HomeMy WebLinkAboutResolution re Hrng Officer and Rev. CUPLAW OFFICES OF
HARPER & BURNS LLP
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To: Honorable Chairman and Commissioners
Newport Beach Planning Commission
From: Alan R. Bums
Date: May 16, 2008
Re: Resolution Adopting the Findings of the Hearing Officer and Revoking CUP No.
2005 -018 for the Fury Lounge
Attached you will find a proposed resolution adopting the Hearing Officer's findings and
recommendations in the matter of the revocation of the Fury CUP.
At the time of the preparation of this memorandum the transcript had just been produced, so this
memorandum and the resolution adopting the findings and recommendation were prepared
without the opportunity to analyze the evidence and compare it with the findings to determine if
it supports the resolution. You should review the transcript and evidence before you adopt or
otherwise take action with respect to the transcript since the hearing officer is making a
recommendation to you.
Although there are older cases that suggest that an agency need not review a transcript but may
rely on a synopsis, I recommend that you actually review the transcript and evidence. You
should have a general familiarity with the evidence before adopting, rejecting or modifying the
Hearing Officer's findings and recommendation. Although there is also older case law that
suggests that due process does not require that the parties be given an opportunity to object to the
Hearing Officer's decision, I recommend that you allow a BRIEF presentation on the issue. Ten
minutes might be enough. There is no right to a new trial before the Planning Commission, and
the purpose of sending it out to a Hearing Officer was so more time could be allocated to hearing
any evidence that the parties desired to introduce. In fact, that hearing took place over a four -day
period.
Your decision must be based on the record before you. That means what is in the transcript. Of
course, other proceedings were also conducted before you and you may consider that for
reference and background issues. You should not consider anything else.
You may adopt, reject or modify the Recommendation. You may reduce the penalty (revocation)
or correct any finding. A resolution has been prepared adopting the Recommendation without
modification. It was prepared before the transcript was reviewed and assumes correct factual
findings and that the findings support the conclusions and recommendation.
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To: Honorable Chairman and Commissioners
Newport Beach Planning Commission
From: Alan R. Bums
Date: May 16, 2008
Re: Resolution Adopting the Findings of the Hearing Officer and Revoking CUP No.
2005 -018 for the Fury Lounge
Attached you will find a proposed resolution adopting the Hearing Officer's findings and
recommendations in the matter of the revocation of the Fury CUP.
At the time of the preparation of this memorandum the transcript had just been produced, so this
memorandum and the resolution adopting the findings and recommendation were prepared
without the opportunity to analyze the evidence and compare it with the findings to determine if
it supports the resolution. You should review the transcript and evidence before you adopt or
otherwise take action with respect to the transcript since the hearing officer is making a
recommendation to you.
Although there are older cases that suggest that an agency need not review a transcript but may
rely on a synopsis, I recommend that you actually review the transcript and evidence. You
should have a general familiarity with the evidence before adopting, rejecting or modifying the
Hearing Officer's findings and recommendation. Although there is also older case law that
suggests that due process does not require that the parties be given an opportunity to object to the
Hearing Officer's decision, I recommend that you allow a BRIEF presentation on the issue. Ten
minutes might be enough. There is no right to a new trial before the Planning Commission, and
the purpose of sending it out to a Hearing Officer was so more time could be allocated to hearing
any evidence that the parties desired to introduce. In fact, that hearing took place over a four -day
period.
Your decision must be based on the record before you. That means what is in the transcript. Of
course, other proceedings were also conducted before you and you may consider that for
reference and background issues. You should not consider anything else.
You may adopt, reject or modify the Recommendation. You may reduce the penalty (revocation)
or correct any finding. A resolution has been prepared adopting the Recommendation without
modification. It was prepared before the transcript was reviewed and assumes correct factual
findings and that the findings support the conclusions and recommendation.
Newport Beach Planning Commission
Resolution Revoking the CUP for Fury
May 16, 2008
Page 2
Your decision must be based on substantial evidence. Substantial evidence is that type of
evidence which is of "ponderable legal significance" which is "reasonable in nature, credible and
of solid value."
Respectfully submitted,
HARt & BURNS LLP
ziul ,
Alan R. Burns
Attorneys for the Planning Commission
in the above,- entitled matter
cc: Thomas W. Allen, Esq.
June Ailin, Esq.
Stephen Jamieson, Esq.
IN
RESOLUTION NO.
A RESOLUTION OF THE PLANNING COMMISSION OF
THE CITY OF NEWPORT BEACH REVOKING USE
PERMIT NO. 2005-018
WHEREAS, the property at 4221 Dolphin Striker Way, in the City of Newport
Beach, was developed in 1973 as an El Torito Restaurant, which at the time did not
require a Use Permit to operate; and
WHEREAS, in 1985, Use Permit No. 3162 was issued for the property; and
WHEREAS, in 2005, Use Permit No. 3162 was amended (Resolution No. 1671)
to permit live entertainment and dancing uses subject to conditions; and
WHEREAS, that amended Use Permit was designated Use Permit No. 2005 -018
and is the operative permit for the Fury Rok & Rol Sushi Lounge (hereinafter "Fury');
and
WHEREAS, the underlying parcel is owned by Ridgeway Development; and
WHEREAS, Fury, as tenant, was owned by Fury LLC and the President was
David Gonzalez, and both Mr. Gonzalez and Brian Schillizi are individuals in charge of
the business; and
WHEREAS, Fury opened for business on June 22, 2007; and
WHEREAS, on October of 2007, various problems with Fury's operation resulted
in a meeting with city representatives and Fury representatives, and a letter was
prepared on October 23, 2007, setting forth the substance of that meeting; and
WHEREAS, subsequent events caused a revocation hearing for the Use Permit
to be set for January 17, 2008, and the Planning Director caused a revocation hearing
to be set in accordance with Newport Beach Municipal Code § 20.96.040 based on his
finding that there were reasonable grounds for the revocation, thereby authorizing a full
hearing so that the Planning Commission could determine if there were such grounds;
and
WHEREAS, the Planning Commission then set the matter for hearing on
February 21, 2008, to determine if grounds for revocation existed; and
WHEREAS, the City Attorney's office declared a conflict in the matter after Fury s
attorneys filed a recusal motion and hired separate counsel to represent the Planning
Commission (Alan R. Burns) and City staff in presenting the case for revocation
(originally Anthony Taylor, then June Ailin); and
WHEREAS, pursuant to the authority provided by Newport Beach Municipal
Code § 1.08.055, the Planning Commission directed the City Attorney's office to select
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Planning Commission Resolution No.
