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Landlord, tenant dispute opens a new front: liquor commission

Most landlord-tenant disputes involve only the owner of the property and one or more tenants. Now, a well-known bar in New Orleans is on the verge of dragging the Louisiana Alcohol and Tobacco Control into a dispute between the bar's owner and the owner of the building that the bar calls home.

The dispute began when the building was purchased in October 2018. The new owner wanted to make improvements and find a new tenant for the bar. The new owner was then sued by the owner of the bar who claimed that he had a right of first refusal to purchase the building. The right of first refusal is alleged to be contained in the lease between the current tenant and the previous owner.

The current building owner has reported several liquor regulation violations involving sales to minor and the rule that requires 50% of the bar's revenue to be generated by food sales. A recent ATC inspection reported that no food was found on the premises. The landlord denies claims that he is trying to "weaponize" the ATC. He says that he wants to protect the liquor license, which would mean extra value if he should try to sell the building. He claims that if the liquor license goes dormant for more than six months due to the litigation, he will lose his right to operate under the license and the property will lose significant value. The lawsuit is currently working its way through Orleans Parish District Court, where a hearing on a motion for summary judgment is set for May 10.

As with many business law claims, the outcome is difficult to predict. If the right of first refusal in favor of the bar owner is found to be valid and enforceable, the new building owner may be exposed to an undetermined amount of damages. A finding for the bar owner may also result in an invalidation of the sale. If the bar owner loses his lawsuit, he will still retain his right to occupy the bar's space in the building.

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