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Hobby Center Lawsuit Has Put Artista in Hot Water

The Hobby Center and Cordúa Restaurants are locked in a dispute concerning the lease of Cordúa's restaurant in the center, Artista.
The Hobby Center and Cordúa Restaurants are locked in a dispute concerning the lease of Cordúa's restaurant in the center, Artista.
Photo courtesy of Artista

It seems Cordúa Restaurants are in a bit of hot water, at least according to the lawsuit recently filed by the Hobby Center for Performing Arts.

The Cordúa restaurant Artista has been located inside the Hobby Center for the past 11 years, but when its lease ran out, in 2012, issues began to arise concerning its cost. According to the lawsuit, the Hobby Center is now seeking "judicial declaration that its lease with Cordúa for the Artista restaurant has ended."

On November 25, 2002, the Hobby Center and Cordúa Restaurants entered into a 10-year lease that gave Cordúa the right to use Hobby Center space to open Artista, a contemporary American-cuisine restaurant that caters largely to theater crowds.

When the lease's expiration date drew near, in early 2012, Cordúa Restaurants notified the Hobby Center that it sought to renew the lease for an additional five years. In May 2012, the Hobby Center gave Cordúa an amended "rental renewal rate" in writing. As before, the rent was divided into charges for "basic rent, percentage rent, concession sales rent and catering sales rent."

Cordúa rejected the proposed rate, so the Hobby Center extended the lease to April 2013 to give both parties time to conduct appraisals. Initially, appraisers for both Cordúa and the Hobby Center agreed that the lease should be divided into four components (those listed above), but the two parties could not reach an agreement regarding the rate for each sales component.

According to the lease agreement, if the two appraisers cannot come to terms, they must designate a third appraiser. The third-party's appraisal was very close to the appraisal offered by the Hobby Center.

On August 14, 2013, the Cordúa appraiser announced that he and Cordúa Restaurants disagreed with both the appraisal and the process of calculating it. Cordúa's appraiser stated, "Artista maintains now that the whole appraisal is erroneous per the lease and I agree with them."

It seems the primary point of contention concerns beverage concessions. The Hobby Center's appraiser and the third-party appraiser both determined that Artista should be paying about 45 percent of beverage sales to the Hobby Center. Cordúa's appraiser believes the amount should be closer to 35 percent.

Neither party has been able to reach an agreement, and the 30-day period for the Hobby Center and Cordúa to amend the lease expired at midnight on September 21, 2013. Now, the Hobby Center is seeking "a judicial declaration that the lease has terminated by its terms following Cordúa's non-renewal and non-compliance with the requirements of the lease's renewal option."

In a nutshell, the Hobby Center wants a judge to rule that, because Cordua wouldn't agree to any terms by a specific date, the lease has been terminated. That would mean that Artista needs a new home, ASAP.

 

We contacted the Hobby Center, whose president, Fran MacFarren, gave us the following statement:

"At this time it is business as usual. Artista is open and serving lunch and dinner. The lawsuit simply asks the court for a declaration of the parties' rights under the lease. Although litigation is never a first choice, we are thankful that the courts can provide clarity on this business matter."

If this all seems a little skewed toward the Hobby Center, that's because the lawsuit, available to the public online, comes from them, and the Cordúas have yet to release a statement.

We contacted executive chef David Cordúa, of Cordúa Restaurants, who was unable to provide a comment. He had previously spoken to CultureMap, though, telling that publication that the group was working on a response to the lawsuit. He also said that he's "looking forward to the next 10 [years at the Hobby Center]."

It's an unfortunate situation for both parties, but probably more so for Artista. The Hobby Center will still be a popular venue without the restaurant, but a restaurant cannot operate without a space. A source told us she dined at Artista recently and found it largely empty, which is unusual for the generally popular dining destination.

Hopefully the issues will be resolved quickly so we can all continue to dine on buffalo churrasco and tres leches cake before watching Lizzie Borden chop her parents to bits while belting out a rock ballad.


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