Stores squabble over 'Ernie's Liquors' name

Barron Park store owner and former landlord both want the name for competing enterprises

Competing banners hang from the vacant barn-red building with a red-tile roof at 3871 El Camino Real in Barron Park: Longtime tenant Ernie's Wines and Liquors has moved across the street, one proclaims. But the other offers a conflicting message: "Ernie's Liquors opening shortly in this same location."

Yet another banner hangs from a storefront at 3866 El Camino Real, a low-slung, L-shaped white building just across Military Way: "Ernie's Wine -- new location."

The battle of the two Ernie's has begun. The dispute between a tenant and his former landlord over who owns the liquor store's name is now headed for Santa Clara County Superior Court, with landlord Johny Mathew of San Jose suing former tenant Antony Puthanpurayil, according to court papers.

Ernie's Liquors has been a mainstay at 3871 El Camino Real for more than 56 years, neighboring business owners said. The liquor store was one of only a few such retail outlets for booze south of Stanford University back in the days when Stanford restricted alcohol sales near the campus.

Puthanpurayil purchased Ernie's from Mathew about 10 years ago. He claims he spent about $1 million for the "good will" and merchandise combined, although a source close to both men put the figure lower.

When the lease expired in October, Mathew and Puthanpurayil tried to renegotiate, only to end up arguing about the lease. Mathew wanted to raise the lease by 5 percent for each of the next 10 years, according to the source, an employee at Barron Park Florist, which is next door to the original Ernie's. But Puthanpurayil only wanted the one-time lease rise, arguing that to have any other percentage increases would effectively double his rent by the end of the decade. Mathew wanted a lease provision for a percentage increase annually to keep up with inflation, the source said on condition of anonymity.

After one month of negotiations -- during which time Puthanpurayil said he was going to move but then changed his mind -- Mathew told his former tenant the building had been leased to someone else, Puthanpurayil said.

Now Puthanpurayil claims he purchased the goodwill from Mathew and that includes the Ernie's name. Mathew claims the name belongs to the building, the employee said.

Puthanpurayil has moved his business into the existing A-1 Liquors at the L-shaped building. He already owned that liquor store as well as Ernie's, he said, and decided to take the Ernie's name with him.

It was all he had left of the old place, besides his good will with his customers, he said.

"My equity, my good will, even the equipment and my customer base" remained with Mathew, he said.

New operators have applied for a liquor license under the Ernie's Liquors name, according to an application filed with the California Department of Alcoholic Beverage Control (ABC) in San Jose.

The licensees, Mathew Chacko and Stephen Joseph, could not be reached for comment. Mathew and his attorney also did not return phone calls.

The Barron Park Florist worker observed Thursday that both Puthanpurayil and Mathew might end up with less than they started as a result of the spat.

Puthanpurayil "was making a ton of money here. He had no competition," the employee said. And "the landowner has to get a liquor license. There's no guarantee the neighbors will allow that to happen."

He pointed out that other stores, including the owner of Barron Park Market, have tried to get licenses to sell alcoholic beverages and have met with strong neighborhood opposition. Walgreen's permit application was turned down, as was the grocery store's, he said.

On Tuesday, wine company salesmen at Puthanpurayil's Ernie's were arranging and setting up displays and racks of bottles.

"I want to make it state of the art," Puthanpurayil said, taking stock of the new store. "I have promised the neighbors I will beat any price, no matter what. And I'll offer the best customer service."

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Posted by Ed
a resident of Barron Park
on Nov 12, 2010 at 11:41 am

Palo Alto annexed Barron Park a long time ago. Part of the baggage was two liquor stores at the entrance of Military Way. No where else in Palo Alto is the entrance to a neighborhood defined by two liquor stores. Most people driving by can not even tell there is a street entrance it looks like liquor store parking. Having two liquor stores creates a zone of trash, traffic, noise, crime and disrupts the quality of life in the neighborhood. The stores serve Stanford students and people who commute along El Camino, few neighbors shop there. One liquor store would create less problems, there would be more accountability and it would still serve the few neighbors who shop there. There is no need for two liquor stores at this location. Just because they have existed in that location does not mean we have to perpetuate the mistakes of the past. Palo Alto had tried to address El Camino Real and clean it up, it is time to continue that process and finally close one of the liquor stores.

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Posted by Ruth
a resident of Barron Park
on Nov 12, 2010 at 10:26 pm

Section 1.3 of Palo Alto's Comprehensive Plan describes the vision for
south El Camino Real. "El Camino Real should become a more pedestrian-oriented street..."

With schools nearby, a second liquor store in the Barron Park neighborhood with its delivery trucks and lack of parking is not very pedestrian friendly.

In fact, it is quite dangerous.

