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Celebrity chef files breach of contract and breach of fiduciary duty suit

Chef Paul Qui, a Texas-based James Beard award recipient and winner of the ninth season of “Top Chef” recently filed suit against his former business partners for allegedly swindling him out of his earnings and sabotaging the progress of his new Miami hotel restaurant.

In his lawsuit, Qui claims his former business partners Bill Stapleton and Filadelfo Tombetta, through their management company New Waterloo Management, LLC, violated contractual obligations and unjustly profited from Qui’s rise to fame.

Restaurant partnership goes sour

In his petition, as reported by Eater Austin and Statesman, Qui alleges he and New Waterloo entered into an agreement whereby New Waterloo would provide Qui representation and advice related to endorsements, licensing, literature, media, and public appearances, in exchange for 20% of his earnings.

At the time the agreement was entered into, Qui had two restaurants in Austin – Qui (closed) and East Side King. Qui claims that the defendants encouraged him to start a new company, VCQui, to operate his restaurants. According to Qui, New Waterloo then quietly increased its share of Qui’s net income from 20% to 50%, without providing additional services to Qui. He also claims the defendants breached their fiduciary duties to him.

Fiduciary relationships in Texas

A fiduciary relationship may arise from a formal relationship, such as an attorney-client or trustee relationship (Meyer v. Cathey, 167 S.W.3d 327, 331 (Tex.2005)), or informally where a special relationship of trust and confidence develops. (Schlumberger Technology Corp. v. Swanson, 959 S.W.2d 171, 177 (Tex.1997)).

According to the lawsuit, “[b]y undertaking duties of Qui’s representative, advisor, counselor and agent under the Agency Agreement, New Waterloo owed Qui fiduciary duties under Texas law to act with the utmost loyalty, care and good faith, and to put Qui’s interests ahead of its own.”

Qui claims that Stapleton and New Waterloo failed to fulfill their fiduciary duties to him, and “repeatedly took advantage” of Qui’s fame. Qui also claims New Waterloo breached its fiduciary duties by blocking his access to the business bank account, comingling money earned from VCQui with other accounts, and lying to Qui about VCQui’s earnings.

The outcome of the case is uncertain. But this case demonstrates the importance of experienced legal counsel as soon as possible. This is the only way to avoid the necessity of litigation that brings public exposure.

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