SARATOGA SPRINGS — The owner of one popular Italian restaurant is taking the owner of another to court.
Daniel Petrosino, owner of Osteria Danny in Saratoga Springs, on Monday sued James Rua and Henry Street Properties, which owns the building that houses Osteria Danny. Rua is also owner of the long-running Cafe Capriccio in Albany.
Petrosino, in legal papers filed in state Supreme Court in Saratoga County, claims Rua misused earmarked rent payments and then refused to sell him the building, as stipulated in the lease agreement.
Rua said he was quite shocked to learn about the lawsuit from The Daily Gazette on Wednesday. After collecting his thoughts, he emailed a point-by-point response to the allegations in the lawsuit.
Cafe Capriccio remains open for business but Osteria Danny closed in mid-January due to the pandemic, with stated plans to reopen in March.
Both Rua and Petrosino are longstanding fixtures in the Capital Region restaurant scene.
Both men offered culinary tours of Italy in the pre-COVID era.
Both of their restaurants bump the Italian menu up a notch or three from the basic pasta/meat/seafood entrees, with ingredients including squid ink, guanciale and burrata.
Their squabble is over money, not marinara.
The lawsuit alleges:
- The two sides entered an agreement on Dec. 31, 2015, that called for Petrosino to lease 26 Henry St., home of Osteria Danny, from Henry Street Properties for $5,000 a month for five years.
- Ownership in Henry Street Properties is divided into 650 shares.
- At the end of the lease, Dec. 31, 2020, Rue was to transfer half the shares to Petrosino for $25,000; Osteria Danny then would have the option of 1) purchasing the other half of the shares from Rua for half the appraised value of the property; 2) jointly selling the building with Rua; or 3) extending the lease five more years.
- On June 25, 2020, Osteria Danny notified Rua it would go with option No. 1, the buyout.
- The 325 shares were transferred to Petrosino as stipulated but Rua has refused to follow through on sale of the other shares.
- Prior to the lease being signed in 2015, Rua stated that the outstanding obligations of Henry Street Properties totaled about $540,000, and it was agreed that Rua would use the rent money to pay down those obligations over the five-year course of the lease.
- Rua fraudulently understated the dollar amount of those obligations, and then used the rent money for his own benefit, despite its being corporate funds belonging to Henry Street Properties; the obligations have increased because of this.
Petrosino wants the building and the 325 shares held by Rua placed in trust; wants an accounting of what was done with the rent money paid over the five years; wants to complete transfer of ownership of the property to himself and Osteria Danny LLC; and wants $1 million in damages, plus legal fees.
In his reply, Rua said:
- All rent money was used to pay corporate obligations as is shown in bank and account records.
- No funds were diverted to me for any reason.
- Danny Petrosino is the treasurer of the corporation with complete access to the bank account.
- All stock owned by Petrosino has been transferred to him.
- The corporate accounts are maintained by a CPA firm. All accounting documents and records (a full financial accounting including taxes) during the five-year lease period were made available to Petrosino’s accountant as we approached the end of the lease. There is no financial transaction that [he] has not seen.
- When the lease was concluded, Petrosino and his attorney Paul Schiocchetti failed to implement the options to purchase, lease, or sell the property. They thus lost the lease and are now operating with a liquor license not supported by a lease. I have notified the SLA.
- We have commenced eviction action against Petrosino that will be heard in Saratoga City Court tomorrow. This action is not COVID-related, and is entirely based upon failure to exercise lease or purchase options.
- This slanderous action is obviously retaliation for the eviction proceeding, filed at the eleventh hour and in desperation. Osteria Danny now faces extinction through deceit, blatant dishonesty, and blundering incompetence.
- This action is an outrageous attempt to seize the corporation and the property based on false claims and to collect a million dollars besides. Mama Mia.