Judge: Strip Club Must Post $2.45M

A Mill River strip club’s owners have until Monday to put together $2.45 million in cash or collateral, or else the owners of a dilapidated former clock factory may proceed with an eviction to make way for 130 new affordable apartments and artist lofts, thanks to a judge’s ruling released Wednesday.

Superior Court Judge John Cordani set the multi-million dollar appeal bond in his latest ruling in the months-long legal dispute between the Scores strip club at 85 Saint John St. and the Portland, Oregon-based Reed Community Partners (RCP) development company, which plans to convert the long dilapidated, contaminated former clock factory at 133 Hamilton St. into a 130-unit complex called the Clock Shop Lofts.

The judge did not go as far as to allow Reed to evict Scores immediately, as Reed had sought. But the decision may produce the same outcome if Scores can’t meet the high bond set.

City officials are watching the case nervously — fearing that a drawn-out dispute that leaves Scores on the premises could doom the entire Clock Shop Lofts project, which was decades in the making. (Read about that here.)

In his decision, the judge recognized and affirmed the developer’s argument in housing court week that the entire $38 million environmental remediation and apartment construction project could fall apart if the strip club does not vacate the former clock factory soon.

“Much of the plaintiff’s financing is in jeopardy of loss as a result of the defendants’ continued occupancy of the premises,” Cordani wrote. ​“Further, the project itself is in jeopardy as a result of the defendants’ continued occupancy of the premises. Without a bond there is no reasonable assurance that the defendants can make good on the damages. … The court concludes that an appeal bond is absolutely necessary to protect the plaintiff from damages that will arise because of the appeal period.”

Click here to read a full copy of Cordani’s decision.

Scores attorney Anthony DiCrosta told the Independent that he and Scores owner Peter Forchetti are still deliberating over if and how to post the bond by Monday.

The going rate with surety companies for appeal bonds is a bond premium worth 2 percent of the bond amount as well as collateral worth 100 percent of the bond amount. That means the club would have to pay a bond provider a roughly $49,000 premium as well as collateral worth $2.45 million in order to secure the appeal bond by Monday.

Cordani’s latest decision follows up on the state judge’s first ruling over a month ago in favor of RCP’s eviction of Scores on the grounds that the strip club’s lease had expired. 

In that Feb. 15 decision, Cordani ordered the club, the sole remaining tenant of the former clock factory complex, to vacate the building by the end of March.

Scores owner Forchetti and attorney DiCrosta then filed then an appeal of Cordani’s decision.

In housing court last week, the judge heard testimony on the developers’ bid to terminate the stay of the appeal; that is, to allow the developer to kick the club out of the premises immediately, even as the club’s appeal works its way through appelate court.

The judge also heard testimony on how high to set the appeal bond, or the amount of money that the strip club has to post in order to remain in its current digs during the appeal and which it would have to pay to the developer if an appellate judge were to find the club’s appeal spurious.

Appeal Not ​“Only” For Delay

In his latest decision on Monday, Cordani declined the developer’s request to terminate the stay of the appeal. The judge wrote that he is not convinced that the strip club filed the appeal solely for the purposes of delaying its eviction, as RCP’s lawyer Jay Lawlor argued in court last week.

“The public interest here is divided,” Cordani wrote.

“The public has an interest in quick certain dispositions of summary process matters. This court has strived in this matter to achieve that goal despite the initial delays which arose as a result of the defendants’ actions. However, the public also has an interest in preserving a party’s right to appeal. This right to appeal is fundamental to our system of justice and arises out of the humble and certain recognition that even with the best of intentions and human skill, mistakes can be made. When weighing these two interests, only in the most unusual and certain cases does the first interest outweigh the second.”

Cordani found that the club’s appeal was not made ​“only” for the purposes of delay, and therefore the club should retain its right to appeal Cordani’s initial decision and hold onto its currently rented property for the duration of the appeal.

The $2.45M Bond

However, Cordani ruled, Scores’s right to stay in place over the course of the appeal must also be balanced by the severity of the potential consequences on the owner’s planned development of the building if the club were to remain in place for the next 18 months or however long the appeal should last.

These consequences exceed the $8,500 monthly rent that the strip club currently pays the building’s owners, Cordani wrote. considering the diversity of funding sources and tight schedule for the estimated $38 million environmental clean-up and apartment construction.

“The appeal period will delay and endanger the redevelopment of the site,” he wrote, ​“costing the plaintiff its carrying cost [of roughly $100,000 per month] for the property and endangering the plaintiff’s investment. … The defendants must therefore post an appeal bond insuring the foregoing damages. The court finds that an appeal bond in the amount of $2.45 million is appropriate.”

Cordani ordered the strip club owners to post a cash or surety appeal bond in the amount of $2.45 million no later than the end of the day on April 1, 2019.

“If they are unable to post the bond,” Lawlor told the Independent, ​“I can file a motion with the court to terminate the stay on that basis.” That means that, even though Cordani declined to terminate the appeal stay in his Monday ruling, if the strip club fails to gather enough money for the bond by Monday, April 1, then the developer can petition Cordani to allow for the immediate execution of the judge’s original eviction order. Even though the appeal will continue.

“The stay on execution would be lifted if they are unable to post the bond,” Lawlor said.

DiCrosta said that he and Forchetti are currently evaluating if and how to gather enough money for the appeal bond by Monday.

“We’re looking into it now,” he said. The judge ​“gave us a short period of time” to gather that much money.

He said that his client would have to retain a bond from a bonding entity, which would charge a fee, though he did not know exactly how much.

Forchetti told the judge that having to pay a multi-million-dollar appeal bond would ​“devastate” Scores. He said his company currently employs between 50 and 70 perople, and that he currently owes $480,000 on a loan he got to make improvements to the club in 2015.