HomeMy WebLinkAboutCA Pete's 881 Club Card Room Permit TerminationAGREEMENT FOR TERMINATION OF CARD ROOM PERMIT AT
PETE'S 881 CLUB IN SAN RAFAEL
This Agreement is entered into between the CITY OF SAN RAFAEL ("City"), Karen
Marie Pellolio, Johnathan Pellolio and Natalie Pellolio. The Agreement shall be effective when
signed by the duly authorized representative of the City ("effective date").
WHEREAS, the parties understand that on or about September 1952, A.P. (Pete) Pellolio
and his wife Mayme Pellolio became owners of the bar and restaurant known as the 881 Club
located at 881 Fourth Street in San Rafael, which later became known as Pete's 881 Club, and that
some time thereafter the City Council of the City of San Rafael approved operation of a card room,
known as Club San Rafael, at Pete's 881 Club pursuant to Chapter 10.36 of the San Rafael
Municipal Code; and
WHEREAS, in 1985 the City acknowledged that Robert (Randy) Pellolio, the son of A.P.
(Pete) Pellolio and Mayme Pellolio, and husband of Karen Pellolio, should have been recognized
as an applicant for a card room permit, along with his parents, because he was operating the
business; and
WHEREAS, A.M. (Pete) Pellolio and Mayme Pellolio incorporated their Pete's 881 Club
business as Pete's 881 Club, Inc. in 1986; and
WHEREAS, San Rafael Municipal Code Section 10.36.100 provides that card room
permits are not transferable and that any attempted transfers render the permit invalid; and
WHEREAS, incorporation of Pete's 881 Club, Inc., does not constitute a transfer within
the meaning of San Rafael Municipal Code Section 10.36.100; and
WHEREAS, in 2006 Robert (Randy) Pellolio and Karen Pellolio transferred their shares
in Pete's 881 Club, Inc. to the Robert and Karen Pellolio Revocable Trust (the "Trust"); and
WHEREAS, Karen Pellolio contends that the transfer into the Trust does not constitute a
transfer within the meaning of San Rafael Municipal Code Section 10.36.100; and
WHEREAS, Pete's 881 Club, including the card room, was relocated with the City's
approval to its current location at 721 Lincoln Avenue in San Rafael (the "premises") in 1989,
which was first leased, then purchased by Robert (Randy) and Karen Pellolio, who mortgaged their
home in 2007 to purchase the premises; and
WHEREAS, the relocation of the card room to the premises does not constitute a transfer
within the meaning of San Rafael Municipal Code Section 10.36.100; and
WHEREAS, San Rafael Municipal Code Section 10.36.045 provides that from and after
September 1, 1968, the City Council will deny any applications for a card room permit in the City;
and
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WHEREAS, Robert (Randy) Pellolio died on August 17, 2013, his parents having
predeceased him, and Karen Pellolio became sole trustee of the Trust; and
WHEREAS, City asserts that the permit for operation of the card room applied only to
Robert (Randy) Pellolio, and upon the death of Robert (Randy) Pellolio on August 17, 2013, that
the card room permit terminated, and that a card room could no longer legally be operated at the
Pete's 881 Club location at 721 Lincoln Avenue or any other location in the City of San Rafael,
pursuant to San Rafael Municipal Code Section 10.36.100; and
WHEREAS, Karen Pellolio, the widow of Robert (Randy) Pellolio, who had been married
to him since 1979 and active in the business, asserts that she is entitled to continue operating the
card room at Pete's 881 Club, because the City approved relocation of the card room to the
premises, the business and permitted premises (since included in the Trust) were purchased with
her money, she was an active partner with her late husband in the operation of the Pete's 881 Club
during marriage, she is sole Trustee and beneficiary of the Trust, and her livelihood, including her
ability to pay the mortgage for purchase of the permitted premises, which matures in 2045, depends
upon the continued existence and lawful operation of a card room at Pete's 881 Club; and
WHEREAS, the permit for the card room has not been located to assist in resolving the
parties' dispute; and
WHEREAS, the current shareholders of Pete's 881 Club, Inc., which now operate Pete's
881 Club at 721 Lincoln Avenue, are (1) the Robert and Karen Pellolio Revocable Trust, of which
Karen Pellolio is the sole Trustee and beneficiary, and (2) Karen Pellolio, an individual; and
WHEREAS, Linda Pellolio, the sister of decedent Robert (Randy) Pellolio, was a
shareholder of Pete's 881 Club, Inc., but has since died, leaving her interest to Karen Pellolio, as
an individual; and
WHEREAS, the children of Karen and Randy Pellolio are Johnathan Pellolio and Natalie
Pellolio; and
WHEREAS, Karen Pellolio is the President of Pete's 881 Club, Inc., and she and her son,
Johnathan Pellolio, are actively involved in the management of Pete's 881 Club, Inc.; and
WHEREAS, Karen Pellolio, Johnathan Pellolio, and Natalie Pellolio represent that they
do not know of any other person or entity, including Johnathan Pellolio, Natalie Pellolio, and Pete's
