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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