Portuguese Bend, the popular Downtown Long Beach distillery that opened in 2019, has officially closed its kitchen, and the future of the company is the subject of a tangle of litigation between its owners that allege fraud, a toxic work environment, poor quality alcohol and conflicts of interest, all of which apparently helped fuel the business’s demise.

When the distillery and restaurant opened in April 2019 at the corner of Third Street and The Promenade North, it was the city’s first distillery. It weathered the pandemic closures of businesses by pivoting to making hand sanitizer and selling cocktails to go, and it has tried to work around issues that have recently plagued Downtown, such as construction, crime and homelessness, which other businesses have said are threatening their ability to survive.

It’s unclear what exactly led to Portuguese Bend’s recent kitchen closure, but a series of court records show that trouble has been brewing for years.

Court filings paint a picture of a toxic workplace, with its two founding partners at odds over how the business’s assets should be deployed, the quality of the alcohol being produced and who was truly in charge of the business.

Shortly after its opening in 2019, the founders began arguing in front of employees and customers, and disagreements unfolded over how funds were being spent, according to court filings.

One of Portuguese Bend’s founding partners, Brenda Rivera, who helps run the successful Lola’s Mexican Cuisine and the Social List with her partner Luis Navarro, helped curate a food menu and was charged with heading relations with vendors, along with cocktail programs and the hospitality program. The other founding partner, Simon Haxton, would lead the distillery and act as the CEO, in addition to marketing and selling spirits made in-house.

In an amended complaint filed by Rivera and the Navarro Hospitality Group in August 2022 against Haxton and the distillery’s LLC, Rivera claims that Haxton acted recklessly with company assets, spending hundreds of thousands on distillery equipment, a lease for a warehouse to store alcohol produced at the site and even a new truck, without discussing any of it with her, according to the filing.

Rivera alleges that Haxton also created a hostile work environment for her and others. While the two were co-founders and co-managers of the business, Rivera said Haxton often treated her like an employee, not an equal.

The suit points to an exchange in which Rivera said that Haxton was told that his vodka tasted like tequila. When Rivera relayed that feedback to Haxton, he allegedly called her “stupid” and that “she did not know anything about vodka” the suit claims.

After a taste test among team members confirmed something was off about the vodka, the suit alleges Haxton made a new batch and “threw” a bottle toward the team stating “Here is your basic b—-, Becky,” according to the filing.

“He made my life a living hell for two-and-a-half years,” Rivera said in an interview, adding that Haxton would ignore and demean her before she decided to leave the company.

The “final straw,” the suit notes, was when Rivera said she discovered that Haxton had begun to pay himself a salary of $90,000, and added another $218,000 in debt owed to him in salary in the company’s books, neither of which were part of the agreement that was struck when the company was formed.

The suit also alleges a failure to pay wages to Rivera, which could be a violation of the state’s labor code. Rivera is seeking $368,000 in damages from lost wages, in addition to other damages. The suit also includes an allegation of fraud due to Haxton’s alleged misrepresentation of his distilling skills and ability to run a business.

Because of “tied house” laws, which restrict the relationships between alcohol manufacturers and alcohol retailers, Rivera said she’s been unable to make money from her other businesses because of her involvement in the distillery and the restaurants’ alcohol sales licenses.

Rivera left the business in November 2021, filing her first legal complaint a few months after resigning from her role as co-manager, but she remains entangled in the business as a founding member and partial owner.

Both Rivera and Haxton own about one-third of the business, with the rest being split up among individual investors who contributed over $1 million to help it open in 2019.

“The biggest thing I want to be known is that we’d never willfully walk away from something if it was positive, if it was successful,” said Rivera, who’s calling for the dissolution of the company.

A counter-filing by Haxton claims that Rivera violated her fiduciary duty to the distillery by not being present enough at the business while prioritizing operations at Lola’s and the Social List.

It also claims that she violated those “tied house” laws by putting Portuguese Bend logos on Navarro Hospitality Group vehicles, sharing employees across businesses and allowing Lola’s employees to wear Lola’s uniforms while working at the distillery’s restaurant, along with using one account to order inventory for both the distillery and her other businesses.

Haxton also claims that Rivera embezzled $156,488 from the business. In 2020, Haxton obtained a $149,000 loan, which Rivera paid off in early 2022 by withdrawing funds from the business’s bank account months after she left, the filing said. The move ate up about a quarter of the business’s operating capital and “threatened the viability” of the company, according to the suit.

Haxton would not comment on the lawsuits, noting that it’s ongoing litigation and he did not want to harm the business anymore going forward. Haxton said while the kitchen is closed, the bottle shop is open and the company is still distributing to Long Beach and other cities.

Haxton is seeking unspecified damages, to be determined in court.

Rivera disputed the allegations and said Haxton’s claims have been made in anger.

Haxton said he didn’t want the hard work of his roughly 50 employees and the people who supported the business through the pandemic to get lost in the haze of the lawsuits working their way through court.

“I’m so proud of our staff, who worked so hard for us in some of the most difficult conditions,” Haxton said.

In addition to Rivera’s and Haxton’s lawsuits, a third complaint has also been filed on behalf of Quatro Urbanos LLC,  an investor group that gave over $100,000 to help open Portuguese Bend. It makes many of the same allegations, in some instances citing both Haxton’s and Rivera’s filings against each other.

That suit alleges that the founders misrepresented to prospective investors how the business would be managed, notably that two men, Jim Leatherman and Josh Johnson, would be equity owners and provide their expertise in marketing at no expense, and that Navarro would be part of the ownership group.

None of the men were part of the ownership group, according to the suit.

It pointed to “baseless projections and forecasts” about the company’s ability to thrive and cited the fractured relationship between Rivera and Haxton as a breach of both of their fiduciary duties.

“They further represented that Rivera, Navarro and Haxton were long-time friends, and that they would work together to make the company’s various businesses successful,” that filing said.

Quatro Urbanos LLC is seeking a full refund of its roughly $100,000 investment in the company.