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ROY — A rapidly expanding pickleball brand in northern Utah is being sued after its management took over a rival's facility but never paid, according to a complaint filed earlier this month.
But the pickleball company disputes the allegations in the lawsuit filed in 2nd District Court and says it has "always operated with the utmost integrity and transparency in its business interactions."
The Kitchen pickleball club, with locations in Kaysville, Woods Cross, Pleasant View and a planned site in Mountain Green, contacted the owners of Outta-The-Jar Pickleball in Roy after the business was listed for sale back in July for $395,000.
"Since revenues were down, the partners/members sought to change the business direction by either looking for an existing franchise to join, or to sell their pickleball business, or to find additional investors that could join the members with additional capital to augment marketing efforts," the complaint, brought by manager and partner Brian Horne, stated.
The Kitchen Pickleball Franchise CEO Britton Black messaged Horne three days after the posting went live, asking, "Are you actively trying to sell the location? We are excited about turning this thing around as a Kitchen," according to a screenshot of the message shared with KSL.com
At the end of July into August, Horne began talks with Britton and Curtis Black to have Outta-The-Jar join the Kitchen as a franchisee, the complaint says.
As part of the conversion to the Kitchen, the owners "had Horne make major changes/improvements" to the facility by painting the courts red and gray, painting the walls black, buying new nets, improving lines, constructing "hangout areas" like what is found in other Kitchen facilities, and carpeting those areas, according to court documents.
In August, Horne and another partner signed a franchise agreement and sent it to The Kitchen, the complaint says, but Kitchen owners "stated they changed their minds" after a trip to Alaska. They "instead offered to outright buy," the location and take over the lease starting in September, the suit alleges.
The Kitchen offered Horne's company $200,000 in a conference call — half up front and the other half after a year, according to the complaint.
Horne and his partners accepted, and by the beginning of September, they claim in court documents to have turned over the security cameras and passwords, their court reservation software and database of almost 600 customers and the "reoccurring revenue stream of existing clients," the internet service account, access to the electronic door system, "the Google Business account with five-star rating and top listing placement," while redirecting their website, OuttaTheJar.com, to The Kitchen's website.
On Sept. 2, The Kitchen sent out an announcement to all customers in the old database, saying, "You may have noticed some changes in the facility over the last few weeks. We have been in the process of taking over this location and converting it over to THE KITCHEN," according to the email obtained by KSL.com.
A new lease was negotiated with the landlord of the building, the lawsuit says, to start as soon as Outta-The-Jar moved out. The landlord "would not sign a new lease agreement until after Horne and/or Outta-The-Jar had officially vacated the plaintiff's facility by written notification," the complaint said, so Horne notified the landlord on Aug. 30 that Outta-The-Jar had moved out.
On Sept. 27, after asking when the new management would send the money, Horne received a text from Britton Black:
"Brian, I'll just shoot you straight here. We never agreed to pay you anything for Outta the Jar. We said we'd consider it. With how this all turned out during new lease negotiations, all the money that we'd even consider paying you is going from us to the landlord to release you from your agreement and allow us to even do business there. Outta The Jar, in our minds, is worth $0.00. We won't be paying you any additional money outside of the taking over the court re-coloring and the couches."
Horne told KSL.com it was reading this message that the situation hit him — over $300,000 in resurfacing the floors, painting, lighting, equipment, and security was all gone.
In a statement, Britton Black said the claims made in the lawsuit are "categorically untrue." He said it was Horne who contacted the company and Horne started converting his business to match Kitchen's branding before he signed a franchise agreement, then later decided to back out of the franchise and put a stop payment on the franchise fee check.
Black said the company made no offer to purchase Outta-The-Jar and upon review, the company discovered that Horne owed the landlord money. He claims the company told Horne such debt made a purchase agreement "commercially unfeasible" but Kitchen agreed to pay $100,000 to the landlord to enter into a new lease. He said the company also paid off other expenses tied to the facility upgrades with the understanding that Horne "would help in the smooth transition."
A letter to the Kitchen was sent Oct. 1, from Horne's lawyer, asking for payment. "I assume you have likely been expecting this type of demand letter," attorney Jered Edgmon wrote. "Rather than go through the effort to set out all of the legal and factual arguments detailing how you received over $200,000 in value of assets from Outta-The-Jar and how you have failed to compensate Outta-The-Jar as agreed, I will just highlight that you were unjustly enriched by obtaining through ruse Outta-The-Jar's assets, and you need to pay as agreed."
Horne said that the letter and other attempts at mediation were unsuccessful. A certified letter was opened by the Kitchen owners notifying them of the lawsuit this week, according to Horne. No court hearing date has yet been scheduled.
