, Plaintiff in the foregoing Petition, who after being by me duly sworn, said that he has read the allegations of fact consid hea, ed thy ae tran cone tthe be fis ewes, infomation snd by ‘URSAD iat By: NICK VIVION ‘Sworp fo and Subscribed before me, Notary Public © dayot Angust, 2935. FS ven EN HEAL =) Notary Publ Store of Texas eS)" wrSarmientpr: & June 10, 2019 16