Freddy's Nightmare

Nadir Foteh is proud of his grill.
Deron Neblett

One Friday last month, sometime between the breakfast tacos and the lunch meat, Nadir Foteh received a telephone call from his landlord.

Foteh runs Freddy's Deli, a small family-owned cafe on the ground floor of the 1800 West Loop South office building near San Felipe. Freddy's has been feeding tenants there since December 1992. In the restaurant game, that almost makes Freddy's an institution.

The eatery's partners -- Foteh, brother Fred and sister Angie -- had served up their food without complaints. Then Jennifer Miller, the property manager for the building's owner, Crescent Real Estate Equities, phoned Nadir Foteh to say they had to meet when the cafe closed at 3 p.m.

He even offered to get together earlier, but 3 p.m. was perfect for Miller: After all, her intent was to inform Foteh that Freddy's had served its last smothered pork chop there. Accompanied by a locksmith, the chief building engineer and a police officer, Miller presented Foteh with an eviction notice and gave him two hours to vacate the premises.

The heavy 46-year-old man, with glasses and wavy black hair that's starting to gray, was shocked. For one thing, he couldn't relocate his equipment and inventory by Monday, let alone in two hours. For another: Why?

Foteh says he tried to appeal to reason. But as workers covered Freddy's glass facade with thick brown wrapping paper, he says Miller told him, "It's too late for talk."

In fact, the Foteh family and Crescent Real Estate Equities had exchanged very few words before the eviction. The Fort Worth-based company bought 1800 West Loop South in 1997. Nadir Foteh signed a new five-year lease with Crescent in December 1999 and agreed to spend at least $10,000 to improve the kitchen and dining area.

With or without the added mural and trim, Freddy's has a pizza-parlor ambience -- simple, roomy, well lit, with few flourishes. The menu features a salad bar, daily specials and, of course, grilled cow.

Foteh notes that few food establishments in Galleria-area office buildings have grills. "We're not Jason's and we're not the Wall Street Deli," he says. "We're just a place that serves what I think is pretty good food."

Foteh's Palestinian parents were in the cafe and grocery business in Ramallah before immigrating to Houston from Israel's West Bank in 1962, when Foteh was six. They continued the trade here, raising the three children now in the business. Fred, Freddy's namesake, runs a family cafe in southwest Houston. At Freddy's, Nadir Foteh -- invariably dressed in a ball cap, shorts, short-sleeve polo shirt and green apron -- is captain and maître d'. There's also a cook, busperson and Angie, who handles the register.

The trouble with Crescent started last summer, when Foteh noticed that the kitchen exhaust and grease-disposal systems needed cleaning. He hired a contractor, who asked for the blueprints of the exhaust ducts. Foteh says he called Crescent "three or four times" for the plans, but received no response until last September 17. That's when Jennifer Miller sent a letter -- it came on a sheet of plain bond paper, oddly enough, rather than Crescent letterhead -- notifying Foteh that he was in default of three sections of his lease because the exhaust and disposal systems weren't clean.

Foteh at last was able to get the plans and, as Crescent suggested, "engage a qualified professional" to clean the ducts and grease trap. As directed by Miller, he forwarded Crescent "evidence of such actions": a $575 invoice, dated October 28 from SOS Services of Houston.

That was the extent of the dialogue with Crescent before January 25, when Miller gave Freddy's the boot. The following Monday, Crescent greeted tenants in the 24-story office tower with a memo stating that Freddy's Deli had "ceased operations."

Some tenants, including two attorneys on the 16th floor, were offended. "As a family operated business," the lawyers wrote, "the members of the Foteh family have exhibited a personal and genuine interest in all of us as patrons, as fellow tenants and friends, which seems to be a rarity in today's business environment."

An executive with the building's senior tenant, an asset management company on the 19th floor, told Miller in a note that he was saddened. "I am not sure about the reason for the Deli's closing," the executive wrote, "but I would certainly encourage you to do whatever you can to work out the problem."