Page 2 of 3
an independent hearing officer to hear the matter and make findings and a
recommendation as to whether the Use Permit should be revoked; and
WHEREAS, that matter was assigned to Thomas W. Allen, Attorney at Law, to
serve as that hearing officer (hereinafter "Hearing Officer"; and
WHEREAS, the Hearing Officer, the parties and their counsel (Stephen
Jamieson representing Fury and June Ailin representing City staff in their request for
revocation) participated in proceedings before the Hearing Officer over the course of a
two -month period, which included procedural matters, evidentiary rulings and the actual
hearing itself, which occurred on April 15th, 18th, 22nd and 24th; and
WHEREAS, those hearings resulted in a certified court reporter's transcript of the
proceedings as well as written rulings on evidentiary and other procedural matters and
the Recommendation of Independent Hearing Offer to Newport Beach Planning
Commission (hereinafter "Recommendation "); and
WHEREAS, said transcript and Recommendation have now been submitted to
the Planning Commission for action at its May 22, 2008 meeting;
NOW, THEREFORE, the Planning Commission, having fully considered the
transcript and Recommendation and its findings on each point, and having listened to
the argument of counsel regarding the Recommendation, does hereby:
1. Find that the recitals described above are true and accurate.
2. Find that notices of these proceedings were duly given in accordance with the
law.
3. Adopt the Recommendation in its entirety (including its findings and conclusions).
4. Revoke Use Permit No. 2005 -018.
Find that this action shall become final and effective fourteen (14) days after the
adoption of this Resolution unless within such time an appeal is filed with the City
Clerk in accordance with the provisions of Title 20 Planning and Zoning of the
Newport Beach Municipal Code.
6. Direct the Planning Secretary to provide notice of this action to all interested
parties.
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PASSED and ADOPTED this day of
BY:
Robert Hawkins, Chairman
M
Bradley Hillgren, Secretary
Planning Commission Resolution No.
Page 3 of 3
/0
NOES:
ABSENT:
Thomas W. Allen
Attorney at Law
3419 Via Lido #210
Newport Beach CA 82663
City of Newport Beach
Planning Commission
3300 Newport Boulevard
Newport Beach CA 92658
Attn: Ginger Varin, Planning
Commission Secretary
Dear Ms. Varin,
Enclosed is a document entitled "Recommendation of Independent
Hearing Officer to Newport Beach Planning Commission ". Also included are two
accompanying documents entitled "Ruling of Hearing Officer on Request for
Subpoena Power" and "Ruling of Hearing Officer on Admission Into Evidence of
Police Reports and Video ".
Please forward these documents to the Members of the Planning
Commission and to others as deemed appropriate by the Planning Director.
Thank you for your assistance.
<e��
Thomas W. Allen
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Thomas W. Allen
Attorneeyy at Law
3419 Via Lido #210
Newport Beach Ca 92663
Hearing Officer
CITY OF NEWPORT BEACH
PLANNING COMMISSION
IN THE MATTER OF:
the Revocation of Use Permits NOS. 3162
AND 2005 -018 (PA2005 -087):
Fury LLC
Dba:, Fury Rok & Rol Sushi Lounge
4221 Dolphin Striker Way
Newport Beach CA 92660
Respondent
RECOMMENDATION OF INDEPENI
HEARING OFFICER TO NEWPORT
BEACH PLANNING COMMISSION
STATEMENT OF FACTS
A. Description of Fury's Settina and Ownership
Fury Rok & Rol Sushi Lounge (Fury) is a restaurant with live entertainment and
dancing located at 4221 Dolphin Striker Way, in the City of Newport Beach, CA. Fury is
located in a commercial area just south of John Wayne Airport on a parcel
approximately 1. 107 acres in size. Fury shares a common parking area with two other
restaurants, "Classic Q" and "Saagar". Fury's 7996 square foot building is situated at
the southeast corner of the property, on the MacArthur Boulevard side of the lot.
(Exhibit C-7) The Califomia Fire Code and Fury's approved plans establish a maximum
occupancy for the Fury at 297 persons.
Recommendation of Independent Hearing Officer - 1
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The business is owned by Fury LLC, which in turn is owned by Fury
Management Inc. The President of Fury Management Inc. is David Gonzalez, who
attended the hearing as the representative of Respondent. Mr. Gonzalez and Brian
Schillizzi are the individuals in charge of the business. According to the Site plan, the
legal owner of the Fury parcel is Ridgway Development, Lafayette Road, Newport
Beach, California.
Fury opened for business on June 22, 2007 and, according to the testimony of
Mr. Gonzalez, Fury ceased doing business on April 21, 2008.
B. Fury s Permits and Licenses
According to the records of the City of Newport Beach (the City), the Fury
was originally developed in 1973 as an El Torito Restaurant at a time when the
City did not require a use permit for a restaurant at this location. In 1985, the Newport
Beach Planning Commission approved Use Permit No. 3162 for a restaurant on the
Dolphin Striker property. The City zoning ordinance applicable to this location permits
"eating and drinking establishments" with live entertainment and dancing as accessory
uses subject to the issuance of a use permit.
