Eviction hearing next month for West Seattle Athletic Club, which also has filed a separate lawsuit of its own

Eviction hearing next month for West Seattle Athletic Club, which also has filed a separate lawsuit of its own

Eviction hearing next month for West Seattle Athletic Club, which also has filed a separate lawsuit of its own

January 24, 2014 at 4:06 pm | In Allstar Fitness bankruptcy, West Seattle news | 37 Comments

By Tracy Record West Seattle Blog editor

Routine checks of court files have turned up two new legal actions involving the West Seattle Athletic Club (which took over the former Allstar Fitness location in North Delridge last year) – one in which it’s the defendant, another in which it’s the plaintiff.

First: The club’s landlord H-P Properties has filed an “unlawful detainer” complaint, and what court documents describe as an “eviction hearing” is set for February 11th.

As explained here, this means basically refusal of an order to vacate. According to the court documents, the landlord is owed $386,000 in “back rent and other charges,” including this month; the documents include the lease, which says that after two rent-less months last spring, owner Sam Adams is supposed to be paying $100,000 rent per month right now. The complaint, filed a week and a half ago, includes a copy of a three-day “pay or vacate” notice that was originally dated December 20th.

The complaint is not only against Adams, his company Hollystone Holdings, and the West Seattle Athletic Club, but also names a company called Barratt Leasing. That company, in turn, is being sued by Adams, according to a separate action filed this month, which names Adams as a plaintiff as well as six athletic clubs, including the one in West Seattle. They are suing Barratt Leasing and Allstate Financial Group for breach of contract, accounting, and rescission.

The court documents say Allstate Financial “offers billing services to owners of athletic clubs” and that it was under contract with these clubs, but alleges that Allstate:

“… has failed to make timely and accurate periodic payments to Plaintiffs. On numerous occasions the periodic payments from Allstate Financial to Plaintiffs were late, less than called for under the terms of the agreements between the parties, not wire transferred, made on out-of-state checks that would not clear for several days, or drawn on accounts with insufficient funds. Many Allstate Financial checks to Plaintiffs would be cancelled by Allstate Financial after being deposited by Plaintiffs, which in turn would cause Plaintiffs’ checks to landlords, vendors, and employees to bounce. As a direct and proximate cause of Allstate Financial’s failure to make timely and accurate periodic payments, Plaintiffs were unable to pay required lease, payroll, insurance and utility expenses.

Other allegations made by Adams and his clubs are that Allstate “convinced (them) to enter into subleases for the inclusion of wellness clinics in four clubs” but has not been paying rent for those spaces and currently owes more than $120,000.

As for Barratt, which “is affiliated with and operates in connection with” Allstate, here’s another excerpt from the documents in the lawsuit filed by Adams’ company:

Barratt Leasing finances the purchase of athletic clubs, taking security in the assets of the athletic club, including athletic equipment owned by the clubs. Plaintiffs entered into Lease Agreements with Barratt Leasing to finance the purchase of the clubs.

Barratt Leasing has breached these Lease Agreements, acting in concert with the improper actions and breaches of Allstate Financial. For example, Allstate Financial, Barratt Leasing and Plaintiffs entered into two Memorandum of Agreements in December 2013 which were intended to resolve many of the legal disputes and issues between the parties. Allstate Financial and Barratt Leasing have failed to perform and have materially breached these Agreements. For example, under the first Memorandum of Agreement, Allstate Financial has failed to “continue to provide advances on collected member dues” to assist meeting the obligations of West Seattle Athletic Club and Bethany Village Athletic Club. Rather than advancing these payments, Allstate Financial has taken control of the Bethany Village Athletic Club away from Plaintiffs. Under the second Memorandum of Agreement, Allstate Financial and Barratt Financial have either wholly failed to perform, partially performed, or not performed in a timely manner, the obligations set forth in paragraphs 5.1 through 5.6 of that Agreement.

As a direct and proximate result of these breaches by Allstate Financial and Barratt Leasing, Plaintiffs have suffered several hundreds of thousands of dollars in damages including but not limited to lost membership fees and dues, lost profits, loss of value of the businesses, late fees, damage to business reputation, attorneys’ fees, and other costs.

Unlike the “unlawful detainer” case mentioned atop this story, this is a regular lawsuit and currently does not have a court date set until next year.

Last fall, as noted in this WSB report from November, there were numerous concerns voiced by members, who alleged deteriorating conditions, and some employees who said their checks had bounced, but the ownership posted a message promising improvements.

Less than a month ago, the Tacoma News-Tribune reported that Adams’ company had been evicted from its Lincoln Plaza Athletic Club near Tacoma Mall.

Last time we tried to contact owner Adams for comment about the West Seattle club, he asked that we do so by phone rather than e-mail; so we called his personal number this afternoon to seek comment, but reached only a message saying the mailbox is full, so we’re trying e-mail too, and will add any comment that we receive. (Added: He did call about 20 minutes after we published this, but did not wish to comment.)

Adams took over the former Allstar Fitness in West Seattle in March of last year, after its former owner’s bankruptcy case led to the sale of its assets for $75,000. (Our coverage of the bankruptcy case and what has followed is archived here.)

We are continuing to review the online court files for these cases and will add an update later with anything else we find that might be of note.

ADDED 5:51 PM: Per a request in comments for including documents from the case – for starters, here’s the document setting the February 11th “eviction hearing.” Here is the related “order to show cause.” And finally, the unlawful-detainer complaint.