Old-time Dallas favorite Balls Hamburgers is in a battle with its Preston Hollow landlord and has filed a lawsuit seeking in excess of $1 million.
Filed by Backbone Corporation/Balls Hamburgers, owner Carol Hobrecht and her business partner JDBurger Dallas, the suit charges the landlords – a quartet of faceless entities that includes Preston Hollow Saticoy, Preston Hollow Indian School, Preston Hollow Westgate and Westwood Financial Corp. – with breach of contract and fraud.
The 67-page petition describes a case "about a group of landlords and their agents attempting to improperly oust a family-owned and -operated restaurant from their shopping center in the Preston Hollow area of Dallas" to be replaced with a bigger, more profitable tenant.
Defendants did that by not only misrepresenting material facts about an existing commercial lease to Plaintiffs but by engaging in acts to prohibit Hobrecht and Balls Hamburgers from operating their restaurant, attempting to strong-arm Hobrecht and Balls Hamburgers into executing a new commercial lease with prohibitive terms that they do not have to execute, by charging rent and expenses that are not due under the existing lease agreement, and by requiring that Balls Hamburgers make its restaurant open to inspection by other potential tenants.
To make matters worse, during this same period of time, Hobrecht and Balls Hamburgers had entered into an agreement to sell their business to Plaintiff JDBurger Dallas Partners. Due to defendants' actions, the sale was terminated. As a result, plaintiffs have sustained substantial damages and injuries for which they seek relief.
The loss of that sale is what pushed it into the million-dollar zone.
Founded by Richard Barry Hobrecht in 1987, Balls pre-dates the current burger trend by decades. The original Balls in Snider Plaza closed in 2008 after losing its lease.
The Balls at 4343 Northwest Hwy. is the final surviving branch. Hobrecht first signed the lease in January 1988, and it was renewed every five years. He died in 2009. According to the lawsuit, the lease contained a five-year extension to 2018 that was automatic unless Carol Hobrecht stated that she did not want an extension.
In February, property manager Renee Tims sent Hobrecht a letter requiring that she execute a new lease agreement. Hobrecht had already entered into discussions with JDBurger, who issued a letter in April stating their intent to buy Balls for $300,000.
In May, Tims sent a new lease agreement with substantially different terms, designed to "prevent not only Balls Hamburgers but also JDBurger and any potential purchaser of Balls from operating any type of retail restaurant business on the property." The lawsuit protests that the new lease:
- Raised the rent by 125 percent
- Gave the landlord approval over the menu and hours of operation
- Restricted signage and advertising
- Prohibited subletting
- Prohibited Hobrecht from operating any other restaurant within a 3-mile radius
- Required that Balls maintain workers' compensation insurance
- Required Hobrecht to pay additional money into a reserve fund for improvements to common areas of the shopping center, on top of Balls' monthly share of common area expenses
- Increased the holdover rent amount by 60 percent
- Restricted Hobrecht's ability to seek legal remedies through a trial by jury should the landlord breach the contract
In August, Hobrecht was informed that the restaurant would be moved into "hold over status" and was billed $14,210. (Her rent had previously been around $6,000.) At the same time, she began to receive inquiries from other burger chains seeking to acquire the space.
The lawsuit was filed on August 9. Other counts include negligent misrepresentations, civil conspiracy and a demand for trial by jury. In September, Judge Martin Hoffman appointed a mediator and scheduled the case for a non-trial-by-jury on September 9, 2014.
Dorothea Vidal, the lawyer representing the defendants, said that plans were underway to file a counter claim, possibly for trespassing.
"It'll be premature for me to say but we will be asking for a declaratory judgment, for the court to declare that we have the right to evict the tenant," she said. "We believe the lease has terminated and that lessee has violated the lease."