In 2005, Use Permit 3162 was amended by Planning Commission Resolution
1671 for the principal purpose of permitting the restaurant use to add accessory live
and dancing. The 2005 mended Use Permit for the property was
as No. 2005 -018 and is the operative permit for Fury (Exhibit C-2,
hereinafter referred to as the "Use Permit"). The Use Permit incorporates 41 conditions,
all of which regulate the restaurant and accessory uses on the property (see exhibit "A"
the Use Permit).
Conditions 9 and 13 of the Use Permit require the operator to obtain a Live
Entertainment Permit and a Cafe Dance Permit from the City Manager's Office. On
June 15, 2007, the City Administrative Service, Revenue Division issued a "Permit to
Conduct Live Entertainment% and on July 2, 2007, it issued a °Cafe Dance Permit ".
Recommendation of Independent Hearing Officer - 2
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Both of these Permits were issued to Brian Schillizzi, individually. Both permits state
they are not transferable to another location or to another individual.
Fury LLC has a Type 47 On —Sale General Eating Place License and a Type 58
Catering Permit issued by the California Department of Alcoholic Beverage Control.
C. Procedural History
On October 18, 2007, City staff from the Planning, Police, Fire, Code
Enforcement and Building Departments met with Fury s operators, its attorneys, head
security, and its public relations representatives to discuss problems with Fury's
operations. On October 23, 2007, the City issued a letter purporting to confirm
discussions at the October 18 meeting. (Exhibit A-2)
The Newport Beach Planning Commission placed the revocation of the Fury's
Use Permit on its agenda for January 17, 2008, and again on its agenda for February
21, 2008. At the February Planning Commission meeting, an extensive exchange
occurred between the Commission members, the City Attorney, City staff, the Fury's
attorney, and the Fury parcel's landowner regarding the Fury's security plan, its due
process rights and the need for a continuance. After being apprised of Newport Beach
Municipal Code (NBMC) section 1.48.055,' the Commission directed the City Attorney's
Office to assign a hearing officer to hear the matter and to prepare written findings and
a recommendation to the Commission on whether the Use Permit should be revoked.
The City Attorneys Office assigned Thomas W. Allen, attorney at law, as the
hearing officer. On March 5, 2008, the hearing officer held an initial informal hearing to
discuss procedural matters, including adoption of hearing procedures, procedures for
evidence and exhibit exchange and stipulations, witness lists, and other preliminary
matters. Attorney Anthony Taylor, representing the City, and attorney Stephen
Jamieson, representing the Fury, attended and participated in the initial hearing.
'This sedron authorizes City boards and commissions to utilize hearing officers.
Recommendation of Independent Hearing Officer - 3
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The evidentiary hearing (the Hearing) was set for March 10, 2008, however, due
to an unexpected leave by Anthony Taylor, the City requested a continuance to April 10
and April 11 to allow June Ailin, the newly appointed attorney for the City to familiarize
herself with the matter. The City requested another continuance to April 15 and April 1 E
due to the unavailability of the City's witnesses.
The Hearing began on April 15 and continued on April 18, 22 and 24, 2008. The
Hearing was conducted pursuant to the Hearing Procedures agreed to by the parties
and identified in the Record as Exhibit A-1.
The Hearing Proosdures adopted as A -1 in section 1.20 H. state in part: "The
City bears the burden of proof to demonstrate by a preponderance of the evidence the
basis for the revocation(s)."
All witnesses testified under oath administered by the Reporter and pursuant to
Ithe adopted Hearing Prooedures.
SUMMARY OF CONTENTIONS OF THE PARTIES
A. The City's Contentions
The City contends the Use Permit should be revoked on the basis that Fury has
violated 15 of the 41 Conditions in the Use Permit. A primary focus of the City is
Condition 20 which prohibits the Fury establishment from becoming a nightclub or bar.
The City cites a lack of full meal service, a short menu after mid- evening, Fury's
emphasis on alcohol sales rather than food and essentially the presence of a nightclub
atmosphere.
The City also alleges that nuisance conditions exist in Fury's parking areas. The
City cites instances of unruly behavior, drunkenness, urination and vomiting, as well as
additional violations of Fury's Use Permit conditions dealing with trash and parking of
employee vehicles.
B. Fury's Contentions
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Fury contends the City lacks authority to revoke the Use Permit on both
substantive and procedural due process grounds. Fury contends the City provided
inadequate notice to the owner of the underlying land and thus, Fury's rights were
impaired. Fury also contends it was denied due process because it was not granted the
right to subpoena witnesses to testify on its behalf and, on that ground and others, Fury
has objected to almost all of the City's Exhibits, particularly the so- called °YouTube
Video" and the police reports.
Other than its due process claims and evidentiary objections, the main thrust of
Fury's defense is the violations of the Use Permit did not occur or were not serious, and
even if they did, the Use Permit itself supports Fury's continued operation because the
Permit's findings note it is located in a commercial area, not in a residential
neighborhood, there are no sensitive uses close -by, and no one is being bothered by
Fury's operation. Moreover, if the City permits the business to sell alcohol, and to have
live entertainment and dancing until 2 a.m., the City must expect the sort of conduct it
alleges violates the Use Permit.
FURY'S DUE PROCESS AND EVIDENTIARY OBJECTIONS
Fury made written and oral objections to the Hearing to revoke its Use Permit on
substantive and procedural due process grounds. (See letter from Mr. Jamieson
Hearing Officer dated April 7, 2008)
A. The City's Authority to Revoke Use Pen-nits
A municipality may revoke a use permit even when a pennittee has acquired a
vested property right if: (a) the permittee fails to comply with "reasonable terms or
expressed in the permit granted"; or (b) there is a compelling public
necessity. O'Hagen v. City of Santa Rosa, 19 Cal. App. 3d 151, 158 (1971); Goat Hill
Tavern v. City of Costa Mesa, 6 Cal. App. 40i 1519, 1530 -31 (1992) (same). A
"compelling public necessity° may exist sufficient to revoke a vested use permit if a
business enterprise causes a nuisance. O'Hagen, 19 Cal. App. 3d at 158.
