Trouble in the West End

Dallas restaurateur Richard Chase-the highly visible, freewheeling bad boy of the West End-says he awoke July 2 with a feeling that something ominous was looming on the horizon. “It was the twenty-fifth anniversary of Ernest Hemingway’s suicide,” says Chase. “Hemingway has been a major preoccupation in my life. I woke up that morning with a sense of uneasiness.”

As it turned out, Chase’s morning malaise wasn’t unwarranted: that day Robert and Stephen Schiff, the two investors backing his three West End restaurants, filed a lawsuit against him, alleging that Chase had siphoned off for personal use hundreds of thousands of dollars from the restaurants. Now, a court order bars Richard Chase from setting foot in the restaurants he designed, managed, and made popular over the past year-Dick’s Last Resort, The West End Oasis, and Mo-line Bar & Grill.

The only explanation Chase can give for the lawsuit is that the Schiffs are a couple of rich guys who don’t like his style and are using the courts to gain control of Dick’s Last Resort, a financial plum that Chase feels he nurtured with his own blood, sweat, and beers. “I don’t really know why they’re suing me,” Chase says. “This thing caught me by surprise.”

Actually, the Schiffs are a couple of rich guys, and they have grabbed the reins of Oasis Management Corporation, Inc., the company set up to run the three restaurants. But they say they’ve taken control of OMI to save their investment from going down the tubes.

“I originally got involved in the restaurants to make a little money and out of friendship for Richard,” says Robert Schiff. “He was a good friend of mine and I wanted to see him succeed. He designed and created the restaurants. They’re his ideas. He’s a very creative man. I admire his creative genius.”

Chase may have created the ideas for Dick’s Last Resort, but the Schiff brothers are now claiming the legal right to them. On July 31 the Schiffc filed a second lawsuit against Chase, this time for trade infringement. The Schiffs claim Chase has transported some of the ideas he used at Dick’s Last Resort to his new bar in the Fort Worth Stockyards, Dick’s Retreat.

In the original lawsuit, the Schiffs bluntly allege that since 1985, Chase and his wife, Kathleen Carson Chase, made off with nearly $400,000 from the corporate cookie jar. Included in that sum is more than $64,000 worth of cash disbursements used to furnish Chase’s North Dallas home with such niceties as a pool and a small office addition.

Chase denies any wrongdoing, but he admits that the cash disbursements were made. He says Robert Schiff gave him an “irrevocable proxy and option agreement” that carried with it control of 75 percent of the stock of OMI, and that this proxy gave him the authority to make the cash withdrawals. Chase says he and his wife were entitled to salaries and “possibly other distributions based on their interests in the various corporate entities.” Schiff admits that the proxy document exists, but says such agreements aren’t legally valid when a corporate officer acts in bad faith. And bad faith is precisely what the Schiffs have hired an army of lawyers to prove.

The Schiffs further claim that because Chase had financially drained the restaurants” operating capital, OMI was bouncing checks for food and liquor, and at one point was in danger of losing the leases and liquor licenses at ail three eateries. When the suit was filed on July 2, the Schiffs say, the three restaurants had about $500,000 in delinquent bills and rent, and owed another $250,000 in federal taxes to the IRS.

Chase has not taken his investors’ legal offensive lying down. In mid-July he responded with an $8.7 million countersuit claiming that the Schiffs failed to provide the necessary operating capital to run the restaurants. Although the Schiffs loaned the corporation more than $700,000, Chase says it wasn’t enough.

Chase and Robert Schiff had been close friends since 1980, when they produced and directed a pilot for a cable television show. Schiff now owns TeleImage Inc., a television post-production company with studio facilities in Las Colinas. His brother, Steven, is a non-practicing attorney who manages the family’s oil and real estate interests.

A former newspaper reporter and film producer, Chase came to Dallas in 1983 to shoot a parody of teen sexploitation films called Paradise High. The project flopped, but a year later the Schiffs and Chase began tossing around ideas about opening a restaurant. When they opened Dick’s Last Resort last year, it was an instant success, and Chase received constant attention from the Dallas media.

“I was approaching forty and I wanted to do something different,” Chase says. “I was tired. I think Dick’s has been such a success because it articulates the basic truth about tribal behavior. It’s a damn good saloon. We’ve never put on any airs at Dick’s. If I liked you I’d buy you a drink. If not, I’d throw you out and fistfight you in the street. I’ve always liked the wild west quality of Dallas.”

But Chase isn’t very amused with thoughts of the courtroom brawls he’s headed for in the coming months. “You know, people think this is some kind of game we’re playing,” says Chase. “It’s not. This is very painful. People are getting hurt. I’m like any other guy. I’ve got car payments and house payments and a kid in college.”

Despite all the negative publicity, Robert Schiff says that the three restaurants remain financially profitable and stable. The Schiffs are a very private family, he says, so at the moment they’re content to let the lawyers do all the talking.

“We basically try to put good people in to run our businesses,” Schiff says. “We let them take the credit,”

Lawyers, judges, and juries may soon decide whether the iconoclastic Chase abused a trust. The courts may be Dick’s last resort.