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Posted by Jon
a resident of Barron Park
on Nov 13, 2010 at 4:02 am

As a homeowner on Military Way, I'm really tired of the traffic problems, trash on our lawns, and other problems that have come with having two liquor stores at the entrance to our neighborhood.
Original Ernies has inadequate and dangerous parking on Military that would not be permitted under today's rules. One liquor store is just a liquor store. Two liquor stores on the same corner is a magnet which creates traffic, public drinking, and trash on my street.

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Posted by Ed
a resident of Menlo Park
on Nov 13, 2010 at 9:48 pm

Just as interesting to me is the part of the story where the landlord apparently wanted 5% increase PER YEAR on account of "inflation". What planet is this landlord living on?

Inflation is near record lows, and indeed, just this past week the Fed instituted policies designed to try to get some inflation in the system -- the concern is DEFLATION. Anyway, 5% per year increase in this environment is absurd.

I wonder if he got that deal from the new tenants? Seems like there is a lot of unrewarded greed out there.

For example, near my neighborhood a store that left because the landlord wanted more $. So then it stood empty for nearly a year because the landlord couldn't get any tenant at the rate he wanted.

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Posted by Ralph
a resident of Barron Park
on Nov 14, 2010 at 8:29 am

People driving by Military Way, as well as pedestrians, cannot help but notice the congestion, the challenges of turning onto and off El Camino when cars are maneuvering in the area, the hazards of walking around cars that are pulling in and out and, of course, the daily street blockages from delivery trucks. This intersection is a traffic nightmare, and with the cars coming out of the alley from Happy Donuts, it is even more dangerous.

A few weeks ago, on October 29, a delivery truck made a bad turn on Military Way causing a diesel spill. (The Police Report calls it a "HAZMAT INCIDENT") The street needed to be closed for almost 24 hours and the hazardous smell lingered for days.

This type of congestion is unacceptable for a Palo Alto neighorhood.

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Posted by Lisa
a resident of Barron Park
on Nov 14, 2010 at 8:53 am

I have witnessed public unrination behind both liquor stores, while walking home, during the past few months.

1 person likes this
Posted by you'rekidding,right?
a resident of Community Center
on Nov 14, 2010 at 10:43 am

Such a great name, you can see why it's worth fighting for. How about "Bert's" to the loser?

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Posted by Michelle
a resident of Fairmeadow
on Nov 14, 2010 at 1:45 pm

I think the landlord is looking to make money and taking advantage - we are all having a hard time but this is disgraceful. I am a big fan of Antony Puthanpurayil, we have been customers for many years and not to just buy wine/beer, but to pop in for a soda or tea on the way home. I don't believe Mr. Puthanpurayil would do anything dishonest, he's a true handshake kind of man and I am so sorry he is having to go through this but the name is his.

How could trust anyone who would want a 5% annual increase in this or any economy, right there is enough to make you wonder how far people will go for a dollar.

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Posted by Tim
a resident of Crescent Park
on Nov 14, 2010 at 8:15 pm

<I have witnessed public unrination behind both liquor stores, while walking home, during the past few months.

I witnessed this all the time in downtown Palo Alto..what else is new.

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Posted by Adrian
a resident of College Terrace
on Nov 15, 2010 at 8:48 am

Addressing a few of the comments above...

What makes a liquor store any less 'pedestrian-friendly' than other businesses?

Also, I would argue that these businesses do serve local needs - they are not just for people driving by. For those of us in College Terrace and Barron Park, these are the only close spots to get our booze.

If there are issues with trash, noise or public urination - well that's an enforcement issue, not a problem of the liquor stores. In fact, I've been inside Ernie's (the original) when the owner calls the Police to come take care of a deadbeat, and PAPD just doesn't show.

Finally, El Camino Real is a commercial and industrial corridor, so it is a moot point to argue that the neighborhood within should be bordered with a 'more pleasing' entrance. The residential zones are west of ECR, and if you want homes along ECR, then you need a zoning change. And by the way, if you did that, they would probably adhere to PA's fad for New Urbanist buildings, such as the development at Arastradero and ECR: close to the curb, higher densities and little building transparency.

Take your pick, Palo Alto, but I'm all for liquor stores on a major commercial strip.

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Posted by K
a resident of Barron Park
on Nov 15, 2010 at 10:41 am

The most awesome corner for high schoolers ( Taco bell and 2 liquor stores) candy, coke, gun and beer. Also a favorite corner for alcholoics, 2 stores to choose from. maybe if one turns you away you go to the other. No one cares what it is called, just a fun place in high school. entertaining though!

