The owner of a new San Luis Obispo tapas restaurant — whose downtown bowling alley and entertainment center project fell through last year amid controversy — has temporarily shut down the eatery after just five months.
The seafood restaurant Branzino, inspired by Spanish and Californian cuisines, closed Aug. 2, pending a potential sale or recapitalization of the business, owner Jeremy Pemberton said.
“We’re in limbo right now,” Pemberton said. “I’ll know more on Monday.“
Pemberton said he’s meeting with potential buyers, but he acknowledged no agreements have been reached yet.
A recapitalization, the restructuring of the business’ financial makeup, could allow Pemberton to keep it under his ownership, he said.
Branzino owner cites financial challenges and lawsuit hurdles
Pemberton said Branzino is closed because of financial challenges associated with a poor credit rating.
Pemberton said he believes that will improve after he clarifies with credit companies a development related to a lawsuit, which is still pending against him.
Pemberton said a nearly $600,000 default judgment he was facing was vacated by the judge on Aug. 2, which court documents confirm.
The court ruling means he is no longer ordered to pay up immediately, but the lawsuit is still ongoing.
The plaintiff, Javi Fajardo, claims Pemberton owes him the $500,000 he invested in 2017 due to a breach in the partnership contract.
Fajardo invested in a planned downtown SLO bowling alley and entertainment project under Pemberton’s company, Discovery SLO, which fell through.
“When he took my client’s money, he was already evicted from the space (of the planned bowling alley and entertainment center),” said Michael Pick, Fajardo’s attorney. “He was already kicked out. That’s the biggest issue.”
Pemberton didn’t respond to an emailed request from The Tribune on Friday for comment on Pick’s contention that he was evicted at the time he took Fajardo’s money.
Pick added: “The (ruling vacating the judge’s order to pay up) had nothing to do with the merits of the case. The merits are still intact, and we demand a return of my client’s money.”
A case management hearing is set for Aug. 26. Pemberton has denied the claims.
Pemberton had been representing himself when Judge Tana Coates entered her ruling on May 9, requiring him to pay about $593,000, including interest accumulated on the initial investment (totaling about $86,000) and lawyer fees (about $6,000), according to court documents.
Coates’ ruling took place after Pemberton retained a local law firm, Tardiff Law Offices, to represent him in the case. His lawyers successfully filed a motion to set aside the monetary judgment as the case moves forward.
Pemberton previously told The Tribune that the terms of the agreement were that “no partner shall demand or receive a return of such partner’s capital contribution.”
“The partnership was always contemplated to be a 25- to 35-year, illiquid asset,” Pemberton wrote in a written summary he shared with The Tribune.
Fajardo also claims Pemberton breached their agreement by failing to share records and accounting, which Pemberton has denied. Pemberton said he updated Fajardo with texts about project funding and plans for project cost reductions.
As for records, Pemberton previously said: “I would have been happy to show him that information, but he never asked.”
“Plaintiff brings this action requesting partnership records and accounting,” Fajardo’s lawyer wrote in a recent court document. “Plaintiff has yet to see the requested partnership records nor any accounting since commencement of litigation. Plaintiff (sic) now desires to have his money returned.”
A history of soured business relationships
In April 2017, Pemberton and his Discovery SLO company were sued by their commercial landlord, Jamestown, a multi-billion-dollar, international corporation, in a lawsuit that has since been settled.
Jamestown accused Discovery SLO of failing to pay $750,000 in rent as the project at 1144 Chorro St. stalled after years of planning. The details of how the case was resolved in 2018 were not revealed by either side. The project plan for the site was canceled.
In addition, Branzino employees who spoke with The Tribune previously said they weren’t being fully paid for their work at Branzino — contending they were shortchanged even after repeated conversations with Pemberton.
Pemberton has repeatedly disputed those claims, and he said Thursday that he has fully paid all employees for their work to date.
One employee, who spoke on condition of anonymity, previously told The Tribune that some of his past paychecks bounced and, after partial payments in cash, Pemberton was “refusing to pay the remainder of what is owed.”
On Friday, the former employee said he has received his back pay but also conducted work for Pemberton outside of normal business hours for which he didn’t get paid. He chose not to further the dispute, saying “it wasn’t worth the battle.”
That same employee said: “As far as I know, everyone (that was on staff) is paid... accurately, I can’t say. ... It honestly makes me very happy it is finally closed and that (Pemberton) will get out of town.”
Pemberton said Friday in an email that “what I do know is there are no employee disputes in writing or verbal to me about compensation.”
Pemberton said the eatery has been a success among customers, receiving good Yelp reviews.
He said he has other projects in Tennessee and Austin, Texas, adding it has been difficult to do business in SLO.
‘I’ve been trying to work my way out of this downward spiral,” Pemberton said.
Pemberton said high labor costs in California and the public scrutiny of development projects in SLO has been challenging.
He said he didn’t think he’d have the same kinds of issues “in bigger markets” that he’s had in SLO.