881 Club, Inc., who or which is, or may be asserting, or is or may be entitled to assert, a claim to
the card room permit to which Karen Pellolio has asserted her claim; and
WHEREAS, the City, Pete's 881 Club, Inc., Karen Pellolio, Johnathan Pellolio, and
Natalie Pellolio desire to enter into this agreement, in settlement of their opposing positions, in
order to avoid litigation over those positions, to avoid catastrophic financial consequences to Karen
Pellolio, to allow for an orderly wind -down of the card room operations at Pete 881 Club, and to
provide that no claim to the continued existence of the card room permit shall remain following
the dates provided hereafter;
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NOW THEREFORE, the City, on the one hand, and Pete's 881 Club, Inc., Karen Pellolio,
Johnathan Pellolio, and Natalie Pellolio, on the other hand, agree as follows:
1. The foregoing recitals, including the representations made therein, are hereby
incorporated into the terms of this Agreement.
2. The City agrees not to challenge the claim by Karen Pellolio that she is entitled to
operate the card room at Pete's 881 Club in San Rafael, and to allow the card room to exist at that
location until the dates provided hereafter, subject to compliance with all other applicable laws.
3. Pete's 881 Club, Inc., Karen Pellolio, Johnathan Pellolio and Natalie Pellolio agree
that on the earlier of a) Karen Pellolio's death, b) the transfer of the Trust's ownership of Pete's
881 Club, Inc., c) the transfer of the premises, d) the transfer of, or any attempted transfer of Karen
Pellolio's asserted interest in the card room permit, whether by creation of a corporation or trust,
or by bequest, inheritance, or otherwise, or e) 20 years from the effective date of this agreement,
the card room permit shall be deemed terminated and cease to exist, and all card room operations
in the City under authority of such card room permit or otherwise, by Pete's 881 Club or any other
entity, shall cease immediately.
4. In the event Karen Pellolio becomes incapacitated resulting in her permanent
inability to serve as President of, or be actively involved in the management of the cardroom at
Pete's 881 Club, Inc., the card room permit shall be deemed terminated and cease to exist no later
than one-year after the occurrence of such permanent inability. The forgoing sentence
notwithstanding, the one-year period, may be extended by the City Council for good cause at the
request of the personal representative of Karen Pellolio, for example, to adequately provide for the
needs of Karen Pellolio while incapacitated. In the event there is a dispute regarding Karen
Pellolio's mental capacity to serve as President of, or be actively involved in the management of,
the cardroom at Pete's 881 Club, Inc, as described above, the dispute will be resolved by the written
opinion of at least two physicians in accordance with California Probate Code section 811.
5. The provisions of Paragraphs 3 and 4, above, are subordinate to any applicable
provisions of California statutes and regulations, and guidance and precedential practices of the
California Gambling Commission and the California Department of Justice, Bureau of Gambling
Control, with regard to card room closure, including, without limitation, handling of patron -funded
jackpots and employment matters, and card room operations at Pete's 881 Club, Inc. shall cease
in accordance with such statutes, regulations, rules, guidance, and precedential practices.
6. The provisions of Paragraph 3 and 4, above, are also subordinate to the application
of the San Rafael Municipal Code, including Chapter 10.36 CARD ROOMS, and the parties
agree that the City continues to have the right to enforce any violation of City code, including but
not limited to Chapter 10.36.110.
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7. In the event such card room operations do not cease at the time required under
Paragraphs 3 and 4, above, as may be qualified by Paragraph 6, above, the City may bring an
action for declaratory and/or injunctive relief to enforce the immediate termination of such card
room operations pursuant to the terms of this Agreement, in which action the City may recover
its reasonable attorney's fees and costs.
8. Pete's 881 Club, Inc., Karen Pellolio, Johnathan Pellolio, and Natalie Pellolio
certify, to the best of his/ her/ its knowledge, that neither Johnathan Pellolio, Natalie Pellolio,
Pete's 881 Club, Inc., any shareholder thereof, nor any of Karen Pellolio's deceased husband
Robert (Randy) Pellolio's other heirs or relatives, if any, or Karen Pellolio's own heirs or
relatives, nor any other person or entity, is entitled to claim any interest in the card room permit
to which Karen Pellolio has asserted a claim, and further agree to provide a written copy of this
Agreement to all of Robert (Randy) Pellolio's heirs and relatives, if any, and to Karen Pellolio's
known heirs and relatives, and to the Board of Directors and all shareholders of Pete's 881 Club,
Inc.
