Santa Monica Restaurant to Fight Judge’s Order to Close

Ned Kelly’s Bar and Grille on Santa Monica’s Third Street Promenade was slated to be closed this week because it had operated as a rowdy nightclub and for owing rent, but the restaurant owners say they will fight the effort to kick them out.

A Santa Monica Superior Court judge last Thursday ordered Ned Kelly’s to leave its spot at 1212 Santa Monica Mall and to pay more than $12,600 in back rent to property owner Hildegarde Heidt. The amount is based on sales that had been under-reported in 1987 and 1988.

The restaurant was also ordered to pay $4,048, the cost of Heidt’s audit. Richard Knickerbocker, the restaurant’s attorney, said he has filed motions to stave off the Los Angeles County marshals who were to seal the doors this week.

Heidt sued restaurant owners Greg McElroy and Vincent Cullinan in June, charging that restaurant operations were improper and raucous, according to Heidt’s attorney, Gordon P. Gitlen.

Heidt claimed that the restaurant owners, who took over Ned Kelly’s in October, 1988, were operating as a nightclub without proper permits. Gitlen said that the restaurant served mostly liquor and only a little food, in violation of its lease.

Gitlen said in an interview that the restaurant offered live and recorded music for about $7 admission and each night bore a different name, such as “West Go West” and “Menace and Mayhem” as a promotion for its nightclub operation.

Knickerbocker said in an interview that the restaurant’s dining business--with a menu that includes “New Wave Soups” and sandwiches called “The Springsteen” and “The Yoko Ono” for about $5--suffered during the renovation of the mall and that the entertainment was aimed at stimulating food and drink sales.

Bomb Threats

According to Gitlen, the crowds at Ned Kelly’s got out of hand: There were frequent bomb threats, patrons got into fights and broke windows in neighboring businesses, and “blood and vomit was seen in the morning, near the broken windows.”

Knickerbocker disputes those claims. In January, a patron died after he got into a brawl on the promenade, but Knickerbocker says the man had left Ned Kelly’s before he got into the fight and that the incident had no connection to the restaurant.

Rent for the restaurant is $1,900 a month or 6% of the restaurant’s gross sales, whichever is greater. In some months, the restaurant grossed up to $58,333, providing rent of $3,500 to Heidt, Knickerbocker said.

But Gitlen claimed that the restaurant was reporting only its cut of proceeds from cigarette vending machines and promotional entertainment events, instead of reporting “gross sales” as stated in the lease, which he said would also include the share taken in by the vending company, promoters and any other sublessees or concessionaires.

Gitlen also claimed that the restaurant owners destroyed cash register tapes. Knickerbocker argued that it was previous owners, not McElroy and Cullinan, who threw away the tapes after recording the figures.

Heidt is “pleased she did put her foot forward as a responsible owner and (as someone who’s) responsible to the community,” Gitlen said, adding that Heidt was looking for a new commercial tenant.

Will Appeal Case

But Knickerbocker said Heidt was “asking more than she’s entitled to” and that he will appeal the case, including Judge Sara Radin’s instructions to the jury that the case was not one of failure to pay rent but one of a breach of other lease provisions.

In failure-to-pay-rent cases, a landlord can only collect rent back to one year, whereas if “they . . . call it a (breach of lease),. . . (they) can go back as far as they want,” he said.

Meanwhile, Ned Kelly’s is considering filing for Chapter 11 reorganization, “to protect our creditors, so we do not have one creditor like Hildy Heidt grabbing all the cookies at the expense of all the other creditors who’ve been dealing with Ned Kelly’s on a (fair) basis,” he said. The restaurant is also looking for a new site in Santa Monica or West Los Angeles in case it is forced to move, he said.