The former operator of The Cliff House restaurant in San Francisco filed a lawsuit against the National Park Service (NPS) alleging the agency breached its concession contract by failing to pay it the proper value of its possessory interest after the contract concluded. The concessioner also alleged that NPS falsely asserted the agency did not intend to continue operations, thus preventing the concessioner from being able to exercise its contractual right to sell its personal property to a successor. The lawsuit was filed in the U.S. Court of Federal Claims.
The concession contract at issue contained a provision stating that the concessioner’s possessory interest would be reduced annually until the contract expired on June 30, 2018. NPS, however, was not ready to select a successor at that point and requested that the concessioner continue operating after that date. When the concessioner finally ceased operating at the site on December 31, 2020 after incurring significant losses and after NPS had failed to select a successor, NPS asserted that the annual possessory interest reductions continued even during the period the concessioner. NPS refused to pay the concessioner any of its possessory interest value, including the non-disputed amounts, unless the concessioner waived its right to recover the annual deductions. The concessioner refused and is now seeking full payment of its possessory interest.
NPS also asserted at the time the concessioner ceased operating that NPS had decided not to select a successor, even though NPS was actively engaged in seeking a successor for a long term lease to take over the facility. In fact, NPS stated on its website that it was only temporarily suspending services while it selected a successor. Under the contract, the concessioner had the right to sell its equipment to a successor. Based on its assertion that was discontinuing operations, NPS insisted the concessioner had no right under the contract to sell its equipment to the concessioner and required it to be removed from the site. The concessioner is also seeking the losses it incurred by having to sell the equipment for far less than it would have received from a successor operator, as well as the revenue it likely would have received for its intellectual property.