9. In the event an action is filed by any person asserting an interest in the card room
permit to which Karen Pellolio has asserted a claim, Pete's 881 Club, Inc., Karen Pellolio,
Johnathan Pellolio, and Natalie Pellolio, jointly and severally, will indemnify the City against all
attorneys' fees and costs incurred in defending against that action.
10. This Agreement may be modified in writing by the parties.
WHEREFORE, the parties evidence their agreement by entering their signatures below.
City of San Rafael
q`V\q By.
* N�
5� Jim chu City Ma a er
Attest:
Lindsay Lara, City Clerk
as to Form:
Pete's 881 Club, Inc.
by:
Karen Pellolio, President
Approved as to form:
1
Marg to Mary Leoni
Atto y for Pete's 881 Club, Inc.
[Executor of the Estate of Linda Pellolio]
F. Epstein, City Attorney -
Karen Pellolio
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7. In the event such card room operations do not cease at the time required under
Paragraphs 3 and 4, above, as may be qualified by Paragraph 6, above, the City may bring an
action for declaratory and/or injunctive relief to enforce the immediate termination of such card
room operations pursuant to the terms of this Agreement, in which action the City may recover
its reasonable attorney's fees and costs.
8. Pete's 881 Club, Inc., Karen Pellolio, Johnathan Pellolio, and Natalie Pellolio
certify, to the best of his/ her/ its knowledge, that neither Johnathan Pellolio, Natalie Pellolio,
Pete's 881 Club, Inc., any shareholder thereof, nor any of Karen Pellolio's deceased husband
Robert (Randy) Pellolio's other heirs or relatives, if any, or Karen Pellolio's own heirs or
relatives, nor any other person or entity, is entitled to claim any interest in the card room permit
to which Karen Pellolio has asserted a claim, and further agree to provide a written copy of this
Agreement to all of Robert (Randy) Pellolio's heirs and relatives, if any, and to Karen Pellolio's
known heirs and relatives, and to the Board of Directors and all shareholders of Pete's 881 Club,
Inc.
9. In the event an action is filed by any person asserting an interest in the card room
permit to which Karen Pellolio has asserted a claim, Pete's 881 Club, Inc., Karen Pellolio,
Johnathan Pellolio, and Natalie Pellolio, jointly and severally, will indemnify the City against all
attorneys' fees and costs incurred in defending against that action.
10. This Agreement may be modi0ed in writing by the parties.
WHEREFORE, the parties evidence their agreement by entering their signatures below.
City of San Rafael
By:
Jim Schutz, City Manager
Attest:
Lindsay Lara, City Clerk
Approved as to Form:
Robert F. Epstein, City Attorney
Pete's 881 Club, Inc.
by:
Karen Pellolio, President
Approved as to form:
Marguerite Mary Leoni
Attorney for Pete's 881 Club, Inc.
[Executor of the Estate of Linda Pellolio]
Karen Pellolio
Johnathan Pellolio
If r
Approved as to form:
David M. Hellman
Attorney for Karen Pellolio, Estate of Linda
Pellolio, Johnathan Pellolio, and Natalie
Pellolio
Johnathan Pellolio
Natalie Pellolio
Approved as to form:
aw(1144U
David M. Hellman
Attorney for Karen Pellolio, Estate of Linda
Pellolio, Johnathan Pellolio, and Natalie
Pellolio
Attorney/Client Privilege
CITY OF SAN RAFAEL
City Attorney's Office
INTERDEPARTMENTAL MEMORANDUM
DATE: May 7, 2019
TO: Jim Shutz, City Manager
FROM: Lauren Monson, Deputy City Attorney i"
CC: Rob Epstein, City Attorney
Lisa Goldfien, Assistant City Attorney
RE: Pete's 881 Club
As you know, the City Attorney's office has been working with Marguerite Leoni, the attorney
for the owner of Pete's 881 Club and cardroom Karen Pellelio, to negotiate an ultimate sunset date
of the card room permit and avoid legal action to shut down the card room portion of the club.
