WATERLOO – Trial is underway in a lawsuit stemming from a failed effort to establish a restaurant in downtown Waterloo.
What started as the Cajun-themed Roux Orleans and then morphed into Black’s 501 Steakhouse at the historic Black’s Building on Sycamore Street struggled to make a profit, leading operator Darin Beck to pull out in August 2011 after just under two years.
In the fallout that followed, Black’s owner Donna Nelson, of Midtown Development, took Beck to court for allegedly disparaging her reputation and backing out of the lease. Beck followed suit by taking Nelson to court over costs associated with the project.
“A good name and good character is an important commodity,” said attorney Thomas Verhulst, who is representing Nelson and Midtown.
Verhulst said Beck packed up the restaurant equipment in the middle of the night without notifying Nelson. Beck then issued a press release explaining the closure and stating he was owed $800,000 in unpaid materials reimbursements and construction labor.
Nelson shot back with what Beck’s attorney William Roemerman called a “venom-filled” press release stating a mess of garbage and debris was left behind and claiming Beck owned Midtown $250,000.
Beck then accepted an invitation by KWWL to respond and said the restaurant was closed without notifying Nelson because he didn’t trust her with the information, anticipating she would lock him out of the building. He went on to say "word on the street” was Nelson and her company didn’t have any money.
In a Facebook post that week, Beck said Nelson lied about the Black’s situation and called her an “evil woman,” Verhulst said.
Nelson and Beck, both well-established business owners, started discussions in 2006 to bring a restaurant to downtown Waterloo. They opted to take on the project themselves, each offering three workers and a supervisor. Beck was responsible for restaurant equipment and fixtures.
A five-year lease was drawn up setting rent using a formula based on a construction loan Nelson took out and shared maintenance costs, taxes and insurance --- or, during more successful months, based on a percentage of the restaurant’s sales, Verhulst said. As part of the deal, the landlord could get up to $2,000 worth of food and alcohol a month from the restaurant.
Verhulst said the remodeling costs reached $1.23 million, paid for with the $796,000 construction loan Nelson took out and the balance advanced by Midtown.
Roemerman said the Black’s Building needed significant renovations like tuck pointing and new windows that had nothing to do with the restaurant operation. He said Beck went to Nelson a number of times over bills and was always told not to worry, they’d settle up when everything was done.
Roux Orleans opened in October 2009 with good results in the first months, but business didn’t go as projected, Roemerman said.
“Except for one month it bled cash, and everybody knew it,” Roemerman told jurors.
In early 2011, Beck and Nelson talked about rebranding the restaurant as a steakhouse to generate more business, but the change wasn’t enough to save the venture, which continued to bleed cash “as if you opened the jugular vein,” Roemerman said.
He said Beck was losing more money on the Black’s Building restaurant than he was making on all of his other restaurants.
Attorney Tim Luce, who is also representing Beck, said Beck had to take the equipment because he had taken out the loan for the items, and he disputed the allegation a mess was left after closing.