NORFOLK, Va. (WAVY) — The owners of Scotty Quixx as well as the bar and restaurant’s landlord is suing the City of Norfolk, demanding their business be allowed to operate again and be awarded up to $2 million in damages.

The suit, filed last week, accuses the city of “unreasonable, arbitrary and capricious” behavior when they revoked Quixx’s special exception permit back in September. The complaint states that “the City and City Council’s goal was not to remedy a possible reporting error, but instead to effectively put Scotty Quixx out of business.”

It is the third business to take the city to court over the crackdown on permits to operate late-night establishments in downtown businesses. However, Scotty Quixx is the first business to seek payment damages.

The city alleges that Scotty Quixx was in violation of its permit as its sales reports to the Virginia Alcoholic Beverage Control Authority (ABC) do not match up with its meal tax payments to the Commissioner of the Revenue.

Under Virginia law, a business that holds an ABC mixed-beverage license must comply with a 45% to 55% ratio. That means food and non-alcoholic beverages must make up 45% of a business’s total sales. Businesses must submit a mixed-beverage annual review, or MBAR, to ensure they’re in compliance.

The city attorney’s office said the MBAR for Scotty Quixx from October 2019 through September 2021 meets the 45% to 55% requirement, however, the city’s meal tax report from Scotty Quixx during the same time didn’t match that number and much less food was reported to have been sold.

In a 5-2 vote, City Council voted to revoke the permit that allows Scotty Quixx to sell alcohol and have entertainment.

Attorneys for the business owners argue proper city policies were not followed when it came to finding discrepancies in tax payments. They also allege false information was given to City Council members ahead of the vote.

During the hearing, Assistant City Attorney Katherine Taylor said there “was a murder inside of Scotty Quixx — a shooting back in early 2019.”

Attorneys say Mayor Kenny Alexander didn’t allow for the record to be corrected.

While a city spokesperson put out a statement saying Taylor misspoke, the suit argues City Council was allowed to vote after being presented a falsehood.

The suit asks for a judge to grant an injunction to allow Scotty Quixx to operate while the case makes its way through the legal system. The suit asks for $1 million in damages to be awarded to both the business owner and landlord for lost profits, sales and reputation.

“The City and City Council harbor a misdirected animus toward nightlife bars and restaurants in downtown Norfolk area and their clientele triggered by recent incidents that have nothing to do with Scotty Quixx,” the suit reads.

A spokesperson for the City of Norfolk sent 10 On Your Side a statement from Norfolk City Attorney Bernard Pishko about the lawsuit:

Scotty Quixx’s CUP was revoked after a hearing to determine if they had violated the terms of their CUP. They were found to not sell enough food to meet the state’s definition of restaurant. ‘Bars’ – i.e. establishments not selling the required percentage of food – are not legal in Virginia. In Norfolk, restaurants have not generated issues like shootings. 

Shootings like the one outside of Scotty Quixx are not common but one is too many.  Zero is our goal. 

For Scottie Quixx’s appeal, the issue is whether the City Council had a reason to conclude the terms of the CUP were violated. Council had good if not compelling reason to revoke this CUP. Ancillary issues raised by Scottie Quixx like whether the Norfolk Circuit judges can be impartial should not overshadow the question on appeal. The City has full confidence in the impartiality of Norfolk’s Circuit judges and judges from other jurisdictions so do not object to judges from other jurisdictions but believe that it is unnecessary and is likely to delay the resolution.

Bernard Pishko, Norfolk City Attorney

Scotty Quixx, which has operated under current ownership since 2013, is the fifth business to see either its Special Exception to operate or its Conditional Use Permit revoked by City Council in the last year. Three have occurred since an August quadruple shooting outside a nightclub.

Legacy Lounge, California Burrito and Culture Lounge have also appealed City Council’s decisions. Thus far, none have been successful.

Following the shooting City Manager Chip Filer promised to once again ramp up enforcement on restaurants that offer alcohol and entertainment.

In a previous interview, Filer said nobody, in particular, is being singled out.

“I wouldn’t say this is targeting. This is simply making sure that establishments that are doing activities that could be potentially somewhat … establishments that deserve higher scrutiny because they are open late and doing other things. We are going to look at them more harshly than others,” Filer said. 

Specifically, Filer said they are looking to make sure businesses aren’t just trying to sell as many drinks as they can, ignoring the state’s rules that 45% of sales must come from food.

The lawsuit revealed that investigations, when it came to MBAR reports, included several downtown restaurants.

Two days before the shooting outside Legacy Lounge, Deputy City Attorney Adam Melita requested MBAR information from Virginia ABC for Hell’s Kitchen, Chicos, Waterside District, Republic, Baxter’s, Neon Live, Caior Bistro, Culture and Scotty Quixx.

Councilwoman Courtney Doyle, who represents the downtown area, assured civic league members following the latest violence, that the conditional use permit reviews were underway.

In March, after the quintuple shooting that left three dead, Doyle said “I just feel we need to take downtown back.”

She proposed all CUP’s be reviewed, that new ones be put on hold and wanted all businesses to close at midnight.

Citing similar comments made at City Council meetings, a separate motion has been filed by the owners of Scotty Quixx, asking for all Norfolk Circuit Court judges to recuse themselves, because of Courtney Doyle’s marriage to Judge John Doyle.

“The circuit court judges share office space and interact frequently,” the motion reads. “Further,
it could be a public perception that all members of the Court know Councilwoman Doyle socially
as the spouse of a colleague. These facts could create a public perception that the proceedings are unfair if a Norfolk Circuit Court judge presides over a case in which the spouse of one of their colleagues plays a key role.”

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