Bugged Club

The Dragonfly tries to take wing again amid claims of fraud and mismanagement

Charlott Norman waves her hand over Lower Greenville Avenue from her perch atop the Dragonfly Bar & Restaurant's roof patio. "The new Dragonfly will be totally different from the old one," she says to a Channel 5 reporter on a segment that aired June 18. "The management team is going to be completely different."

The comment seems crafted to assure viewers that Dragonfly's problems -- allegations of mismanagement and fraud, drug charges against a partner -- are gone, swept out the door with former managing partner Steve Kahn.

Kahn is the nightclub and one-time condom shop operator who turned the Dragonfly into one of the most lucrative spots on Lower Greenville's nightclub row. In the process, he generated a confusing morass of allegations of financial misdeeds that put the club's partners at one another's throats. The enmity peaked in a tepid armed showdown at the Dragonfly last December as the partners struggled to outmaneuver one another for control of the once smoldering nightclub. Kahn was arrested shortly afterward on a cocaine possession charge, driving a stake in the club's heart. (His case is scheduled for trial August 9.)

Charlott Norman wants to reopen the Dragonfly.
Mark Graham
Charlott Norman wants to reopen the Dragonfly.

Through persistence and crafty legal wrangling, Norman, a partner, grasped control of the Dragonfly last February, and she's been struggling to regenerate it ever since. Yet the ill winds that drove Kahn's bluster seem to have returned, swirling around the Dragonfly with the reek of greed. "It's a hornets' nest of BS," says a source close to the nightclub's revival attempts.

Norman's efforts to secure a new liquor license have met fierce resistance by Lower Greenville area residents, who have successfully bottled up the Texas Alcoholic Beverage Commission application process with complaints that the club has far too few parking spaces to accommodate the traffic that crowds surrounding streets.

It didn't help matters when Norman admitted in the Channel 5 newscast that there were only 55 parking spaces for a venue she claims holds some 600 people. At least Gerald "Ed" Williams didn't think so.

Williams is the latest Dragonfly investor to wind up in court over the failed club. In his June 21 lawsuit against Norman, he claimed that her remarks on television were "detrimental to the reputation of the business." But his real beef isn't with Norman's news appearance. Williams sued Norman in Tarrant County district court, claiming that she had reneged on a management agreement for the Dragonfly that the two struck last May.

"I didn't feel like it was equitable," Norman says of the agreement. "It gave him [Williams] sole control and authority in the management of the operation. It gave him 100 percent of the management fee. I just didn't feel like that was fair."

But Judge Bob McGrath did. He slapped Norman with a temporary injunction June 28 and ordered her to abide by the terms of their original agreement.

That agreement, it turns out, was actually a last-ditch effort to save the place from choking on two months' worth of defaulted rent payments (amounting to roughly $14,800), $75,000 in back TABC taxes, and some $200,000 in mechanics liens. Norman first approached Williams, who claims in court documents to have some 20 years of food-service experience (Williams couldn't be reached for comment), last April with an offer to become a partner in the Dragonfly.

Then, on May 7, Norman and Williams met with Bill Hutchinson of Dunhill Partners, the club's landlord, to hammer out a lease deal to get the Dragonfly out of default, according to the lawsuit. Hutchinson had no confidence in Norman's ability and resources to successfully operate the club (Hutchinson declined to comment on the Dragonfly) and was unwilling to waive the default unless he was assured a new, experienced operator with sufficient capital was locked in place.

After Williams convinced Hutchinson of his operational expertise and available resources, Hutchinson amended the lease and waived the default. But trouble returned little more than a week later. On May 18, Norman again contacted Williams, this time in desperation. She told him that unless past-due rents were paid by 1 p.m. the following day, the lease would be terminated and the Dragonfly would be history. So the pair hastily drafted a management agreement, and Williams cut a check to cover the back rent. The agreement was sweeping, giving Williams sole power of authority to manage the restaurant along with a 6 percent fee.

Norman insists that she was never happy with the arrangement and that she agreed to it with the intention of renegotiating the specifics later (indeed, the initial letter calls for a more comprehensive agreement to be negotiated at a later date). On May 26, Norman voiced her disappointment with the agreement because it shoved too much operational control in Williams' clutches.

But Williams countered that this level of control was necessary because he was investing all of the funds to get the club open (Norman says she is unaware of any significant funds Williams invested in the operation other than a loan to cover back rent). He wouldn't budge. So Norman secured a new partner and offered to buy him out. Again, Williams wouldn't budge. He further claims Norman attempted to undermine his position by removing his name from the liquor license application, filing for a new TABC license, and changing all of the Dragonfly's locks. (Norman claims his name was never on the application, and TABC says it is unaware of any changes to the original application. She also says that it was Williams who ordered the locks changed, but that the locksmith dropped off the keys with her.)

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