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2013 In Review: Pensacola vs. Fish House

Great Southern Restaurant Group

Pensacola businessmen Ray Russenberger and Collier Merrill met with city officials in early December, on allegations they owed past-due sales royalties and interest on revenues from the Fish House and Atlas Oyster Bar restaurants.

At issue was the ownership of the building, not of the restaurants themselves, on a tract of city land called “Pitt Slip Marina.” Russenberger leased the property in 1987, then granted a sublease in 2000 to Collier Merrill and his partners – who formed Great Southern Restaurant Group.

The city claims that more than five million dollars is due – based on a percentage of sales plus interest over the past 13 years. That’s calculated to be roughly one year’s worth of revenues for the two eateries.

In a letter sent in November attorney Bruce Partington – who represents Merrill – told the city that its legal analysis on all points of this matter were “fundamentally flawed” in two ways:

“The city alleged that there was an assignment of the lease rather than a sub-lease and that’s not accurate.” said Partington. “And the letter talks about Fish House revenues received by Merrill Land LLC and Merrill Land does not own the Fish House Restaurant. It’s owned by Great Southern Restaurant Group of Pensacola.”

The way the lease is structured, Partington continued, is that payments to the city are tied to revenues received by the person holding the lease with the city – in this case Ray Russenberger and his firm Seville Harbor. Partington says Seville Harbor has no affiliation with the restaurants, and receives no revenue from them to go with existing revenue streams.

In a prepared statement, Mayor Ashton Hayward said their position had not changed and they are not backing down.

“I am pleased that Mr. Merrill and Mr. Russenberger have now agreed that there are legitimate issues which exist related to the Pitt Slip lease,” the Mayor said. “Now, because of the agreement, we are able to have an informed discussion. This is a substantial move forward, one which I hope will result in a resolution of this matter. I intend to resolve this matter in the interest of the taxpayer.”

Hayward declined to be specific about the lease issues. The letter withdrawing the claim -- signed by Bruce Partington and city attorney Nix Daniel, also doesn’t say what they might be.

Meanwhile, the next step for Collier Merrill is repairing what he calls damages to the restaurants’ business brought about by the lease flap. Those include groups booking events elsewhere because of the uncertainty over the Fish House’s future – the restaurant has a lease at Pitt Slip Marina until the year 2045 – and employees who have taken other jobs over that uncertainty.

If there were any silver linings, says Merrill, it’s that they have received an outpouring of support from fans of the eateries; and that perhaps the city will think twice before sending out a similar letter to another business.