Club, landlord, restaurants, property owner wrangle in court over Phase 54 - East Valley Tribune: Business

Club, landlord, restaurants, property owner wrangle in court over Phase 54

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Posted: Thursday, June 3, 2010 2:33 pm

Lawyers for a Chandler club and the building's landlord, the neighboring restaurant owners who are suing the club and the Chandler property owner have been battling it out at Maricopa County Superior Court this week.

Owners of Phase 54, a concert venue and club that opened May 7 off Interstate 10 and Ray Road, say their venue is good for business, has adequate parking and received a written agreement from the property owner to open.

However, the lawyer for the three restaurants and the property owner say Phase 54 is a night club, which is not allowed under the property's codes, covenants and restrictions.

The plaintiff's attorney Julianne Wheeler said the restaurants never agreed to the club opening and said there's not enough parking for all the businesses, which include Outback Steakhouse, Carrabba's Italian Grill and Charleston's, the three restaurants suing the club.

Judge J. Richard Gama has listened to three days of testimony this week. He received the case after Judge John Rea recused himself last week after it was discovered his bailiff is friends with the owner of Outback.

The lawsuit was filed two weeks before the club's grand opening. However, Rea allowed the club to open as planned.

On Tuesday, Gama found that a transcript of a taped conversation from an Outback manager complaining about the race of club patrons will not be allowed in the case. He said it would create confusion for the jury.

Jon Harris, Phase 54's owner, said that the real reason the restaurants don't want the club to stay open is because they're concerned by the racial background of club patrons.

Phase 54's Phoenix-based lawyer, John Moshier, said the venue is similar to Celebrity Theater and is a concert venue first.

He is arguing that no objections were raised to the city during the liquor license and permit process, and that the club agreed with most of the 10 demands in a letter sent in March. Agreeing to those terms was perceived as an agreement to open, Harris said.

Karen Bremer, the vice president of real estate for Private Restaurant Properties LLC and OSI Restaurant Partners Inc., testified that the letter was not an agreement. She said the club owner did not accept all 10 terms, so there was no agreement. She was also involved in writing the property's codes, covenants and restrictions.

The restaurant managers testified saying they had no parking issues when the club was open other than some valet barrier problems and cars left overnight.

Moshier is also arguing that none of the restaurant or property owners have ever been to Phase 54 while it was open and have no idea what goes on inside the club. He said the research of the club came from the website, which included old information from Harris' previous Phase 54 recording studio and night club.

Harris owned the Phase 54 recording studio in Tempe for 20 years, and then opened a lounge on top of the studio for four years. He sold the recording studio a year and a half ago.

Harris spent more than five months and more than $1 million gutting the building, which formerly housed a furniture store, to turn it into the venue it is today.

"We're a performance venue with a stage," Harris said. "People dance at Symphony Hall, but you wouldn't call it a night club."

The 26,100-square foot, two-story club, has a 4,000-square foot outdoor patio, a 5-foot tall large stage with full lighting and sound for bands and dancers to perform in a concert atmosphere. A resident DJ plays top 40 music at the club, which has 50 employees.

Phase 54, which is open from 8 p.m. to 2 a.m. Wednesday through Saturday, also features a large wine cellar.

The judge will set another court date next week to continue the case.

"I'm hoping the outcome will be that our use will be allowed," Harris said. "I hope that we will prevail in this case or that we can come together and make an agreement and dismiss this case so everybody can save money."

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