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Posted by Janine
a resident of Old Palo Alto
on Nov 15, 2010 at 11:01 am

Having been a recent resident of Barron Park I am familiar with the owner of Ernie's. He should not have to contest the rights to keep the name of his store...the name of his store should not be based on a location, but rather by the folks that own and run it. The owners and staff of Ernie's are wonderful...real nice folks who don't just sell liquor and smokes, they are part of our neighborhood peeps. The landlord of the old location of Ernie's is obviously unjustly trying to take the name for himself with the hopes that the old location could still be successful as a liquor store. Besides not needing two liquor stores at that corner, I would bet that Ernie's would prevail and continue to be successful even with competition. The landlord obviously does not realize that neighborhood folks will continue to be loyal to Ernie's and NOT because of the location, but more so because of the folks who run it. I have moved to Old Town Palo Alto but still frequent and shop at Ernie's for my smokes and spirits.....worth the extra jaunt over to their store.

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Posted by Frank
a resident of Ventura
on Nov 15, 2010 at 1:55 pm

I live on the other side of El Camino about 3 blocks away. I do think (have always thought) that having 2 liquor stores next to each other was sub-optomal.

But I also think that the "Traffic Problems" are self imposed by the residents of Barron Park. The streets are too narrow and there are no sidewalks and if you want to be lynched (at leased in effigy) suggest that the city fix this.

I also walk past here daily. I have never seen people drinking or drunk loitering around either business. I can't say it never happens but I believe it happens more often at the restaurants which actually serve drinks.

I think it's great that the landlord is being repaid for his greed by loosing a tenant and I do agree that if the new tenant applies for a liquor license I will oppose it. We don't need 2 stores next to each other.

Like this comment
Posted by Travis James
a resident of Stanford
on Nov 15, 2010 at 3:11 pm

Bring back Shibu!

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Posted by Ed
a resident of Barron Park
on Nov 16, 2010 at 4:52 pm

Liquor licenses are based on a set of rules, one of which is the population it is assigned too at the rate of one possible license per 2500 people. The new license being applied for is assigned to census tract 5106 or Barron Park. Barron Park does not have 5000 people of drinking age so there shouldn't be two licenses contemplated. Across the street or down towards College Terrace are different census tracts with no liquor stores. If someone wants a new license they should propose it in a location that supports it.

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Posted by Anita
a resident of Barron Park
on Nov 17, 2010 at 8:54 pm

I like Tony and Francis and support them keeping the "Ernie" name, but one liquor store is plenty for this intersection. There's always CVS & Bevmo available down the road too. The parking, traffic and deliveries are a pain not worth the convenience, and I could do without such a temptingly close to home vice. Still, they have the right to run a business however despicable.

Like this comment
Posted by Jse
a resident of Barron Park
on Nov 19, 2010 at 6:43 am

I know Johny Mathew very well. He used to live in Barron Park and his kids attended Barron Park Elementary and JLS with my kids. The corner at Military was infested with prostitutes and pan handlers long time ago. There used to be shouting and quarrels between Adnan, then owner of Ernies and A1 Liquor owner. When Johny Mathew took over Ernies, he stopped serving these people and did not allow them in the store. Then they were depending on A1 Liquor. He talked to A1 owner and got him to stop serving them also. Even Sandhu, then owner of A1 liquor only had good things to say about Johny Mathew.
I called Johny about the issue and he told me this. Ten years ago when the lease was given to Anthony, it was supposed to increase 2.5% per year. Anthony requested to give first 10 years as fixed lease and increase to 5% during the option for the next ten years. Johny agreed and lease was written that way ten years ago. Now Anthony decided not to exercise the option and to consolidate at A1 Liquor. So, Johny found a new tenant for the building. Even though lease was over on October 31st, Anthony did not give the possession of the building or pay rent for the building. So, Johny is in court to get the possession of the building. In the mean time Anthony destroyed the Leasehold improvements and fixtures in the building and Johny had to get an injunction from court to stop this. How can we be against allowing Ernies to continue there? Johny also needs to feed his family and live here. I am sure Johny will only give the lease to people who meet our standard.
I asked him about Ernies name and he said that he is not aware of any case regarding this. According to him, Ernies is a common name for liquor stores as it was part of a Chain. Since Ernies Corporation that owned the rights to the name is closed, the name is controlled by the fictitious name registration at the county office. New tenants have the name Ernies Liquors registered with the County and they also own the domain name Johny is not aware of any claim against this.
I really love employees like Francis at the store. But, Anthony is exploiting them by giving less than minimum wages and no overtime as they are “Un-documented” workers. I will not go to his store anymore.

Like this comment
Posted by Kim
a resident of Barron Park
on Nov 19, 2010 at 10:58 pm

If this is true, Anthony is lying to all of us. How can we object about the re-opening of Ernies, just because Anthony is asking us to do it? Ernies is here for a long time and is part of this neighborhood. I will most certainly support reopening of the store. When A1 had closed down due to fire for more than eight months, none of us objected the re-opening. So, now we cannot do the same against Ernies.

Sorry, but further commenting on this topic has been closed.

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