Empire Courthouse Saga Comes to a Close

For the second time, a Travis County judge has dismissed claims brought by Stephen Sternschein and his businesses against investor and one-time consultant Andrew Sernovitz, and granted financial sanctions against the Empire Control Room & Garage founders. The plaintiffs have 30 days to appeal the ruling, but this could mark the end of a bitter legal dispute that has disrupted entertainment in the Red River Cultural District for months.  

In July 2025, Sternschein alleged in a lawsuit seeking a temporary restraining order that Sernovitz, whom he hired to help “restructure and consolidat[e]” Sternschein’s many business interests, misappropriated trade secrets, stole personal property, breached fiduciary duty and a non-compete covenant, and made harmful false statements about Empire’s economic interests. On July 29, 2026, Judge Catherine A. Mauzy held that said Sternschein’s lawsuit was “groundless and brought for an improper purpose” and that Sternschein and business partner David Machinist’s failure to produce evidence, after being compelled to do so by a court order, was “an abuse of the discovery process.” 

Sternschein, who did not respond to multiple requests from the Chronicle for on-record comments, maintained to the Statesman that he is the victim of a calculated plan to oust him from his venue for financial gain. 

“I believe [Sernovitz] saw the opportunity to acquire a valuable piece of property for below market value by exploiting the instability that we were experiencing,” Sternschein said. Machinist could not be reached for comment either.

For his part, Sernovitz told the Chronicle that “the effect of this [ruling] is a complete vindication. That the only purpose of his lawsuit was to harass us and none of his claims ever had merit.” Claims against Sternschein and Machinist and their companies have been severed into a separate lawsuit and remain pending.

Sternschein sought the temporary restraining order against Sernovitz in July of last year following a memo the investor sent to fellow shareholders in 606 Holdings LLC, which serves as Empire’s landlord. In the publicly available memo, Sernovitz claimed that Empire’s “books and records have not been maintained,” suggested a plan be made to ensure the mortgage was paid on time, and expressed concerns about misconduct in Sternschein’s agreement with Rally Austin, the public-private development entity that lent him $2.2 million to buy the Garage in 2024. 

Sternschein did not appear in court on Wednesday to hear Judge Mauzy’s in-person thoughts on the lawsuit, but she told his attorney, Christopher Douglas: “Respectfully, it seems like there’s a bunch of games being played to me,” pointing to frequent last-minute filings and the recurrence of lightly amended petitions after previous claims against Sernovitz had been dismissed in December 2025. 

“I have rarely seen litigation that has been so improperly handled,” she continued. “The plaintiffs have utterly disregarded the judicial process and the system will not work if people who do that are not properly sanctioned.”

In addition to the requested attorney’s fees – $65,809 for this latest round of back-and-forth – the judge imposed an additional $15,000 sanction “to deter misuse of the judicial process and failure to abide by Court Orders in the future.”

Sternschein, who opened Empire in 2013, was voted out as a manager of 606 Holdings LLC in January 2025, according to an operations agreement amendment filed with the Secretary of State. Treysian LLC, managed by Side Bar owner and longtime Empire shareholder William “Trey” Spaw III, now manages 606 Holdings and did not respond to a request for comment. In April, the landholding entity locked Heard Entertainment out of 606 E. Seventh, aka the Control Room portion of the venue, citing nonpayment of rent. Then, in June, Heard Entertainment was evicted from 604 E. Seventh, the Garage, for holdover. 

Depending on your perspective, these moves are either a part of Sernovitz’s purported takeover or a response to Sternschein’s alleged mismanagement. For those who enjoy business disagreements and interpersonal vitriol, this saga has certainly provided a tantalizing ride – but its exhausting claims of victimhood detract from the circumstances that initially brought claims of financial mismanagement at Empire Control Room & Garage to the public’s attention: mistreatment and nonpayment of musicians, security workers, lighting and sound technicians, bartenders, booking agents, and other industry workers.  

Those who spoke to the Chronicle often pointed to the passing of Dick Chalmers, longtime Empire employee and unofficial mascot of Red River, as the emotional impetus for speaking out about their experience at the venue. Since our January cover story detailing the venue’s issues, booking agents, artists, and other industry professionals have continuously reached out to the Chronicle with ongoing claims of nonpayment, often citing fear of litigation as a reason to stay off the record.

Online music fans have lamented the temporary loss of work for music industry employees while the venue has been shuttered, and the niche Empire had filled on Red River: In recent years, the dual stages had become a home to hip-hop and rap acts, helping to fill a much-needed gap in Austin’s live music scene. Sernovitz, speaking as a majority shareholder of 606 Holdings, told the Chronicle that the LLC hopes to resolve whatever disputes remain as quickly as possible so the stage can reopen.

“Our plan is to restore this building to being an iconic music venue,” Sernovitz said. “We are looking for a buyer or an operator, preferably an independent one, who can run it right, treat employees right, and treat the artist right.”

The conditions of Rally Austin’s mortgage stipulate that the space must be used as a music venue for the next 20 years – a relief to many concerned about preserving RRCD’s unique character. In an email to the Chronicle, the organization said: “Rally shares the community’s interest in seeing the property continue to support live music, artists, workers, and the cultural vitality of the Red River Cultural District. We understand the urgency and appreciate the space needed to work through complex legal and financial options carefully and responsibly with the property owner to resolve matters quickly.”

Addressing internet comments that Empire might be scooped up by concert monopolizers Live Nation, Sernovitz said the team has “talked to Live Nation, AEG, and dozens of others,” but added, “we’d prefer it to be an independent operator.”

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