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Bugged Club

Charlott Norman wants to reopen the Dragonfly.
Mark Graham

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.)

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.)

After Williams' suit was filed, Norman says Judge McGrath ordered the pair into mediation to settle the dispute, an attempt that failed. "The judge wasn't happy about this even going into court," Norman says. "He was upset that we couldn't work it out. Ed was non-negotiable...and the judge was rather frustrated."

But these aren't the only problems facing Norman in her attempt to revive the nightclub. Over the ensuing months since the club closed last January, bitter rifts have formed between Norman and her former allies in the legal battle to oust Steve Kahn. She cut Brad Priebe, who sued Kahn along with Norman, from Dragonfly management late last March because she feared his association with the nightclub would jeopardize her attempts to get a liquor license. Priebe was part of the original partnership when it was formed in January 1998, and his name, along with Kahn's, was on the liquor license that Priebe surrendered to TABC officials after Kahn's arrest for cocaine possession.

Priebe believes his ouster was a strategic move by Norman to consolidate her grip on the club. "Once she had control, I was no longer needed," he says.

But perhaps the most incendiary rancor flared up between Norman and Santiago Peña, the contractor who finished out the Dragonfly and has $158,000 in liens filed against the building. He suspects Norman attempted to void his liens by forging lien-release documents and submitting them to Hutchinson to secure a new Dragonfly lease arrangement, a charge Norman vehemently denies.

Peña also claims Norman never paid him for roughly $6,000 in repairs he performed on the Dragonfly after she took control. "There's something fishy here," Peña says. "First of all [Norman] can't pay me shit. She's hiring other contractors to come in there, and I've got liens all over this damn place. You can't pay the guy you owe, but you have newfound money to pay somebody new. I said, 'You're just like another Steve Kahn.'"

Norman, who seems genuinely flummoxed by Peña's ire, says she intends to settle all legitimate claims on the club. But potential problems for the Dragonfly don't stop there. Sources say a group of investors that sunk $400,000 into Steve Kahn's totally nude dance club, Ocean Club and Video (which was renamed The Trophy Club in late May before it became World Video Adult Superstore in late June) on Reeder Road near Interstate 35, may hit the Dragonfly with liens to recover Ocean Club funds they suspect Kahn diverted to finish and then operate the Dragonfly.

TABC officials, meanwhile, continue to rake through the operation. Sources say Dunhill's Hutchinson is exasperated with the whole Dragonfly ordeal, and Lower Greenville residents would love nothing more than to see the bug zapped for good, according to the Channel 5 report.

Yet despite these roadblocks, Norman continues to slog through the Dragonfly swamp. Originally hoping to reopen in mid-July, she now admits she has no idea when the Dragonfly will be airborne. But as the Dallas Observer went to press, she said that she and Williams reached an undisclosed monetary settlement over the July Fourth weekend that drops his suit and severs his interests in the club. In the meantime, she's channeling her energies into getting her hands on a liquor license and securing new partners. And keeping Dragonfly skullduggeries at bay.


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