Recommendation of Independent Hearing Officer - 5
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The Newport Beach Municipal Code also authorizes the City to revoke or modify
a use permit pursuant to the Newport Beach Municipal Code. Newport Beach Municpps
Code section 20.96.040 E. 2. allows revocation upon a finding that the terms or
conditions of approval of the permit have been violated or that other laws or regulations
have been violated.
Finally, specifically with regard to the Fury's Use Permit, the permit itself grants
the City the authority to revoke it Condition 6 of the Use Permit states: '"fhe Planning
Commission may add to or modify conditions of approval to this Use Permit or
recommend to the City Council the revocation of this Use Permit upon a determination
that the operation which is the subject of this Use Permit causes injury, or is detrimental
to the health, safety, peace, morals, comfort or general welfare of the community."
Further, Condition 27 says: "The eating and drinking establishment shall take
reasonable steps to discourage and correct objectionable conditions that constitute a
nuisance in parking areas, sidewalks and areas surrounding the alcoholic beverage
outlet and adjacent properties during business hours. If the operator fails to discourage
or correct nuisances, the Planning Commission may review, modify or revoke this Use
Permit in accordance with Chapter 20.96 of the Zoning Code."
Therefore, if the Fury is found to have violated "reasonable terms or conditions"
as expressed in the Use Permit, or. if Fury's operations are found to constitute a
nuisance, the City has authority to revoke the Use Permit.
B. Inadequate Notice to the Landowner as Denial of Due Process
Fury also contends the notices of these revocation proceedings were not
properly given to the owner of the land and thus the due process rights of Fury were
impaired. Fury contends it was "merely a tenant" and that inasmuch as Use Permits in
California run with the land, they are a property right of the landowner and therefore
must be defended by the landowner.
According to testimony, attorneys' comments in the Hearing, the notices sent by
the City and notes on the Fury Site plan, Mr. Tod Ridgway is the owner of the parcel
Recommendation of Independent Hearing Officer - 6
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where the Fury is located. Ginger Varin, the Planning Commission Secretary, testified
she oversaw mailed notices of each of the Planning Commission hearings, both certifii
and regular mail, to Mr. Ridgway. She was not able to testify absolutely in each
instance however. Ms. Varin was certain of her own personal knowledge that notice
was mailed to Mr. Ridgway for the January 17, 2008 Planning Commission meeting, b
could not be certain about the February 17, 2008 notice of the Planning Commission
meeting. Signed certified mail receipts were not received in all instances but Mr.
Ridgway signed a receipt for one certified mail notice. The mailings were sent to Mr.
Ridgway at a Newport Center address and to a Lafayette Road address. None of the
non - certified mail notices to Mr. Ridgway were returned as undeliverable. For
documentation of the mailing lit and notices given and posted, see Exhibit C-41 A -E.
Significantly, Mr. Ridgway attended and spoke at the both the January 17, 2008
and the February 21, 2008 Planning Commission meetings where the Fury revocation
matter was on the agendas. He participated in an exchange with the Commission
regarding a continuance of the revocation hearing. Furthermore, Mr. Ridgway was
present in the Hearing room on more than one occasion during the Hearing and in fact
during a break in testimony introduced himself to the Hearing Officer as the "property
owner". It cannot be disputed that Mr. Ridgway had actual notice of these proceedings
and for unknown reasons, chose not to formally participate. In California, actual notice
of a proceeding satisfies due process. Benson v. Ca@bmia Coastal Commission, 139
Cal.App.0 348, 353 (2008).
C. inability to Subpoena Witnesses as Denial of Due Process
Fury also contended it was denied due process because it was not
afforded the opportunity to subpoena witnesses to testify on its behalf. Specifically, Mr.
Jamieson desired to subpoena the private individuals named in police reports who
allegedly engaged in inappropriate behavior in and around Fury's premises. The
Hearing Officer denied this request in a separate written opinion entitled "Ruling Of
Hearing Officer On Request For Subpoena Power". in summary, the Hearing Officer
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found that Fury had ample opportunity to cross examine the officers who wrote the
police reports and that Fury's ability to confront the witnesses against it fulfilled the
requirements of due process. This Ruling is a part of the record and is attached.
D. Fury's Objections to Evidence
Fury's attorney objected to almost all of the Exhibits presented by the City. The
objections were documented in a letter from Mr. Jamieson to the Hearing Officer dated
April 7,2008 1 2 and in most instances, the objections were renewed at the time the City
presented the evidence at the hearing. The parties stipulated to the admissibility of
some items of evidence, including the Daily Consolidated System Sales Detail.
Fury emphatically objected to the introduction of the so- called "YouTube Video",
Exhibit C-19, a video tending to support the contention that Fury was operating as a
nightclub. Fury also objected to the introduction of the Newport Beach Police Reports
identified as Exhibits C- 26 through C-39 on the basis, inter aft that they did not
comply with Evidence Code section 1280. The Hearing Officer overruled both these
objections in a separate written opinion entitled °Ruling of Hearing Officer on Admission
of Police Reports and Video ". This Ruling is a part of the record and is attached.
ANALYSIS OF EVIDENCE AND HEARING OFFICER'S CONCLUSIONS
The following are the Use Permit conditions at issue and the Hearing Officer's
analysis of the evidence as to each:
Condition 1: The restaurant operation shall be in substantial coMormance with
the approved Plot Plan and floor Plan, dated received June 3. 2005.
The City presented no evidence to support a finding that this Condition was
violated.
