City wins Moonlight Beach concession stand lawsuit

The city of Encinitas recently prevailed in a breach-of-contract lawsuit filed by operators of the former Moonlight Beach concession stand.

Treggon Owens and his wife, June, ran a food and beverage stand for 3 1/2 years at Encinitas’ most frequented beach. But the couple’s July 2013 lawsuit said the city failed to notify them about plans to demolish the concession stand, prematurely ended their lease and wrongly awarded the new contract to another business.

San Diego Superior Court Judge Early H. Maas III granted the city’s request last month for a summary judgment, writing in his decision that the city’s termination of the lease honored the contract terms.

Further, Maas stated the Owenses raised the contract issue only after they were passed over during a competitive process for the lease.

But Michael Curran, an attorney representing the Owenses, said the couple were only trying to work with the city.

“We feel that the city got away with a breach because the Owenses were trying to be decent people and work with the city and not make waves at the time,” Curran said. “Unfortunately, this turned out to be a deciding factor against them.”

In 2009, the Owenses inked a deal to operate the concession stand. The one-year contract included an option with up to four one-year renewals.

Curran previously argued they held the right to renew the contract, given government code and legal precedents. But city Attorney Glenn Sabine countered that both parties had agreed in 2012 that the contract would be terminated within six months, according to a court document.

Sabine pointed to a February 2012 email from city staff notifying the Owenses that the lease would be extended for only another six months because of plans to demolish the concession stand and build a new one.

The new, larger facility debuted July 2013.

Maas called it “significant” that the Owenses submitted a written response to that email that “accepted and otherwise agreed” to the modified six-month proposal.

Another factor that was significant in Maas’ decision: In October 2012, the city notified the Owenses that it was going to request proposals from groups to operate the new concession stand.

The Owenses, court filings say, were led to believe the process was only a formality, and that they would operate the new concession stand. So they turned in a proposal, but the following spring the city awarded the lease to Moonlight Beach Deli & Dogs, the current leaseholder.

It was only at this point the Owenses stated they believed the contract was still in effect, Maas said.

“Nothing in the contract precluded either party from offering something other than a one year renewal, and the termination clause was not unreasonable and not inconsistent,” Maas stated. “Plaintiff’s failure to raise the issue of any contractual violation until after … the lost request for proposal process to another vendor supports this conclusion.”

The couple sought $120,000 in damages due to lost profits and money spent on improvements.

In 2009, they sank $80,000 into repairs for the dilapidated stand, updating the menu with healthier options and other overhauls. Legal documents note the Owenses believed the Moonlight Beach project wouldn’t happen for some time, because back then the city was focused on first revamping Beacon’s Beach.

Curran said that an appeal isn’t planned.

While the lease situation went south, it started on a promising note. After agreeing to the deal, the Owenses told several media outlets that running the concession stand was a dream come true.

Last week, the Encinitas City Council in closed session gave direction to seek the recovery of legal fees, an option the contract allows for.

“Given the closeness … of the call and equities involved, we doubt any fees will be awarded,” Curran said.