Crescent spokesperson Sandra Porter said the company would not comment on pending litigation. Nor would it make available the results of a strange sort of secret operation the company initiated to try to expose Nadir Foteh as a liar.

Without notifying the Fotehs, Crescent hired an "independent contractor" to inspect the exhaust fan and grease trap, the two-page lease termination notice states. The contractor concluded that they "had not been adequately cleaned, despite your assurances to the Landlord…"

Under the circumstances, Crescent had "no choice" but to terminate the lease, the notice says.

When the company refused to discuss the situation, Foteh sued. A judge ordered Freddy's back in business, pending a hearing before a justice of the peace. Miller issued tenants a one-sentence memo that Freddy's was reopening January 30.

Pierpont Public Relations, one of the tenants, sent a list of staff comments praising the eatery. "Like any restaurant, some people like it and some people don't," explains Pierpont's Philip Morabito. "But they're nice people and their hamburgers are fabulous."

The Foteh family doesn't believe Freddy's disposal system simply failed Crescent's white-glove test. At the very least, the canceled check to SOS Services would demonstrate a good faith effort to perform the work.

Nadir Foteh says that, for a brief time, he wondered if Crescent was caught up in a post-September 11 display of jingoistic bigotry. The company's initial complaint did come less than a week after the World Trade Center terrorist attacks. Foteh is active in the local Palestinian community, but he has never been back to his troubled homeland, nor does he have any desire to return.

"Hell, I've been here too long," he says. "I'm a Texas boy now."

Instead, Crescent's handling of this longtime tenant could be just another example of corporate ham-handedness. In 1999 the company backed out of a deal with the City of Houston to build the convention center hotel after deciding that $65 million in taxpayer subsidies wasn't enough. The company -- which owns ten million square feet of office space, including Greenway Plaza -- also has sued the city for leasing the municipal-owned Compaq Center to Lakewood Church.

Regarding the Fotehs, Crescent's real motivation could be simply to wiggle out of the five-year lease. The family pays $12 a square foot in a building that commands on average about $20.

Indeed, the day Freddy's reopened after the court order, Foteh began receiving mail addressed to an outfit called N&M Enterprises. Harris County records show N&M operates the Out to Lunch Cafe & Deli in the Crescent-owned Post Oak Central Two near the Galleria. Its newest business registration is for the Uptown Grill & Deli at 1800 West Loop South. N&M registered for that name with the county clerk on January 24 -- the day before Crescent evicted the Foteh family. Maliwan Mak, N&M's president, declined to comment on her company's plans to expand.

Whether or not Crescent has already cut a more favorable deal with a new tenant is unknown. But the company could use the money. Crescent is suffering from an ill-advised buying spree after the company went public in 1994, including a failed bid to enter the casino business in Las Vegas. With shares sagging in spring 1999, the company agreed to sell $500 million of office properties and "non-core assets" in other states.

However, financial troubles continue for the company. In January, Standard & Poor's issued a negative Credit Watch on $600 million of Crescent's unsecured debt. Earlier this month, S&P issued another ratings watch after a related company, Crescent Machinery Co., filed for Chapter 11 bankruptcy protection in Fort Worth.

Still, the Fotehs know that in a legal battle, they can't hope to match the resources of Crescent, one of the largest real estate companies in the nation. The family's lawyer, Daniel Jackson, admits that settling the case through mediation would probably be best. A civil action for breach of contract and lost revenues may be too costly.

"They're not wealthy people, and if they win a jury verdict and have $30,000 in legal costs, where does that leave them?" Jackson says. Nadir Foteh says he's not inclined to remain where he's not wanted, but he won't be bullied out of business. He's put about $65,000 into Freddy's, and the loans aren't close to being paid off.

If Crescent officials wanted to change tenants, they should have done it before or after the current lease, Foteh says. "Don't just decide you don't want me in here, then put me out on the street with a moment's notice."

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