Condition 5: The restaurant employees shall be required to use the 16 off -site
parking spaces fparkina also referenced in Conditions 3 and 41.
2 This letter was made a part of the record.
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I The three restaurants, including Fury, are on the perimeter of a main lot that all
2 three share. A City Code and Water Quality Enforcement Officer, Shannon Levin,
3 testified to several occasions when Fury's employees parked their vehicles in the
4 shared lot instead of the employee parking spaces at a time when there was space
s available in the 16 of"ite employee spaces. Iola. Levin testified she observed the
e status of employee parking on those occasions in the late aftemoonlearly evening whi
7 many of the employees were reporting to work, not at the height of lot congestion.
s Nevertheless, a reasonable inference can be drawn that Fury was indifferent to the
9 requirements of Condition 5. (Exhibit C-8, Exhibit C-9, Exhibit C-10, and Exhibit C-40
to I and Exhibit C-41).
11 Condition 12: There shall be no on -site radio. television. video. film or other
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14 approyeo bpecrar tyem: Permit as nisuea py we urry or Newport tieacn.
15 This condition was technically violated on one occasion when the YouTube
16 was filmed. The City did not present any further evidence of violations of this Con
17 Condition 13: Prior to the commencement of patron dancine, the applicant r
19 obtain a CaM Dance Permit from the City Manaaer Office. Dancina shall be
19 limited from 9:00 p.m. to 2:00 a.m.. Thursday through Sunday.
20 A Cafe Dance Permit was obtained. Therefore, Fury did not violate this
21 Condition.
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25 The City did not present any evidence that Fury violated this Condition. Therefore, Fu
26 did not violate this Condition.
27 Condition 16: Full menu food service shall be available for orderina at all times
28 that the restaurant establishment is open for business.
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The kitchen on the premises is relatively large, and the fixtures and appliances
are adequate to prepare the normal range of food in a full service restaurant. The
kitchen remains the same size as when El Torito operated its restaurant in the Fury
location. Fury presented the menu (Exhibit F 22), which depicts a wide range of
specialty Asian influenced seafood dishes, with many Sushi creations, and a range of
other foods as well, including short ribs, duck, rack of lamb and chicken. Chef Sevan
testified to the significant effort expended by Fury to create an attractive menu and wide
array of dishes. The evidence established the full menu is available until 9:30 or 10 p.m.
every night Fury is open. Detective Stark's report, however, indicates a bartender told
him he could order the full menu until 11 p.m., after which only sushi was available. A
"Late Night" menu was produced as evidence that showed 5 items being available
(Exhibit C-43). The officers in Exhibit C- 27 were told "hot food service closes at 10,
thereafter sushi "_ On 11/02/07 Detective Petersen was also told by a server that "most
of the tables are sold at 10 p.m. for bottle service", the implication being that full menu
food service was not available.
The evidence showed that Fury transitioned into a late night mode between 9:30
and 10:30 p.m. and stopped serving full menu food between 10:00 and 11:00 p.m.,
when only a limited menu was available. Since the significant question is whether the
"full menu food service" is available "at all times" Fury is open for business, the dear
conclusion is reached that Fury violated Condition 16 of the Use Permit.
Condition 18: The applicant shall comply with all federal, state, and local laws.
revocation of this permit.
No claims of material violation of federal law were made. The undercover
officers, and occasionally uniformed officers, observed violations of state laws involving
assault and battery, public intoxication and disturbing the peace as well as local law
violations involving public urination and overcrowding. While there was no evidence of
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successful prosecutions for this conduct the evidence depicted material violations from
time to time. Thus, violation of this Condition is occurred.
C n 1 event ed by an outside promoter or en
where the restaurant owner or his employees or representatives share in any
profits, or pay any percentane or commission to a promoter or any other person
based upon money collected as a door charoe, cover charas or any other form of
a Mr. Gonzalez, Fury's representative, testified Fury in fact contracted with several
9 promoters to bring customers to the facility. The promoters included Social Group,
to Sienna, and Club Eclipse/Upscale Access. Mr. Gonzallez's testimony was that in each
11 instance Fury paid the promoter a flat fee and at no time did they share profits or pay a
12 1 percentage or commission. This testimony was not disputed. Conclusion: This Conditior
13 was not violated.
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17 Two sections of the Newport Beach Municipal Code are applicable to the
18 Fury matter, and they are analyzed below.
19 A_ Newport Beach Municipal Code Section 20.050 K.7.
20 Municipal Code section 20.050 K. 7 defines Bars and Cocktail Lounges as
21 follows:
22 °Establishments with the principal purpose to sell or serve alcoholic
23 beverages for consumption on the premises or any establishment having
24 any of the following characteristics (emphasis added):
25 a. Is licensed as a'public premises' by the California Department of
26 Alcoholic Beverage Control;
27 b. Provides an area for serving alcoholic beverages that is operated
za during hours not corresponding to regular meal service hours. Food
Recommendation of Independent Hearing Officer - n
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products sold or served incidentally to the sale or service of alcoholic
beverages shall not be deemed as constituting regular meal service."
To determine whether Fury is operating as a bar or cocktail lounge under the
sentence of the above definition, the question to be analyzed is whether Fury's
"principal purpose is to sell or serve alcoholic beverages for consumption on the
premises ". If the evidence of the amount of food sales as compared to liquor sales
were diapositive of the question, then the answer would be that alcohol sales is Fury's
principal purpose (See discussion under Condition 29). However, Fury also operates w
a full service restaurant for a substantial portion of the time it is open, and it also
provides dancing and live entertainment. Thus, under that first definition, Fury is not a
bar or cocktail lounge.
The next question for the analysis under section 20.050 K. 7 is whether Fury had
any of the characteristics listed in subsection "a" or "b" above. Fury does not meet the
characteristics under subsection "a" because Fury is not licensed as a "public premises"
by the California Department of Alcoholic Beverage Control.
