Restaurateur says he helped young chef buy a home, but chef then stole secret recipes

In another legal salvo, Fresno restaurateur David Fansler has accused his former executive chef of betraying him by conspiring with the former general manager of Pismo’s Coastal Grill to steal secret recipes in order to start their own restaurant.

But a lawyer for executive chef Justin Shannon, who resigned from Pismo’s in September, questioned whether Fansler filed the lawsuit in Fresno County Superior Court just to crush the competition.

“He knows young people don’t have the money to defend these lawsuits,” Fresno attorney K. Poncho Baker said.

Fansler, who has been in the restaurant business nearly four decades, has filed 12 legal claims for damages against Shannon, including for breach of contract, breach of duty of loyalty, fraudulent concealment and breach of fiduciary duty.

In another lawsuit, Fansler filed similar legal claims for damages against former Pismo’s partner/general manager Adrian Alvarado.

While Fansler has accused Alvarado of stealing recipes and putting the restaurant in a precarious financial situation by having sex with a restaurant hostess and drinking alcohol on the job, his beef with Shannon focuses on an alleged breach of loyalty.

When Shannon was deep in debt, Fansler loaned Shannon money to pay off his student loans and help him and his wife purchase a home near Woodward Park, the lawsuit says.

Fansler, 63, declined to comment. Shannon, 35, could not be reached.

Both men are well known in Fresno restaurant circles.

Fansler is majority owner of Yosemite Ranch Steak and Seafood in northeast Fresno, Westwoods BBQ & Spice Co. in the River Park Shopping Center area, and Pismo’s in the Villagio Shopping Center at Blackstone and Nees avenue.

Shannon was executive chef of Bentley’s Bistro at Friant and Fort Washington roads near Woodward Park before being hired by Fansler in 2008 to be chef at Yosemite Ranch.

Before Bentley’s, Shannon worked for Thomas Keller, arguably one of the best American chefs. Shannon worked as chef de partie at Keller’s The French Laundry, one of the country’s premier fine-dining restaurants in Yountville. He also was a sous chef at Keller’s Bouchon, another Yountville establishment that is known for its fine French bistro dishes.

The civil lawsuit gives Fansler’s side of the dispute:

Once Pismo’s opened in November 2009, Fansler made Shannon the executive chef. In addition, Shannon remained a chef at Yosemite Ranch.

In April 2010, Fansler learned Shannon was in default on his government student loans in the amount of $62,075. To help, Fansler loaned Shannon $28,000 to settle the debt. “The government accepted Pismo’s settlement payment,” saving Shannon and his wife $34,075, the lawsuit says.

Because Shannon and his wife were living in an apartment, Fansler purchased a $220,000 home on Newcastle Lane near Woodward Park in September 2010 and paid $15,000 for renovations so Shannon and wife could move into it.

The lawsuit says Shannon had bad credit, so Fansler loaned Shannon’s mother $20,000, who then gifted the money to her son so he could use it as a down payment on the Newcastle Lane home. In November 2011, Shannon and his wife purchased “the house on Newcastle from David Fansler at cost, using the $20,000 as the down payment,” the lawsuit says.

The lawsuit says Shannon signed a written employment agreement to work at all three of Fansler’s restaurants. In the agreement, Fansler agreed to pay Shannon $70,000 a year, plus bonuses, benefits, and a $600 a month restaurant account for food and beverages.

In addition, Shannon received a 3 percent ownership at Westwoods BBQ at no cost to him, the lawsuit says.

Included in the agreement was Shannon’s promise to repay Fansler the $50,000 loan he borrowed to pay off his student loan and for the down payment on the Newcastle Lane home. But instead of paying $50,000 in cash plus interest, Fansler offered Shannon a deal in which Fansler would take off $10,000 off the loan for every year Shannon worked at the restaurants until the loan was paid in full. Shannon accepted the offer in June 2012, the lawsuit says.

Shannon also signed an agreement in June 2012 to purchase ownership interests in Pismo’s and Yosemite Ranch, and to remain part owner for at least 10 years, and “to always act in the best interests” of the restaurants, the lawsuit says.

But upon gaining ownership interests, Shannon became difficult to manage, made disparaging comments about some of the restaurants’ managers and “would state that he was the sole reason for Pismo’s success,” the lawsuit says.

In August 2016, Fansler confronted Shannon, asking him if he was working on opening a competing restaurant. Shannon said no. Relying on Shannon’s word, Fansler forgave the remaining balance owed on the $50,000 loan. But soon after, Fansler learned that Shannon and Alvarado “were planning a new restaurant in the immediate area of Pismo’s,” the lawsuit says.

On Sept. 28, Shannon resigned from his position as executive chef of Pismo’s, but kept his part ownerships in Pismo’s, Westwoods BBQ and Yosemite Ranch. Upon his resignation, he failed to provide copies of his recipes for the three restaurants to Fansler, the lawsuit says.

Fansler contends in the lawsuit that Shannon and Alvarado used Pismo’s kitchen and food to work on menu items for their new restaurant. “Cooks at Pismo’s reported that Justin Shannon would make new food items all the time for himself and Alvarado which were never offered to customers of Pismo’s,” the lawsuit says.

Fansler also believes Shannon and Alvarado took food and alcoholic beverages from Pismo’s to the homes of customers, investors and vendors “for the sole purpose of impressing them … for the planned new restaurant.”

Laura A. Wolfe, the lawyer for Alvarado, has said “Mr. Alvarado denies all material allegations in the complaint.” Alvarado held the title of general manager of Pismo’s until he was fired in October last year.

In court papers, Wolfe noted that Alvarado has not opened a restaurant which is competing or potentially could compete with Pismo’s. “At most, the complaint alleges that Mr. Alvarado has possession of ‘confidential information and trade secrets,’ which he lawfully obtained while working for and owning Pismo’s,” Wolfe said in an April 12 letter to Fansler’s lawyer.

“Simply having this information is not by itself unlawful,” Wolfe’s letter says.

Baker, who represents Shannon, said his client also denies all of the allegations. Speaking rhetorically, Baker said it’s the American dream for any young, smart, energetic person to own a business. He also said Fansler is making a big deal about the importance of the recipes.

When he and his wife go to fancy restaurants, Baker said, his wife often asks the chef for the recipe of the dinner they just ate. The chef has no problem revealing it, Baker said.

“How many ways can you cook a hamburger or a cook a fish?” Baker said. “This isn’t like having the secret to Coca-Cola.”

Fresno attorney Darryl Horowitt, who represents Fansler, however, said don’t be fooled by Baker’s comments. Recipes and the food produced by them are the lifeblood of any successful restaurant, he said. “That’s why they keep them secret.”

Horowitt also said Shannon isn’t a victim; he was savvy enough to hire a formidable lawyer in Baker. “Shannon was hired to create recipes for Pismo’s and had a fiduciary duty to preserve them for Pismo’s,” Horowitt said.

This story was originally published June 7, 2017 at 11:29 AM with the headline "Restaurateur says he helped young chef buy a home, but chef then stole secret recipes."