Breach of Contract Lawsuit Filed Over Texas Restaurant License Agreement
Austin, TX (Law Firm Newswire) December 19, 2014 – A Texas restaurant company and its construction arm recently filed a breach of contract lawsuit against a licensee.
Domco Inc., which operates El Tiempo restaurants in the Houston area, and MKWW Management Inc., an affiliated construction company, filed the lawsuit against Liquid Gold Hospitality Group LLC and five Liquid Gold managers. Liquid Gold entered into a contract to operate a number of new El Tiempo restaurants, but construction delays prevented the restaurants from opening on schedule. Domco alleges that Liquid Gold breached their license agreement.
“License agreements are usually complex documents. Reasonable minds may differ on whether certain actions constitute a breach of contract, especially if the agreement is somewhat ambiguous,” said Gregory D. Jordan, an Austin business litigation attorney with the Law Offices of Gregory D. Jordan.
According to the lawsuit, the intention of the license agreement was to allow Liquid Gold to use the El Tiempo marks and trade dress, as well as the procedures, proprietary recipes and management techniques used by El Tiempo. Domco asserts in the lawsuit that the license agreement was for one restaurant only, in Webster. According to the lawsuit, construction on the restaurant remains unfinished, and Liquid Gold has failed to pay its construction bills to MKWW.
However, Liquid Gold asserts that the license agreement is for 18 restaurants, and that the company intends to honor the agreement and open the restaurants. According to a statement by Liquid Gold’s attorney, the license agreement requires Liquid Gold to use MKWW for construction, and that caused cost overruns of more than $500,000. According to Liquid Gold, El Tiempo is trying to stop construction and get out of a binding contract.
The lawsuit asks for a trial by jury, a preliminary and permanent injunction preventing Liquid Gold from using El Tiempo marks, and actual and punitive damages.
“This case illustrates the importance of carefully drafting license agreements,” noted Jordan. “A good contract upfront can prevent a lot of headaches on the tail end.”