A former pitmaster of Lockhart Smokehouse has filed a counterclaim accusing the owners of the barbecue joint of fraud and breach of contract in its investor and partnership agreements, according to court documents.
The counterclaim is part of a trio of lawsuits filed in Collin County in April by Lockhart owners Jill and Jeff Bergus. In the various petitions, the Berguses allege Tim McLaughlin, his wife, and his in-law’s trust interfered with contracts, employees, and business relations to hurt Lockhart Smokehouse. It is yet another layer in a complicated ongoing legal battle.
Tim McLaughlin is the owner of Crossbuck BBQ, a barbecue restaurant he opened in April 2022 in Farmers Branch. He worked with the Lockhart barbecue group for about 10 years. He was a pitmaster before he was terminated in December 2020.
Lockhart Smokehouse has received numerous accolades since opening in its Bishop Arts location in 2011. The Berguses recruited McLaughlin to help create its Central Texas-style menu, which includes smoked brisket, ribs, and sausage sourced from the legendary Kreuz Market in actual Lockhart, Texas. The restaurant group also hosts Smoke Camps, where guests can talk to pitmasters and learn how to smoke meats. When it opened over a decade ago, it joined Pecan Lodge as one of the few barbecue joints in Dallas proper to receive statewide attention from Texas Monthly and other publications.
In 2022, McLaughlin opened Crossbuck BBQ with Lockhart Smokehouse’s former director of operations. The menu fuses Central Texas-style barbecue with barbecue styles across the country and includes items like adobo chicken, St. Louis-style ribs, and smoked citrus-glazed salmon.
Since McLaughlin was terminated and opened a new barbecue restaurant, complicated and complex litigation erupted between the two restaurants. Both sides have traded lawsuits.
The latest occurred on Sept. 15, when McLaughlin filed a counterclaim in response to one of the petitions against him and his mother-in-law’s trust. It alleges he took confidential company property and used it for his own personal gain. It cites a pre-trial petition filed in March 2023 by McLaughlin, his wife, and the trust asking for specific information on Lockhart’s operational structures, intellectual property, relationships with partners and investors, and expenses. McLaughlin told D Magazine he needed the information to know more about his and the trust’s investments—McLaughlin and the trust are minority shareholders in Lockhart.
An attorney for the Berguses says McLaughlin and his attorneys made a document request and received it last November. But McLaughlin says not all of the documents were included, so he filed a pre-trial petition in March. The Berguses filed suit in April, alleging McLaughlin and the trust “demanded” information on issues related to their minority shareholder interests in Lockhart in the March petition.
McLaughlin says the information he requested from Lockhart in March was to understand his investments and their value. He says it was also needed to help close his father-in-law’s estate. McLaughlin’s father-in-law died in January, and Internal Revenue Code says estate tax returns are due nine months from the date of death.
“Anytime someone dies and they own a trust with someone else, you have to establish the value of that trust at the time of death,” Beth McLaughlin says. “The accountants got involved and they needed to get all the value of the investments at his time of death so that we can set this up appropriately. It’s a very simple accounting IRS matter.”
Jill Bergus told D a K-1 tax form was sent out in March to all investors, and all other necessary documents are available through the attorney, to whom shareholders and investors have access.
Four other lawsuits have been filed against McLaughlin, his wife, and two former Lockhart employees who work or have worked with Crossbuck. One petition claims Beth McLaughlin made defamatory statements against Lockhart, and another against McLaughlin says he interfered with Lockhart’s business.
The other two lawsuits filed in 2021 and 2022 involve a former Lockhart general manager and an executive pitmaster who signed non-competes when they were hired to work for Lockhart, Bergus says.
“They have five lawsuits against the people I care about,” McLaughlin told D Wednesday. “They’ve tried to delete me, make me not exist. And they are just attacking me. It is a use of the court system to financially attack me.”
In the new counterclaim, McLaughlin and his family’s trust allege the Berguses committed an act of fraud and breached multiple terms of investor and partnership agreements. The counterclaim says McLaughlin and his mother-in-law’s trust signed investor agreements under the “assumption that Mr. McLaughlin would be heavily involved in the Lockhart Entities.”
Bergus says McLaughlin invested in the Dallas location, and the trust invested in the Dallas and Plano locations. Both parties have been paid back over eight times their investments with interest for those two entities, Bergus says.
The court filing says the Berguses breached the investor contract agreements when they created a separate entity in 2016 called Lockhart Smokehouse Holdings, LLC, without the knowledge of their investors. The counterclaim alleges the couple transferred the Lockhart brand, goodwill, and intellectual property into the new entity and “took active steps to fraudulently conceal this information from Cross- Plaintiffs and other investors.”
According to Bergus, Lockhart Smokehouse Holdings, LLC, was created to license the Lockhart branding and name. Investors in properties are not required to be involved in the formation of licensing entities related to the business, she contends. McLaughlin says that was not communicated to him or other investors.
The counterclaim also says the Berguses in 2017 “entered an agreement” to open a Lockhart Smokehouse at Texas Live! in Arlington. Bergus says the Arlington location was not subject to investor rights because it is a licensing deal, and that she and her husband do not own the location.
McLaughlin helped with the organization, design, and training of the staff for the concept, and he was paid 20 percent of net proceeds plus consulting fees, according to court documents. McLaughlin says the branding and menu are nearly identical to the two other Lockharts. He was issued two checks, one in 2019 and another in 2020, according to court documents. It’s unclear if he was paid for his consulting work, court documents say. Bergus says he was paid as a consultant.
McLaughlin told D he became curious about the business’ finances after the Texas Live! agreement was in place. He claims the Berguses not only purposefully left investors out of the contract negotiations, but that they are using resources from the Dallas and Plano Lockhart restaurants to promote the Arlington location.
“They have overly and continually used funds from the other two restaurants—funds, labor, products, advertising costs—to promote that third restaurant,” he says. “That is just not fair to the investors of the first two restaurants.”
Bergus denies the allegation and says Lockhart employees at the Dallas and Plano locations always have the opportunity to train at Texas Live!, but neither is “loaning” workers to the Arlington location.
McLaughlin says he’s sought out ways to leave the restaurant behind as an investor, and he’s attempted to negotiate with the Berguses to sell his shares through their attorneys. They won’t negotiate, he says. Bergus says McLaughlin and his attorneys set a price that was way too high.
“The number he gave out is probably worth more than the whole business put together for his minority shares,” she says. “I’m not sure that leaves us room to negotiate.”
McLaughlin and the trust are seeking non-monetary relief in the counterclaim. He told D he wants the legal battle to come to an end and that he wants to sell his shares.
“We want to come to a settlement,” he says. “I have nothing against Lockhart—I love Lockhart. The last thing I want to see is a restaurant that I spent over a decade of my life building and caring about to close and I feel like I’m watching that.”
Bergus asserts Lockhart isn’t in danger of closing: “We made it through COVID and we will make it through this fine.”
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