Food News

After Restaurant Meltdown, Circo Leaders Head to Court

The story of Circo TX is not done.
The story of Circo TX is not done. Alison McLean
When Circo TX closed in the summer of 2019, details exploded into public about alleged mismanagement of the Uptown restaurant. Numerous former employees told this newspaper about paychecks that bounced or issued in cash and weeks where the restaurant could not afford to buy basic ingredients.

Now new accusations are being added to the picture, as Circo’s former leaders have filed lawsuits against each other in local civil courts.

Lauren Santagati, Michael Kahn and Peter Lloyd, the partners in Circo’s management company, sued Barbara Adelglass, the restaurant’s main investor, in early December for breach of contract and fiduciary duty and tortious interference with contractual relations.

The suit, filed in Collin County, contends that “almost all of” the restaurant’s issues “related to the Adelglass’ chronic misconduct,” including that she failed to pay taxes for which she was responsible, abused access to free food and drink and agreed to high expenses from general contractors without consulting the other partners.

In addition, the court filing claims Adelglass’ personal misconduct included “obnoxious and disruptive behavior,” “creating a hostile work environment” and “improperly instructing a Circo chef to cook food products containing marijuana for her and her husband.”

Santagati’s attorney, Mark L. Hill, declined to comment on the lawsuit.

On Jan. 24, Adelglass countered by suing Kahn, Lloyd and Santagati for fraud and breach of contract in Dallas County. Adelglass’ suit also alleges a variety of misbehavior.

Adelglass’ petition contends, for example, that Kahn, Lloyd and Santagati took some of the $2.5 million that Adelglass invested in Circo and instead spent the money on their previous restaurant, Fat Rabbit, without the investor’s consent. Adelglass further contends that when she discovered those financial questions, she was banned from her own restaurant.

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The interior of the former Circo TX
Alison McLean
Multiple former employees told the Observer last summer that Adelglass was indeed barred from visiting her investment, although they did not know why.

After Circo closed, Adelglass’ filing claims, Santagati held a secret auction to sell off the restaurant’s property. According to the suit, Santagati kept profits from inventory which Adelglass had helped to pay for.

Adelglass’ attorney, Blake Beckham, says his client eventually sank more than $3 million into the restaurant, believing from the original sales pitch that it would be on the same level of elite dining as New York’s original Le Cirque.

“My clients invested in something of that level — of worldwide acclaim,” Beckham says.

“I’ve been licensed since ’86,” Beckham adds. “I don’t know that I’ve ever seen the person that took the money come back and sue and say we want more.”

There are other colorful details, too. Adelglass, who co-owns a cosmetic surgery center, says she was told at an early stage in the design process that the dining area would include a “cosmetic health spa.”

Adelglass’ lawsuit alleges Santagati and Kahn’s actions created cash shortfalls that resulted in bounced paychecks for some employees. Two former Circo employees alleged that they had multiple paychecks bounce in the Observer’s original investigation into Circo’s ill-fated run in Uptown, published last June.

The Dallas Morning News also reported that residents of the apartment above Circo took violent measures to disapprove of the restaurant’s nightclub, including what the News described as “urine-throwing incidents.”

In its nine-month existence, Circo had four executive chefs and one consulting head chef.

Beckham’s team filed a motion in Collin County to move that case to Dallas and merge it with the other suit. Both sides desire a jury trial. Adelglass plans to reveal her financial demand at trial; Santagati, Kahn and Lloyd are seeking over $15 million.
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Brian Reinhart has been the Dallas Observer's food critic since spring 2016. In addition, he writes baseball analysis for the Hardball Times and covers classical music for the Observer and MusicWeb International.
Contact: Brian Reinhart