Galatoire family loses lawsuit against former employee

A group of Galatoire heirs, once owners of the century-old French Quarter dining institution bearing the family name, has lost its lawsuit against the restaurant’s president, who they claimed owed them $235,000 for a failed bistro in Baton Rouge.

Galatoire’s Restaurant LLC, a group of 30 descendants of founder Jean Galatoire, sold the restaurants in 2009.

The following year, they filed suit against Melvin Rodrigue, their former chief operating officer, who stayed on after the sale and has since been promoted to president under the new owners.

The family said Rodrigue owed them $235,000 from their joint investment in a spinoff restaurant called Galatoire’s Bistro, which opened in Baton Rouge after Hurricane Katrina. It failed to thrive and shut down a few years later.

The iconic New Orleans location, a favorite among the city’s Carnival class, was badly damaged in the storm and closed for several months, reopening in January 2006.

The Galatoire family decided to open the Baton Rouge bistro to try to make up for lost profits as the Bourbon Street address was being repaired, according to testimony at the trial in December. They split the startup costs with Rodrigue: The Galatoires chipped in 85 percent and Rodrigue was responsible for 15 percent.

Galatoire’s Bistro opened on Perkins Road in December 2005.

At first, it did well. However, it ran into trouble as displaced New Orleans families began returning to their homes, the general manager got sick and left, and construction made it difficult for patrons to reach the restaurant.

The business began to lose money, and the owners took out several hundred thousand dollars in bank loans to keep it afloat, according to testimony.

Then the economy tanked, and Hurricane Gustav knocked out power, causing the bistro to close for two weeks.

The Galatoire family, after owning the New Orleans restaurant for more than 100 years, started looking to sell the business.

Rodrigue organized a group called Bourbon Investments that offered $11 million for both locations and the storied French Quarter building, about $3 million more than the appraised value.

Also included in the deal was Rodrigue’s debt, $235,000, which was to be canceled upon signing.

Most of the Galatoire family agreed, but a few members refused to sign on.

Under a family arrangement, each heir had what lawyers call a right of first refusal, meaning they were entitled to match any offer for the business, no more and no less.

A small group of family members matched Bourbon Investments’ offer, then immediately sold both restaurants to businessmen John Georges and Todd Trosclair. Several Galatoire’s descendants remained partial owners.

Georges also owns The Advocate.

The family filed a lawsuit against Rodrigue in December 2010, claiming he still owed them the $235,000.

At issue in the trial held in December before Civil District Court Judge Kern Reese was whether Rodrigue’s debt was canceled in the sale to Georges and Trosclair.

His attorney, P.J. Stakelum, argued Bourbon Investments’ offer paid off the debt and the right of first refusal required that the alternative buyer match the offer exactly.

Reese apparently agreed. He dismissed the family’s claims in an order rendered last week.

Rodrigue, meanwhile, ended up staying on under the new owners and was promoted to president last year.

The bistro in Baton Rouge, which finally shut its doors in 2011, reopened at a new location under the new owners in January.