lawsuits

Josh Morgan Suing Bobby Werhane Over ‘Financial Improprieties’ at Choptank

Choptank.

Choptank.Photo: Hannah Whitaker

Well, here's something for a Friday afternoon: A representative for Josh Morgan passed along a statement from the Morgan Restaurant Group owner saying he has filed a civil lawsuit against his Choptank partner, Bobby Werhane. Morgan is alleging that Werhane, who recently opened the Italian restaurant Spasso, conducted "financial improprieties" and "committed, among other things, fraud, breach of fiduciary duty, corporate waste, and unjust enrichment." After Choptank shuttered in December owing to water damage, the restaurant never did open back up again. Morgan tells us he got suspicious while conducting a year-end analysis of the restaurant's finances. Though fall and winter had been slower, "the decline in sales wasn't accounting for the significant insolvency," Morgan tells Grub Street, "as I looked closer I started to see some serious improprieties." Plenty more, straight ahead.

Now Grub Street learns that Werhane will open an Italian concept in the Choptank space in "a couple of weeks," if things go according to plan. Morgan, meanwhile, tells us he hopes to retain the Choptank brand and reopen in the same space, if possible. So, this should be fun to watch.

Here's Morgan's full statement:

New York, NY - Choptank co-owner Josh Morgan has filed a civil lawsuit against his financial partner and long time friend Robert Werhane, owner of Experience Hospitality, Ernest & Olivia, and the recently opened restaurant Spasso.  The two opened Choptank in January 2010. 
 
Josh Morgan worked together with Werhane to bring the best of their native Chesapeake Bay to New York City's West Village. Their success was featured on ABC News, Taxi TV, the prestigious Vanity Fair Summer Restaurant Guide, and most recently in Time Out as having one of NYC's top burgers. Choptank was known for it's traditional Maryland Crab Feasts and it's casual and relaxed, neighborhood vibe. 

The restaurant experienced sudden insolvency and after preliminary investigation, Morgan believes he can show documented instances of financial improprieties on behalf of Werhane and his company, Experience Hospitality.  Morgan retained Jason Gabbard and his firm as legal advisors.   The civil suit they filed alleges that Werhane, Experience Hospitality, and 551 Hudson, LLC d/b/a Spasso, "committed, among other things, fraud, breach of fiduciary duty, corporate waste, and unjust enrichment."   

Josh Morgan said, "I am deeply saddened that a potentially sound partnership based on friendship has come to an end.  But the financial misconduct I believe was committed here, and which I suspect is indicative of his volatile history in previous partnerships, must be acknowledged.  I put my heart in this concept and my trust in Bobby and his book-keeping."

Josh Morgan is still an investor in the business that owns the Choptank space, although he is no longer involved in the operations and management.  The entity, now solely under the control of Robert Werhane, is planning on opening an Italian concept in the old Choptank space. 

While Josh and his company, Morgan Restaurant Group, sees this suit through, he will be looking to obtain the rights to the Choptank brand, which he created, and is currently working on a new concept.

Of course, Werhane isn't having any of this. When we contacted him to get his side of the story, his rep sent the following statement along:

I am both disappointed and frustrated that my former co-managing member Mr. Morgan has named 308-310 Bleecker Restaurant, LLC, 551 Hudson Restaurant, LLC, and myself as co-defendants in a malicious and meritless lawsuit, as a result of his removal as a managing member. We have retained counsel and will defend these false allegations as far as the law will allow.
- Robert C. Werhane, Experience hospitality.

Between this, the Graffit/Graffiti kerfuffle, and the shenanigans at the Lion, it's been a good week for beefin'. Sounds like everyone needs to relax a little. Must be time for the long weekend to start!

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