Chapel Hill restaurateur sues UNC foundation over business practices

tgrubb@newsobserver.comNovember 19, 2013 

— A former downtown restaurateur has sued UNC’s real estate arm, claiming misrepresentation and fraud in how the business would remain open during a planned redevelopment.

Maisie Coborne, owner of Butternut Squash, filed the civil lawsuit Oct. 29 in Orange County Superior Court against Chapel Hill Foundation Real Estate Holdings Inc. REH is a not-for-profit, private foundation that owns, develops and manages real estate projects for the university and affiliated groups.

According to the lawsuit, Coborne is seeking damages in excess of $10,000 for multiple claims of misrepresentation, fraud, emotional distress, and unfair or deceptive trade practices. She also is seeking punitive damages.

Gordon Merklein, UNC’s executive director of real estate development, declined to comment about the lawsuit.

Coborne claims REH officials misled business owners about their plans and whether help would be available for businesses to relocate during and after construction, the lawsuit states.

Coborne and her daughter Kelly Bruney, who is a partner in the business, also have said their landlord, Raleigh-based Thomas Linderman Graham, offered to help them move. They had two offers to sell since opening Butternut Squash in 2009 but declined because they expected relocation to one of the landlord’s many properties, Bruney said.

Coborne’s lawsuit claims that shortly after REH bought the property in 2009, Merklein told the business owners they would have help staying open during the transition and returning to the new development.

Coborne claims REH officials assured them four times between 2009 and 2011 that the restaurant could stay open until the second phase of demolition started. REH officials also told her the restaurant would be temporarily relocated during construction and return afterward to a new location facing Franklin Street, she stated.

REH misrepresented its intentions “in order to allow it to continue collecting rent from Plaintiff Butternut Squash Restaurant on a short-term basis until the Defendant’s construction and development plans no longer required the Restaurant as a tenant,” the lawsuit states.

Coborne learned in August 2012 that the foundation was not going to relocate the restaurant or continue its lease, although other tenants were offered short-term lease extensions, the lawsuit states. By that time, Coborne claims she was no longer able to find a buyer for the restaurant.

According to the lawsuit, Coborne terminated the lease in March, just a month after bringing her claims to a Chapel Hill Town Council meeting at which the University Square project was approved. Merklein also did not address her claims at that time but later said REH officials had been clear the businesses would have to move.

Although they initially considered redeveloping the shopping center in stages, they decided it would be better to do it all at once, Merklein said in a February interview. He also said REH and the landlord were working with tenants who wanted to relocate; several businesses have found new homes at University Mall.

The redevelopment project is in the final stages now and could break ground late next year, he said.

Grubb: 919-932-8746

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