Two original owners of the Burrito Gallery restaurant are suing their partners over who is entitled to view the partnership’s financial records.
John Shockey and his wife, Alison, filed a complaint Oct. 16 in circuit court in Jacksonville against Gallery Restaurant Group LLC.
Gary Lee, a CPA in Jacksonville Beach and the registered agent for Gallery Restaurant Group, did not immediately return a request for comment.
Attorney Hank Holbrook with Lippes Mathias Wexler Friedman represents Gallery Restaurant Group. He did not return a phone call for comment as of Friday afternoon.
Gallery Restaurant Group was formed in 2004 and is the sole owner of Burrito Gallery & Bar, the original Burrito Gallery restaurant Downtown at 21 E. Adams St. and owner of Uptown Market & Deli LLC at 1303 Main St. in Springfield.
According to the complaint, Gallery Restaurant Group has since evolved from owning the two venues to having its own franchise and real estate divisions.
When the corporation was formed, there were four members: managing member John Shockey, Eddy Escriba, Anthony Allegretti and Marco Monroy.
In 2014, each of the four members gave 5% of their ownership interest so that Shawn Lednick could become a member. The restructured corporation comprised five members, each with a 20% interest.
On Sept. 3, 2014, Gallery Restaurant Group entered into a license agreement with Brooklyn Burrito Gallery LLC, a corporation owned by Lednick and John Valentino, who owns Mellow Mushroom restaurants in Jacksonville.
The agreement allowed the Burrito Gallery restaurant in the Brooklyn area, and up to four more restaurants, with the original Burrito Gallery trademark, intellectual property and proprietary information.
In exchange, all of the Burrito Gallery restaurants operated by Lednick and Valentino are required to pay a license fee of 4% and an advertising fee of 1% of total gross monthly sales.
The Shockeys provided documents in the lawsuit indicating the license agreement requires each restaurant to submit its sales tax returns for each month showing the gross sales reported to the state of Florida for purposes of calculating the license fee.
On Sept. 11, 2014, the five Gallery Restaurant Group partners entered into a consulting agreement with Valentino.
Valentino, in exchange for a $200 per hour fee invoiced monthly, was to assist the original Burrito Gallery and Uptown Market in improving efficiency and profitability.
In addition, Valentino was to receive a 10% interest in Gallery Restaurant Group, derived from a 2% contribution from each member.
The consulting agreement also required Gallery Restaurant Group to pay Valentino performance bonuses in 2014, 2015 and 2016 equal to 25% of the increase in net sales of the original Burrito Gallery and Uptown Market.
Since entering into the license agreement, Burrito Gallery restaurants owned by Lednick and Valentino have opened in Brooklyn, Jacksonville Beach and along Gate Parkway in South Jacksonville.
The Shockeys claim that since 2014, when Lednick became the managing member of Gallery Restaurant Group, he has not provided financial reports to members and has not held annual meetings of the company as required by the operating agreement, despite repeated requests.
According to the complaint, on May 2 the Shockeys sent to Gallery Restaurant Group a written request to inspect the financial records, including state sales tax and federal income tax returns related to the restaurants, records of Valentino's invoices for consulting services and payments made to him, and other financial documents related to the restaurants, pursuant to state law.
The Shockeys contend that Gallery Restaurant Group indicated it would produce some of the records, but would not provide records older than three years. The Shockeys also said that no records were provided before the lawsuit was filed on Oct. 16.
The Shockeys are asking the court to order Gallery Restaurant Group to produce the records for inspection and also to award them reasonable attorney fees.
The Shockeys are represented by the Jimerson Birr law firm.
The case is assigned to Circuit Judge Robert Dees.