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Ocean City

Town facing ‘do-over’ on Sin City after lengthy court battle

(June 21, 2013) After a lengthy legal battle that resulted in its actions being revoked by the court, the Town of Ocean City will essentially be going back to square one in its ongoing adversarial relationship with Sin City, the adult store in the Bayside Plaza shopping center on 137th Street.

“It’ll almost be like starting from scratch,” said City Solicitor Guy Ayres, referring to the possibility that a second business license hearing – essentially a do-over of the contested hearing from October 2011 – could be held as early as next week.

The decision of Worcester County Circuit Court Judge Thomas Groton came down in March of this year, after the controversial case flew largely under the radar since it began 18 months before.

The saga of Sin City, Ocean City’s only sex shop, dates back to its founding by business partners Moshe Bitton and Ofir Bouzaglo in 2007. Almost as soon as it opened, the store caused a massive outcry from city officials and business leaders over the resort’s coveted family image and the damage the story was perceived to have done.

In response, the city passed an ordinance in early 2008 that heavily restricted adult-themed stores via the city’s zoning code, only allowing such business uses outside of a 600-foot minimum distance from religious and recreational facilities. Such facilities include the beach itself, and given that the entire resort is barely 600 feet wide in some places, the ordinance essentially bans sex shops from all but a few narrow strips of land.

Bitton and Bouzaglo’s store – then named Sex Style – did not meet the location requirements, but was given “grandfathered” zoning status. If the shop was closed for more than six days, however, it would lose its rights to a non-conforming use under the zoning code.

In the spring of 2011, according to court documents, Bitton and Bouzaglo had a contentious falling-out over their business, with Bouzaglo taking over the holding company, BB Novelties Inc., which owned the pair’s Ocean City store as well as stores elsewhere. But Bitton’s name was on the lease at the 137th Street facility, and he threatened to repossess any of Bouzaglo’s merchandise that was in a space that was still technically part his.

To this end, Bouzaglo removed all of his merchandise from Sex Style in June 2011, but continued, he claimed, to return on select nights and weekends with boxes of DVDs to sell and then take with him out of the store.

In the fall, Bouzaglo was able to renew his lease without Bitton, and re-stocked the store with a new name, Sin City. But when he went to re-apply for a business license, Bouzaglo was told the city had reason to suspect that he had been closed through the summer, and had violated the 60-day statute for non-conforming use.

Bouzaglo requested a business license hearing, a quasi-judicial rendering authorized by state law and under the city’s charter.

The hearing is to be conducted by the city manager, but by the time the hearing was held in October, former City Manager Dennis Dare had already been ousted from his post, leaving Mayor Rick Meehan as acting city manager.

Meehan, according to court documents, said he had a conflict of interest regarding the site and could not preside over the hearing. Instead, then-Council Secretary and current Council President Lloyd Martin was selected by Meehan to hear the case.

In the hearing, Bouzaglo testified that he was not closed for a period of 60 days during the summer, and presented tax documents, electric bills and several witnesses who had been to the store or helped him transport merchandise.

But the Bayside Plaza Condo Association, many of whose owners had been publicly opposed to a sex store in their shopping center in 2007, presented testimony that they had never seen Bouzaglo during the period in question.

Martin ultimately found against Bouzaglo, and ordered him to shut down his business. However, Bouzaglo quickly appealed the case to Worcester County Circuit Court.

The gist of Bouzaglo’s appeal, as presented in court records by his attorney, David Gaskill, was that Martin was unduly biased against his business before the hearing even had begun.

According to memoranda from Gaskill, the fact that Martin was a member and former officer of the Caine Woods Association – the community group whose residences border Bayside Plaza – created undue influence against Bouzaglo.

Further, the fact that Martin was an elected official who had voted for the ordinance restricting Bouzaglo’s enterprise violated the principle of due process.

“As the Court pointed out at oral argument, the Code set up a mechanism whereby Petitioners’ property rights would be guarded by a neutral, un-elected decision maker not subject to the opinion of the electorate,” Gaskill wrote.

He also pointed to a comment made by Martin at the beginning of the license hearing, in which Martin was recounted as telling Bouzaglo that “you only paid your taxes to make it look like you were open.”

In a subsequent court hearing, however, Martin “testified that he had no knowledge of a ‘public groundswell’ or public opinion adverse to Petitioner’s business at the time of the passage of the ordinance relating to sexually-oriented businesses,” according to arguments from Ayres.

“He testified further that he was never subjected to public pressure relative to the existence or location of the store.”

Groton found that, while creating the possibility of bias, Martin’s involvement with Caine Woods and his status as an elected official were not evidence of bias in and of themselves, in light of his testimony.

But during the court hearing, Groton opined that a specific instance actually did evidence undue influence.

In that instance, Martin was asked why he doubted the credibility of Bouzaglo’s witnesses. He gave the example of a man named Vernon Spence, who had testified that he had seen Bouzaglo at the store during the time in question and that he was doing business. But Martin noted that he had prior knowledge that Spence had legal and financial troubles and that he believed Spence could be easily convinced to fabricate stories.

“It was an unfortunate circumstance that Martin, as hearing examiner and though no fault of his won, had contact with Spence on a prior occasion,” Groton wrote. “There has been produced no evidence that Martin was biased or prejudiced as to Appellant or the subject matter of Appellant’s business; however, his decision was certainly influenced by his extra-judicial know­ledge and dealing with Spence. Under such circumstances, Appellant was not afforded a clean slate upon which to present its case.”

“The fact that Lloyd had some prior contact with Mr. Spence is basically what it comes down to,” Ayres said this week.

He and Gaskill are negotiating how a new decision regarding the license will be rendered, Ayres said. He also acknowledged that Bouzaglo had offered to make a number of concessions to the city, including changing his signs and window displays to be less conspicuous.

Gaskill could not be reached for comment.

Bouzaglo himself, however, said that the city was not negotiating in good faith.

“Basically, what they’re doing is to dry me out of money,” he said this week. “They’re going to shut me down again and we’re going to have to appeal again. We tried to make a compromise with them – they want me to change my sign, even though they lost in court, but they seem to have decided that they don’t’ want to negotiate with me at all.”

If the city continues to press, Bouzaglo said he would simply look to open other stores on the island as a matter of economy.

“I gave them my word that after a few years of this, they’re going to have more stores,” he said, noting that his legal fees have topped $100,000 thus far. “It’s the same money to fight over one store or four stores, so it will be four.”

“If the store didn’t make any money, it would be closed,” he said. “But it does, so obviously people want it.”

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