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The Casa Madrona Hotel and Poggio, the Italian Restaurant Inside
 the Sausalito Hotel Locked in Litigation Battle

By Gary Klien, The Marin Independent Journal, Novato, Calif.McClatchy-Tribune Regional News

October  03, 2010 --An historic Sausalito hotel and the famous restaurant on its ground floor have become locked in a litigation battle that could last well into next year.

The dispute involves the Casa Madrona Hotel & Spa, a 125-year-old property on the National Register of Historic Places, and Poggio, the swank Italian restaurant inside the hotel.

Poggio recently sued Casa Madrona in Marin Superior Court on claims of wrongful eviction, breach of lease, breach of covenant of quiet enjoyment, trespass and interference with prospective economic advantage. The lawsuit also names Terra Resort Group, the Wyoming-based management company that runs the hotel.

Poggio's action came two months after Casa Madrona filed a lawsuit against the restaurant, claiming it has not been paying its rent.

"Apparently in response to our lawsuit, they brought this lawsuit," said Nicolas De Lancie, a San Francisco lawyer representing the hotel. "We're desirous of having an amicable relationship with the restaurant."

The dispute dates to February, when the 63-room hotel, at 777 Bridgeway, changed hands in a foreclosure auction. A private equity firm in Southern California bought the hotel from the Federal Deposit Insurance Corp. and hired Terra Resort Group to run it.

Poggio, a venture led by the Sausalito-based restaurateur Larry Mindel, has been operating on the ground floor of the hotel since 2003. According to Poggio's lawsuit, Casa Madrona's new management launched an unsuccessful effort to evict

the restaurant.

"Poggio was not in any way in default under its lease," wrote Michael Baker, a San Francisco lawyer representing the restaurant. "(The hotel's) transparent purpose was to wrest possession and control of a multi-million restaurant space for free."

Having failed in its efforts to evict the restaurant, Poggio claims, the hotel "embarked on a new strategy." The lawsuit says Casa Madrona "engaged in a series of escalating acts to harass Poggio into either giving up the premises or agreeing to substantially higher rent."

Among other allegations, Poggio claims the hotel forced the restaurant to pay valet parking for hotel guests as well as restaurant guests; filled Poggio's banquet and meeting rooms with office equipment; denied Poggio access to valuable event space and revenues; refused to pay for repairs on the property; and denied Poggio employees use of the parking lot.

Poggio is seeking $200,000 in damages from Terra Resort Group, injunctive relief, a rent reduction to cover economic damages, unspecified punitive damages and legal fees.

De Lancie, the hotel's lawyer, declined to comment on the restaurant's allegations.

"We're hopeful that reason's going to prevail at some point," he said. "Our objective is to have a first-class establishment and an amicable resolution."

A case management conference is scheduled for Feb. 9 before Judge Verna Adams.

Charles Francis, Sausalito's city treasurer, said state law precludes him from commenting on how much revenue Poggio and Casa Madrona bring the city. But he said the city received $784,000 in transient occupancy taxes during the fiscal year that ended June 30, and that Casa Madrona was the second-highest tax generator of Sausalito's four hotels.

Francis said Poggio is routinely among the top five tax generators among all of Sausalito's restaurants, which contribute about $500,000 combined in annual sales tax.

Read more Sausalito & Marin City stories at the IJ's Sausalito, Marin City section.

Contact Gary Klien via e-mail at gklien@marinij.com

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To see more of The Marin Independent Journal or to subscribe to the newspaper, go to http://www.marinij.com/.

Copyright (c) 2010, The Marin Independent Journal, Novato, Calif.

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