Fury's operation as compared to the characteristics in section 20.050 K. 7,
subsection "b" above is more problematic for Fury. The evidence established that Fury
"[p]rovddes an area for serving alcoholic beverages that is operated during hours not
corresponding to regular meal service hours." Fury operates until 2:00 a.m., well
beyond its regular meal service hours. Fury has a bar that is operated all the time and
does not correspond to the times for full menu service.
Sometime behveen 9:45 and 10:30 p.m., Fury usually ceases to serve its regular
meal service menu, and serves a limited menu until 2:00 a.m. The evidence showed
that Fury's limited menu food products are °sold or served incidentally to the sale or
service of alcoholic beverages." Fury even ropes off areas for tables that include a
bottle of liquor. Clearly, the majority of Fury's late night business constitutes the sale of
alcoholic beverages, not food. Fury's limited food service cannot be "deemed as
Recommendation of Independent Hearing Officer - 12
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constituting regular meal service" since its regular meal service ends sometime after
9:45 p.m. or so.
Since the Fury characteristics are the characteristics defined in Section 20.050
K.7, subdivision "b ", Fury operates as a bar or cocktail lounge after 10:30 p.m.
Newport Beach Municipal Code Section 20-050 13 3
Section 20.0501.3. defines Cabarets and nightclubs as follows: "Establishments
with the principal purpose of providing live entertainment and/or dancing occupying
more than twenty (20) percent of the net public area in conjunction with the serving of
food and/or beverages."
Evidence at the hearing was that after about 9:30 —10:30 p.m., the Fury table
servers transition their appearance; there are more "cocktail type waitresses" and fewer
male food service waiters. (Exhibit C-28) This transition was observed by the
undercover police officers (Exhibit C-28) and described in a magazine article about the
Fury (Exhibit C -22). Additionally, a significant number of dining tables are converted
from food service tables to °bottle service" use. It also appears reservations or other
arrangements can be made for the use of bottle service tables. (Exhibit C-19)
Cover charges are sometimes collected by Fury employees as a condition to
priority entry into the Fury, Detective Graham described this practice in his reports.
(Exhibits C-27 and C-29) Correspondingly, an automatic service charge was added to
the table sales after 10 -10 :30 p.m. (Exhibit C-28)
The central focus of the City's nightclub definition is a finding that the "principal
purpose" must be live entertainment and/or dancing in conjunction with the serving of
food and/or beverages in more than 20% of the net public area. The evidence
presented indicated that, after 10 or 10:30 p.m., the vast majority of the net public area
in Fury's interior is taken up with tables and booths devoted to service of alcohol and
appreciation of the musical entertainment and dancing. (Exhibits C -7, C-27, C -28, C-29,
8 Code section 20.05.05D 1, deals with TA mmencial Recreation and Enterbinmenr and is not applicable to Fury.
Recommendation of Independent Hearing Officer - 13
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C-30) Officer Jones observed when he was stationed in the parking lot outside Fury
that after about 10:15 p.m. "the club style music got measurably louder" (Exhibit C-27),
further evidence that Fury operates as a nightclub with its main focus on dancing, live
entertainment and alcohol.
The YouTube video (Exhibit C-19) provides a view into the late night Fury
environment. There are repeated references to the "club" atmosphere and a sense of
high energy, excitement and action, all being hyped as a "happening place" with
throbbing non-stop music, dancing, shouting, and alcohol consumption.
Mr. Jamieson pointed out in closing argument that patrons in a establishment
where drinking, live entertainment and dancing are allowed will normally not eat meals
after 10 p.m. but will remain in the establishment to be entertained, to dance and to
drink. He questions what the City expects when it licenses these establishments to
operate until 2 a.m. The Use Permit in this instance, however, anticipated these
concerns and attempted to control the transition into a nightclub by requiring the full
range of food to be served until 2 a.m., and by requiring the operator to maintain an
even balance between sales figures for food and alcohol. The evidence is clear the
Fury failed to stay within the conditions of its Use Permit, and encouraged its patrons
and contract promoters to consider it a nightclub.
The analysis under section 20.050 I. 3. shows that Fury is an establishment with
the principal purpose of providing live entertainment and/or dancing occupying more
than twenty (20) percent of the net public area in conjunction with the serving of food
and/or beverages and is therefore a "nightclub" for a period of 3 to 4 hours each
evening it is open. Therefore, Fury violated Condition 20 of its Use Permit.
Recommendation of Independent Hearing Officer - 14
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According to reports written by Officers Yee and Dugan, 518 occupants were
counted inside the establishment on January 26, 2008 at 12:50 a.m. (Exhibit. C-30)
Officer Yee confirmed his count and also had a conversation with Officer Dugan in
which they compared their individual counts. Officer Yee testified to methodology of his
count under oath at the hearing. Officer Yee used a pencil and paper while Officer
Dugan used a counter or clicker. Officer Hardy issued a citation to Mr. Gonzalez for
overcrowding of the premises. On cross- examination, Officer Hardy admitted he did not
actually conduct the carat and that it was conducted by Officers Yee and Dugan. Officei
Hardy also admitted he never appeared in court on the citation. Mr. Gonzalez testified
he had Attorney Cho appear in court on the date specified in the citation and that there
was no record of the citation ever having been filed in the court. Mr. Gonzalez testified
his door personnel use hand counters, and on that night they calculated the occupancy
limit was not exceeded. Fury did not call any door personnel to testify at the hearing.
The weight of the evidence established there was significant overcrowding
observed at Fury on January 26, 2008, and Condition 21 was violated.
Condition 25: No "happy hour" tvoe of reduced price alcoholic beveraue
promotion shall be allowed except when served in conjunction with food ordered
from the full service menu.