Karen Pellelio's husband was the holder of the card room permit and upon his death she did not
technically maintain a right to continue operation of the club. On February 4, 2019, I presented this
potential legal action as well as a proposed settlement agreement between the City and Ms. Pellelio
and her heirs to continue operation of the club for a date certain, with the card room permit to
sunset in 20 years. Council approved the 20 -year sunset date outlined in the proposed settlement
and asked for an effort to achieve the following additional assurances as part of the agreement:
1. A condition that ends the permit if Karen Pellolio is incapacitated in a way that she is no
longer able to participate in the day to day running of the club;
2. Council discretion to terminate the permit at any time; and
3. Assurances that the permit can be terminated based on criminal activities, public nuisance,
etc.
In negotiation with Ms. Leoni, I was able to achieve these requests and now present the agreement
to you for signature. The key terms of the agreement are as follows:
• Paragraph 3 of the Agreement provides for the following conditions on the termination of
the card room permit for Pete's 881 Club: a) Karen Pellolio's death, b) the transfer of the
Trust's ownership of Pete's 881 Club, Inc., c) the transfer of the premises, d) the transfer of,
or any attempted transfer of Karen Pellolio's asserted interest in the card room permit,
whether by creation of a corporation or trust, or by bequest, inheritance, or otherwise, or e)
20 years from the effective date of this agreement.
• Paragraph 4 of the Agreement provides for termination of the card room permit "In the
event Karen Pellolio becomes incapacitated resulting in her permanent inability to serve as
President of, or be actively involved in the management of the cardroom at Pete's 881 Club,
Inc." and allows a one year window after incapacitation to wind down card room
operations.
• Paragraph 6 affirms the City's ability to enforce SRMC Chapter 10.36 -- CARD ROOMS,
and the parties agree that the City continues to have the right to enforce any violation of
City code, including but not limited to Chapter 10.36.110.1
• Paragraphs 8 & 9 ensures Karen Pellolio's heirs waive any claim to the card room permit
and provides that they will indemnify the City against any cost to defend against any such
claim.
In all, I think we were able to achieve most of Council's goals. Please let me know if you have any
questions. Otherwise, the Agreement is attached and prepared for your signature.
1 SRMC 10.36.110 provides: "Permits under this chapter may be suspended or revoked by the city council upon
conviction for a violation of any of the provisions of this chapter or when in the opinion of the city council the continued
operation of the place or establishment will be injurious to the public health, safety, welfare or morals of the people of
the city of San Rafael."
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Cary WITH P,
CONTRACT ROUTING FORM
INSTRUCTIONS: Use this cover sheet to circulate all contracts for review and approval in the order shown below.
TO BE COMPLETED BY INITIATING DEPARTMENT PROJECT MANAGER:
Contracting Department: City Attorney
Project Manager: Rob Epstein Extension: 3080
Contractor Name: Agreement for Termination of Card Room Permit at Pete's 881 Club in San Rafael
Contractor's Contact: Marguerite Leoni, Esq. (Counsel for Pete's 881 Club) Contact's Email: MLeoni@nmgovlaw.com
❑ FPPC: Check if Contractor/Consultant must file Form 700
Step
RESPONSIBLE W
DESCRIPTION
COMPLETED
REVIEWER
DEPARTMENT
DATE
N/A
Check/Initial
1
Project Manager
a. Email PINS Introductory Notice to Contractor
1/31/2019
b. Email contract (in Word) and attachments to City
Attorney c/o Laraine.Gittens@cityofsanrafael.org
2
City Attorney
a. Review, revise, and comment on draft agreement
3/5/2019
and return to Project Manager
N/A
b. Confirm insurance requirements, create Job on
PINS, send PINS insurance notice to contractor
3
Department Director
Approval of final agreement form to send to
Click or tap
contractor
to enter a
Forward three (3) originals of final agreement to
date.
4 Project Manager
3/6/2019
contractor for their signature
When necessary, contractor -signed agreement
® N/A
5 Project Manager
agendized for City Council approval *
*City Council approval required for Professional Services
Agreements and purchases of goods and services that exceed
Or
$75,000; and for Public Works Contracts that exceed $175,000
Click here to
Date of City Council approval
enter a date.
PRINT
CONTINUE ROUTING PROCESS WITH HARD COPY
6
Project Manager
Forward signed original agreements to City
4/30/19
Attorney with printed copy of this routing form
Review and approve hard copy of signed1���
7
City Attorney
agreement
_
8
City Attorney
Review and approve insurance in PINS, and bonds
F
(for Public Works Contracts)
1
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9
City Manager/ Mayor
Agreement executed by City Council authorized
r
official
10
City Clerk
Attest signatures, retains original agreement and
forwards copies to Project Manager
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