Solomons, MD – For many years Solomons Island’s famous Tiki Bar was known for serving up a potent cocktail known as a mai tai. Last week, while the iconic bar was shuttered and up for sale, a former business partner of the business’ late owner served up something that appears to have the potency to at least temporarily block any pending transaction.
According to documents on file in Calvert County Circuit Court, Patrick Donovan of California filed a complaint for declaratory judgment and injunction against the entity that currently owns the bar—PT Tiki Inc. and John W. Martin IV of Great Mills, who court documents state “is allegedly the primary stockholder” of the bar.
In the court action’s statement of facts, it is noted that in May of 2005 Donovan and the bar’s late owner, Terry Clarke, formed PT Tiki Inc. The court document stated that Donovan “owned 400 shares of PT Tiki Inc.” which made him the primary shareholder of the bar. It was further noted that Donovan and Clarke “owned and operated several other businesses before forming PT Tiki Inc.”
In December 2012, Clarke and Donovan executed an agreement to purchase stock through which Donovan sold his stock to Clarke “for several companies jointly owned and operated by the business partners. However, noticeably absent from this agreement to purchase stock is any mention of PT Tiki Inc.” According to the court document, prior to executing the agreement, Clarke and Donovan consulted with an accountant, “who explained that plaintiff [Donovan] ought not to sell the stock of PT Tiki Inc. to Mr. Clarke, due to Mr. Clarke’s criminal history negatively affecting the company’s ability to possess a liquor license in Calvert County.”
Nearly five years later, in March of 2017, Donovan received a letter from attorney V. Charles Donnelly on behalf of Clarke indicating he (Clarke) “wished to exercise an option to purchase Mr. Donovan’s stock for $100.00 allegedly included in an option to purchase stock executer in December 2012,” court documents stated. Donovan did transfer his stock and did not respond to Donnelly’s letter. Later that month Martin appeared before the Board of License Commissioners of Calvert County (The Liquor Board) in regards to an application for a change in stockholder. At the meeting Martin told The Liquor Board that he had been the bar manager for several years, adding that he would “practically live” at the Tiki Bar during its days of operation. The board approved the stockholder change pending the receipt of a promissory note. The board also added Martin’s name to the Tiki Bar’s Class D liquor license.
Terry Clarke died suddenly last September.
The action filed by attorney Joshua A. Tarr on Donovan’s behalf affirmed that he (Donovan) “never transferred, encumbered, sold or otherwise disposed of his stock in PT Tiki Inc. and remains primary shareholder of same.” It’s further stated that Martin and Donnelly—in his role as PT Tiki Inc.’s minority shareholder—“effectuated the transfer of PT Tiki Inc.’s liquor license to hold that Martin is the primary shareholder.”
Donovan is asking the court to recognize his ownership of 400 shares of PT Tiki Inc. and for a declaratory judgment stopping PT Tiki Inc. from obtaining any business or liquor licenses, permits, conducting business or “entering into agreements with third parties or government agencies.” Donovan is also seeking a temporary restraining order and preliminary and permanent injunction barring the sale of PT Tiki Inc.
When TheBayNet.com contacted Martin for comment he had not been formally served papers notifying him of the court action. Martin ended his employment at the Tiki Bar last June.
No comment could be obtained from PT Tiki Inc.’s attorney. TheBayNet.com also reached out to Dennis Murphy, the Annapolis-based real estate broker who is handling the sale of the Tiki Bar. A call to Murphy had not been returned as this story was being filed.
Tarr told TheBayNet.com that both defendants will have time to file an answer to the complaint. The court will then schedule a hearing to determine the merits of the action including if there is cause to place a restraining order on the sale of the bar.
Contact Marty Madden at marty.madden@thebaynet.com