There was no evidence of a regular "Happy Hour•' where reduced price drinks
offered during certain times of day. The City introduced Exhibit C -13, however, shov
an internet page advertising Ladies Nights Complimentary Champagne at the Fury.'
ad was posted by Club Eclipse, a Fury contract advertiser and one of its promoters.
Based on the representation made by Fury's agent that free champagne would be
served at Fury, without any reference to the purchase of food in conjunction with the
drink, the conclusion is that Fury violated Condition 25.
Recommendation of Independent Hearing Officer - 15
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program must meet the standarde of the California Coordinatina Council on
Responsible Beverage Setvice or other certWintAicensing body, which the State
required certified trainina program shall be maintained on the premises and shall
be presented upon request by a representative of the City of Newport Beach
within sixty (60) days upon hiring.
Mr. Gonzalez testified that an agency of, or approved by, the California Alcoholic
Beverage Control provided training for the employees during October 2007. The City
did not contest this testimony. Therefore, Fury did not violate Condition 26.
Condition 27: The eatina and drinkina establishment shall take reasonable stei
to discourage and correct objectionable conditions that constitute a nuisance in
parking areas, sidewalks and areas surroundina the alcoholic beveraae outlet
and adjacent properties durina business hours. K the operator fails to
discourase or correct nuisances, the Plannina Coirunission may review, modifir
or revoke this Use Permit in accordance with Chapter 20.96 of the Zoning Code,
The City dearly focused on this condition by having undercover police officers
stationed in the shared parking lot on several occasions during busy evening hours.
According to the reports of OffaceralDetectives Jones (Exhibit C-27), Garrity (Exhibit C-
29), Hardy (Exhibit C-30) Graham (Exhibit C-31), there was regular urination, vomiting,
unruly behavior, fighting, occasional instances of what appeared to be drug use, and
occasional sexual activity taking place in the shared parking lot. The officers criticized
the seemingly lackadaisical attitude of the security forces toward this conduct. There
were apparently efforts to resolve these conflicts prior to instituting the revocation
process. Mr. Gonzalez testified about a meeting "just with Aaron Hasp" (Assistant City
Attorney) in October 2007 and there was reference to another meeting and the letter
described herein on p. 3. line 10.
Recommendation of Independent Bearing Officer - 16
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The Police Department began its undercover work at the Fury a short time after
these efforts to resolve the issues. The first reported undercover operation was done
on November 2, 2007 (Exhibit C-27) and this work continued until late February, 2008.
C -32) The police reports establish that Fury failed to control this behavior even
after its meetings with the City and Assistant City Attorney where the situation was
discussed. Fury violated Condition 27, and continued to violate it after the City tried to
resolve the ongoing issues.
Condition 29: The quarterly gross sales of alcoholic beverages shall not exceed
the gross sales g1 food during the same period. The licensee shall mairftain
records that reflect separately the gross sale of food and the gross sale of
alcoholic beverages of the licensed business. Said records shall be kept no less
#_I_ -guently than on a guarteNv basis and shall be made available to the
Department on demand.
Using the figures in the Sales Detail provided by Fury, the Citys attorney, Ms.
Ailin, prepared the following table using figures from Exhibit C -24. The table shows the
sales totals for "Food" versus the "Total for All Alcohor for the months of October
through December 2007, and the combined totals for the last quarter of 2007.
These figures speak volumes about the emphasis on the sale of alcohol at the
Fury. Fury argued the "trend" was that alcohol sales figures were going down as
compared to the food sales figures. Nevertheless, it is clear Fury violated Condition 29.
Recommendation of Independent Hearing Officer - 17
October
November
December
Q4 2007
Food
$68,077.26
$121,698.25
$177,436.77
$367,212.2
T r I
Alcohol
$299,687.60
$239,329.33
$231,000.55
$770,017.4
Categories
These figures speak volumes about the emphasis on the sale of alcohol at the
Fury. Fury argued the "trend" was that alcohol sales figures were going down as
compared to the food sales figures. Nevertheless, it is clear Fury violated Condition 29.
Recommendation of Independent Hearing Officer - 17
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approval by the Newport Beach Police Department. The Procedures included in
the plan and any recommendations made by the Police Department shall be
implemented and adhered to for the life of the Use Permit
Fury Exhibit 21 is a 'Security Plan" dated "February 27, 08 °. The City offered no
evidence with respect to a violation of Condition 36 and therefore, Fury did not violate
I Condition 36.
HEARING OFFICER'S CONCLUSIONS AND RECOMMENDATION
Conclusions The following Conditions of Use Permit No. 2005 -018 were
violated: 5, 12, 16, 18, 20, 21, 25, 27 and 29; and
Fury allowed nuisance conditions to occur by failing to control the patron
vomiting, urination, unruly behavior including fighting, in and around the parking areas
I of the establishment.
Recommendation to the Planning Commission: It is hereby recommended
that the Planning Commission adopt an appropriate motion revoking Use Permit No.
2005 -018 on the following basis:
1. Conditions 5, 12, 16, 18, 20, 21, 25, 27 and 29 of Use Permit No. 2005-018 have
been violated; and
2. In particular, the violations of Use Permit No. 2005-018 Conditions 16 (Full Menu
Food Service Not Available), 20 (Use of Premises as a Nightclub) and 29 (Alcohol Sales
in Excess of Food Sales) have together caused the property to transition from operation
as a restaurant with live entertainment and dancing to a nightclub.
3. Nuisance conditions exist on the property because of the failure of the property
owner and operators to control patron vomiting, urination, unruly behavior including
fighting, in and around the parking areas of the property.
