6th and Spring Roll-Down Doors Hide Legal Fight Over Bar Space

DOWNTOWN LOS ANGELES — Although Mercury Liquors has long since fallen off the radar of most Downtowners, restaurateur Andrew Meieran and developer Barry Shy have spent the last sixteen months locked in a court battle over the bar and the building above it.

Lawyers for both sides were back in Los Angeles Superior Court on Friday, arguing over work Shy wants to do to bring the second floor of his SB Manhattan building at 215 W. 6th into compliance with city demands.

That floor was not in the design of the original building. When the building was in use as a bank, a mezzanine wrapped around the edges of the lobby, and the ceiling of the lobby soared two stories above the ground floor.

According to a September letter sent by Meieran's lawyers, the bar's space extends all the way up to that original height -- the bottom of what is now the third floor. "The Addendum to Lease clearly provides that the [Meieran Family Trust] has rights to possess the 'open space above the premises up to the structural slab beneath the 3rd floor.'"

Filings by Meieran's lawyers also allege that Shy converted the mezzanine to a full floor without permission from the city. "After completing the unauthorized work, respondents simply submitted building plans that pretended that the second floor had always been there," they claim.

In March of 2008, the city's Department of Building and Safety issued Shy an Order to Comply which demanded that the developer "demolish, remove and re-construct all portions of unapproved construction of mezzanine infill." That same month, Shy began leasing units in the building, which now has tenants in roughly 85% of its 198 units.

Shy was able to convince the city that demolition of the second floor was not necessary, and a second Order to Comply was issued on August 29 that permitted him to simply add support brackets to the columns supporting the new floor. While Shy has completed that work for the bulk of the second floor, the dispute with the Meieran Trust has prevented him from accessing the bar space to do work there.

Today's hearing was to consider a motion filed by Shy's counsel on December 17, 2008, asking the court to compel Meieran to allow him the access needed to do the reinforcement work.

Such a request was made necessary by a pair of injunctions that have been issued against Shy, forbidding him from entering space belonging to the Meieran Trust. In filings and in court today, Shy's counsel has emphasized the minimal nature of the work required, which it characterized as $5,000 worth of welding and followup inspections.

Despite the injunction, Shy and a team of construction workers forcibly entered the bar space on February 21, 2008, doing work which Meieran's lawyers claim caused severe damage to the space's historic elements. In today's hearing, Shy's lawyer said that intrusion was necessary to install fire safety equipment.

Regardless of the reason, Judge Richard J. Fruin did not seem to view the incident highly. "[Shy has] shown a flagrant disregard for the injunction I issued before," he told the two legal teams. "Why should I let the wolf in the hen house?"

Elsewhere in the hearing, Judge Fruin gave weight to the argument made by Meieran's counsel that it was impossible to say that Shy would stick to such a limited scope of work. "Mr. Shy is very difficult to control," he told Shy's counsel, and "at this point in time, I don't trust Mr. Shy."

Without the work and the resulting inspection, SB Manhattan can not get a final Certificate of Occupancy. Right now the building is operating under a Temporary Certificate of Occupancy (TCO), which allows occupation of all but the three units over the Trust's space. While a TCO is valid for a maximum of six months, all indications are that the city will continue to renew the temporary document while the case is ongoing.

One possible outcome of the appeals currently making their way through the legal system is that Shy could be ordered to demolish the portion of the second floor above the bar space, reopening the ground floor to its original height.

While Judge Fruin did not issue a ruling on the Motion to Compel this morning, during the hearing he said that his inclination was to deny the motion.

A Bar Built Around a Bank Vault

Mercury Liquors was to be the first of Downtown's bank vault bars. Set in the basement of the 1910 Los Angeles Trust & Savings Bank building at 6th & Spring, the bar by Edison creators Andrew Meieran and Marc Smith was often reported as being just months away.

The September 19, 2005, edition of the Downtown News described the space:

Andrew Meieran and Marc Smith are turning a former bank vault in the basement of the Los Angeles Trust and Savings Bank Building at 215 W. Sixth St. into a retro bar. The 6,000-square-foot basement will feature white marble floors, walnut wood paneling, polished stainless steel walls and much of the original architecture, including the vault's 12-inch-thick circular doors. The bar, which was previously named "Bills," should open by February, Meieran said. The bank building above is vacant, and is being proposed for residential use.

Meieran once owned the entire 14-story building. He bought it in 2000, seven years before he opened the Edison in the basement of the Higgins building, a structure he converted to residential in partnership with Shy.

While Meieran knew what he wanted to do with the bank building's basement and a portion of its ground floor, he had no plans for the rest of the 14-story structure. In 2005 he sold the building to Shy for $13 million, keeping a lease on the bar spaces and stipulating that the title to the spaces be turned back over to the Meieran Family Trust once the residential conversion was completed.

It wasn't long before the deal went sour.

In court filings, Meieran's lawyers allege that Shy tore out an elevator bank the bar needed for ADA access, demolished a stairway required for the club's egress plans and damaged wiring and pipes. The documents also allege that in cutting a lightwell into the originally solid building, Shy allowed water to flood the basement bar, leaving rust on the historic vault doors and mold growth throughout.

In a deposition, Meieran says that this dangerous growth was simply ignored. "I saw workers using sheetrock to cover areas that had been infested with mold without taking any measures to remedy the mold problem..."

In November of 2007, Meieran was awarded roughly $13.5 million in damages and lost business value, along with approximately $1 million in attorney's fees.

A trial judge later rescinded the bulk of that award, though, and appeals by both sides are still working their way through the judicial system.