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From left: Dylan Yeargin, Savannah Yeargin, Charles Rawlings and Frances Rawlings. (Courtesy Dixie Restaurant social media)
The legal saga around the Dixie Restaurant has taken a turn as its current operators have brought a new argument into court.
Last week Dylan and Savannah Yeargin, who purportedly purchased the downtown Petersburg diner last year and are now being sued by previous operators Charles and Frances Rawlings, filed a response in the case claiming that the sale never actually closed and that the Dixie wasn't even the Rawlings' to sell.
Located at 250 N. Sycamore St. in Old Towne Petersburg, the Dixie has been around for about 100 years. It was publicly announced last year that the Rawlings, who were looking to retire, sold the business to the Yeargins.
But this spring, the Rawlings filed a lawsuit alleging the Yeargins stopped sending the agreed-upon payments for the restaurant after realizing that the sale contract included an error, namely that the entity being sold was "Dixie Restaurant, Inc.," which does not exist, instead of the restaurant's actual operating entity, "Dixie Restaurant LLC."
The Rawlings' suit asks the court to correct the contract and compel the Yeargins to pay them the roughly $250,000 to which the two couples allegedly agreed.
The Yeargins, who have continued to operate the restaurant while the dispute plays out, fired back on Aug. 20 in their first detailed response to the lawsuit, arguing the sale wasn't legitimate.
The Yeargins point to a clause in the 2011 lease the Rawlings signed when they took over the restaurant. The Yeargins claim that lease "indicates that (the Rawlings) were mere licensees being allowed to use the name the 'Dixie Diner,' not that they are or were the owners of the restaurant."
The Yeargins' response states the Rawlings are "attempting to sell a business that they do not own ... and which they have no right to sell or convey."
"Regardless of whether the (purchase agreement between the Rawlings and Yeargins) should read 'Inc.' or 'LLC,' the (Rawlings) are attempting to sell nothing, and are attempting to be paid for nothing," their response states.
The Dixie has been a staple of Petersburg dining for decades. (BizSense file photo)
The Yeargins also allege that the Rawlings made false representations about the business, claiming that the Dixie was not turn-key, as they encountered "numerous problems" with equipment at the restaurant, and that they had to close the restaurant on numerous occasions "due to years of neglect by the (Rawlings)." They also allege the Rawlings "took advantage of the (Yeargins') lack of business experience."
The response admits that the two couples met last year and discussed terms of a sale, but denies that terms were finalized, nor that "it was ever discussed what exactly was to be conveyed."
The purchase agreement, which is included as an exhibit in court documents, contained a clause that the Rawlings were to employ the Yeargins at the Dixie so the Yeargins could learn the restaurant's day-to-day operations. But the Yeargins claim the Rawlings "did little other than utilize the (Yeargins) as workers and not show them how to run the restaurant or disclose the problems with the restaurant."
Another clause in the purchase agreement required the Rawlings to leave $15,000 in cash in the Dixie's register, but the Yeargins claim that amount has been fully repaid to the Rawlings, and that no other payments are due to the Rawlings.
The Rawlings' attorney, Franklin Cragle of Hirschler, said in a statement that his clients find the accusation that they did not have the right to sell the restaurant as frivolous, "if not more so," than the Inc. vs LLC defense.
"Realizing the weakness of that position, combined with public backlash, the defendants now assert that, because the Rawlings' original lease gave them the right to use the name 'Dixie Diner' - a name the Rawlings never used - that the Rawlings somehow did not own the going concern business operation of the Dixie Restaurant. The Yeargins are wrong," Cragle said.
"After 14 years of blood, sweat, and tears, the Rawlings were the owners of the Dixie Restaurant, and had the right to sell it - which they did, to the Yeargins. The Yeargins seem perfectly content to continue operating this business, turned over to them by the Rawlings; they simply do not want to pay for it."
Nate Scaggs of Hill & Rainey Attorneys is representing the Yeargins and did not respond to a request for comment by press time.
The Yeargins' response follows their previous attempt to have the case dismissed; however, only a few of the Rawlings' accusations against the Yeargins were thrown out by the judge after a hearing last month.
The Yeargins, in their response, asked for a jury trial or that all the remaining counts against them be dismissed with prejudice.
No further hearings are currently set for the case. The lawsuit is playing out in Richmond Circuit Court because, even though the Dixie is in Petersburg, the Yeargins' operating entity for the restaurant is registered in the City of Richmond.
The restaurant has remained open throughout the legal proceedings.
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