Respectfully Submitted,
Dated: April 30, 2008 Thomas W. Allen
Recommendation of Independent Hearing Officer - 18
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THOMAS W. ALLEN
Attorney at Law
3419 Via Lido #210
Newport Beach Ca 92663
Hearing Officer
CITY OF NEWPORT BEACH
PLANNING COMMISSION
IN THE MATTER OF:
THE REVOCATION OF USE PERMITS )
NOS. 3162 AND 2005 -018 {PA2005 -087): )
FURY LLC
Dba: Fury Rok & Rol Sushi Lounge
4221 Dolphin Striker Way
Newport Beach CA 92660
Respondent
RULING OF HEARING OFFICER ON
REQUEST FOR SUBPOENA POWER
Respondent has requested subpoena power to allow it to compel witnesses to
appear to testify in the pending revocation proceedings. Respondents request is made
on the basis that the due process clauses of the Califomia and United States
Constitutions require that Respondent have such power. The City argues against
Respondents request as beyond the scope of the due process that must be afforded to
Respondent in this proceeding.
Respondent contends it is entitled to an °even playing field" whereby it will be
entitled to the same governmental powers as the City possesses. Without subpoena
power, Respondent contends, it is at a comparative disadvantage and, unless it can
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subpoena witnesses, it will be deprived of a meaningful opportunity to confront and
cross- examine the witnesses against f.
Respondent requests subpoena power for the specific purpose of summoning as
witnesses the private citizens named in the City s police reports, whose names are In
the reports because of conduct the police allege occurred at Respondent's business. It
is likely some of these citizens would be highly reluctant to appear to discuss their
conduct, some of which is embarrassing and unseemly
( drunkenness/vomi6ng/urinating). Moreover, compelling such witnesses to testify wouk
likely result in a series of "mini-trials" where the individuals alleged to have engaged in
offending conduct would take issue with the contentions made by the police officers.
The burden on the hearing process occasioned by issuing subpoenas to numerous
unwilling participants to defend themselves against allegations of an embarrassing
nature is quite significant. The burden on the proceeding simply outweighs the
likelihood that the evidence provided by the witnesses would significantly after the
outcome of the hearing.
A96hilef v. JanovW, 51 Cal.App.4"' 267 (1996), has been cited repeatedly in the
parties' briefs and comments in this case. In WNW, the Court held that a landowner
defending against allegations of a nuisance on his land was not entitled to subpoena
power to conduct his defense. The Court noted that due process may require a city to
subpoena witnesses in circumstances where the city's ultimate decision would
otherwise be based solely on the witnesses' written reports, with no testimony to
authenticate the reports. In the present case, however, the City's brief states the police
officers who prepared the written reports the City presents will be available to testify at
the hearing. Therefore, Respondent will have a meaningful opportunity to cross -
examine the witnesses, the police officers, who have made allegations against it.
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Due process of law in this matter is satisfied Wthe police officers who wrote the
reports are available to be examined and cross - examined by Respondent. Based on
these factors, Respondent is not entitled to subpoena power as an element of due
process of law.
April 12, 2008 ����jJ� /,►/J� /
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THOMAS W. ALLEN
Attorney at Law
3419 Va Lido #210
Newport Beach Ca 92663
Hearing Officer
CITY OF NEWPORT BEACH
PLANNING COMMISSION
IN THE MATTER OF:
THE REVOCATION OF USE PERMITS )
NOS. 3162 AND 2005 -018 (PA2005 -087): }
}
FURY LLC } RULING OF HEARING OFFICER ON
Dba: Fury Rok & Rol Sushi Lounge } ADMISSION INTO EVIDENCE OF
4221 Dolphin Stater Way ) POLICE REPORTS AND VIDEO
Newport Beach CA 92660 )
Respondent
1. Admissibility of Police Resorts The Parties have requested a ruling on the
admissibility of the written reports prepared by Newport Beach Police Officers in the
course of their investigations into the operations of the Respondent business. (City
Exhibits No. ) In each instance, the Reports were written and signed by the various
police officers within a few days after the events described in the Reports took place. In
each case the officers testified they prepared the reports using in part notes that they
took contemporaneously with or shortly after the events they observed. The notes were
then discarded. The officers who prepared the reports were cross examined by the
Respondent.
Reconmendation of Independent Hearing Officer - 1
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Evidence Code §1280 and the case of Jackson v. Department of Motor
122 Cal.AppAm 730 (1994), cited by the City, clearly authorize the admission into
evidence of the reports in light of the availability of the authors of the Report for cross-
examination. Accordingly, they may be admitted in this proceeding.
2. Admissibility of Video The City is seeking to admit into evidence a segment
digital video approximately seven minutes in length which was copied from the Internet
I by Kristy Parker, a paralegal in the City Attomey s Office. (City Exhibit No. 19) Ms.
Parker testified she located the video on an Internet site known as YouTube while she
was searching for information on the Fury Lounge pursuant to directions from her
superiors. The video purports to show the interior and exterior of the Fury Lounge and
includes some audk*Weo comments from Mr. Schilizzi, one of the operators of the
Fury Lounge.
Ms. Parker testified she had never been to or seen the Fury Lounge. Three
police officers testified they had viewed the video and said they recognized the interior
and exterior footage as being the Fury Lounge. Ms. Parker and two of the officers said
they knew Mr. Schilizzi and they testified they recognized him on the video. The stated
purpose for admitting the video is the comment about the cover charge by Mr. Schilizzi
and the identification of the site. Also, the City contends the video tends show a "club"
or "nightclub" atmosphere.
Recomendation of Independent Rearing Officer - 2
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Scientific authentication of the video is not necessary because of the limited
purposes for which this item is being introduced. A Fury witness will be afforded the
opportunity to point out any inaccuracies or possible hampering based on observations.
Based on the purpose for which the video is being introduced, that is, the
atmosphere, identification of the site and Mr. Schilizzi's comments, the video has been
adequately authenticated and is relevant to the proceedings and is admitted into
evidence as City No. 19. See Evid. Code §250 and People v. Mayfield 14 Cal.0
668,747 (1997)
Thomas W. Allen, Hearing Officer
Hecoamendation of Independent Hearing Officer - 3