Nightclub owners sue for $13 million Nightclub owners sue for $13 million (April 08, 2005)

Lawsuit alleges city forced them to close

By Jon Wiener

First the owners of the Limelight accused the city of violating their rights as property owners and forcing the Castro Street nightclub to shut down.

Now, after two court-ordered mediation sessions failed to produce resolution, Kareem and Andrew Nahas are asking a federal judge to grant them $13 million in damages for the restrictions they say forced them to close in 2003.

The two sides are currently taking depositions for the trial scheduled to begin this October. The city council met in closed session last week to discuss the case.

According to the lawsuit, first filed in October 2003, the city's actions "represent[ed] an attempt by the City to impose restrictions which the City knew or should have known would put the Limelight out of business."

City attorney Michael Martello said he was surprised by the allegations.

"The staff and the council bent over backwards to try to work with the owners," said Martello. Adding that the Limelight's liquor license was "similar to Chili's or Chevy's," he disputed the assertion that the city acted unfairly.

Noise complaints and reports of underage drinking and kids urinating in neighbors' yards drew the city's attention to the club in 2002. Police Sgt. Derek Sousa remembers the club as a trouble spot and said police calls from Castro Street have decreased significantly since it closed.

"The majority of the downtown police activity, especially on weekends, was somehow related to them," said Sousa.

In an effort to curb the problems, the city banned under-21-year-olds from the Limelight, limited the club's hours and ordered the Nahas brothers to make half of their revenue through food sales.

Through their company, Big Sky Entertainment, the Nahas brothers were paying nearly $25,000 per year in rent for the space, now inhabited by the Monte Carlo. The suit alleges the city's conditions were an illegal taking of property that made it impossible for them to run their business and prevented them from selling the business to a prospective buyer. They also allege the city council did not grant them enough time at hearings to defend themselves.

Similar lawsuits against the city have failed, according to Martello. "The city's never paid a dime to settle any of them," said Martello. "We've either won them or they've been dismissed."

The city may soon be asking U.S. District Court Judge James Ware to suppress certain evidence, and his ruling -- due in late June -- could provide an early indication of the direction of the case. The Nahas brothers are being represented by attorney Eric Sidebotham.
E-mail Jon Wiener at jwiener@mv-voice.com

E-mail a friend a link to this story.