The owner of Crossbuck BBQ in Farmers Branch, pitmaster Tim McLaughlin, has filed a countersuit against his former business partners at Lockhart Smokehouse alleging the owners — and by proxy its other investors, Jeff and Jill Bergus — committed breach of contract and fraud. The countersuit follows a lawsuit lodged against McLaughlin earlier this year by the owners of Lockhart Barbecue, which similarly alleged breach of contract, defamation, and tortious interference. It’s the latest chapter in a messy legal battle that illustrates the intense competition among barbecue joints in Texas.
Back in June, McLaughlin and his family trust filed a request for the Lockhart team to appear at discovery and answer questions about Lockhart’s finances; the meeting was necessary to settle his deceased father’s estate, which was invested in the entity. That was met by a lawsuit from the Berguses and Lockhart against McLaughlin, alleging defamation, disparagement, and a breach of his fiduciary duties.
“I [was] quite shocked,” McLaughlin says about the Berguses lawsuit. “I want to not be involved in the business anymore.” McLaughlin is no longer involved in the day-to-day at Lockhart, after being fired as pitmaster by the Berguses at the end of 2021 — something he and his wife Beth McLaughlin were surprised was even possible given the terms of the partnership. Nevertheless, his family’s ongoing investment means McLaughlin is still tied to the business financially, though he hopes that by completing the discovery process through his late father’s estate he can close this chapter.
However, litigation by the Berguses has prompted McLaughlin to countersue based on his belief that his firing was mishandled.
“If they wanted to fire me from the business, they would have had to have a board meeting prior to that, and I should have been invited to that meeting,” he says, though he notes that the Berguses have a combined 51 percent ownership stake in the business. (The exact terms of the partnership and investment agreement for Lockhart Smokehouse is opaque, due in part, to what the McLaughlin’s say were misplaced documents handled by a lawyer for the restaurant who has since died. Eater reached out to the Burguses and attorneys for Lockhart Smokehouse for clarity multiple times and did not receive a response at press time.) McLaughlin’s countersuit further alleges that the Berguses transferred intellectual property (IP) from Lockhart’s original LLC that McLaughlin’s family invested into a new business entity with a similar name he and his family invested into a new LLC with a similar name. That’s where McLaughlin’s allegations of fraud come into the picture.
“I was always under the assumption, especially based on investor letters written by Jill and Jeff, saying ‘Thank you for investing in our brand,’ that I was developing the brand. That was my value and what I would be compensated for,” McLaughlin says. However, with that IP shifted away from the entity he and his family are invested in, McLaughlin wonders what he and his family own.
McLaughlin’s lawsuit asserts that there is no written record of the transfer of IP and no agreement about it between investors.
In a statement to Eater Dallas, Jill Bergus contends McLaughlin misunderstands the nature of his investment; Bergus says that investors such as McLaughlin put money towards individual locations of Lockhart Smokehouse in Dallas and Plano, while the brand Lockhart Smokehouse was maintained as a separate business entity. “The owner of the brand, including the name Lockhart Smokehouse, is not the two individual entities which own the stores and was owned before the stores ever started,” she writes.
McLaughlin also wanted to respond to an allegation made by Jill Bergus in the initial lawsuit, in which she claimed that McLaughlin called her a bitch in a conversation before his termination from Lockhart Smokehouse. “I never had a conversation where I called Jill Bergus a name in my entire life,” McLaughlin says. “That simply just never happened, it wouldn’t have happened. I don’t behave like that.” Jill Bergus did not respond to requests for clarity on the incident nor McLaughlin’s denial that it happened.
In previous reports, McLaughlin questioned why the Lockhart Smokehouse LLC didn’t issue dividends to investors in 2020. He asserts that the failure to pay dividends opened investors like himself up to issues with the IRS. “We have to pay money [in taxes to the IRS] on the income Lockhart claims that has nothing to do with dividends,” McLaughlin says. “Jill told me I was wrong... Based on that conversation I had with her, based on recent comments I’ve read [in D magazine] that she has claimed, I’m really concerned that they don’t even understand the way the investment works.”
Jill Bergus responded to those claims in a statement as well, saying, “The investors in the Dallas and Plano Lockhart Smokehouse restaurants have been paid back more than eight times their initial investments, and continue to receive distributions.”
Despite all the back and forth between parties, it remains unclear why the Berguses chose to filed a lawsuit against McLaughlin rather than assisting in the discovery process that would allow McLaughlin to settle his father’s estate and divest from Lockhart Smokehouse’s business. Eater posed that question to the Berguses but did not receive a response
McLaughlin says that the cost of these ongoing lawsuits is significant. “We have tried to negotiate with them. We have offered them a sale price. If this needs to go through the courts for me to get an end, I guess so be it,” McLaughlin says.