COMMENTARY: Steve Miller

Las Vegas Tribune

April 24, 2002

"COMPLIANCE WITH LAWS. Tenant shall, at his sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now in force or which may hereafter be in force pertaining to use of said premises, and shall faithfully observe in said use all municipal ordinances and state and federal statutes now in force or which shall hereinafter be in force."

"DEFAULT. Upon occurrence of any Event of Default, Landlord may: 1. Give Notice to Tenant that his lease shall terminate upon the date specified in the notice."

The above is part of the terms and conditions of a typical lease made between Schiff Properties and a tenant of one of the company's many commercial buildings. The condition is there to insure that the landlord can evict a tenant that is repeatedly violating the law.

The condition is also a double-edged sword. Indeed, it is designed to make it easy to evict a lawbreaker from his or her lease, but the provision also exposes the landlord to liability in the event that a tenant continues to break the law and the landlord does nothing to stop the practice.

This brings to mind Renata Schiff, owner of Schiff Properties, and her tenant the Crazy Horse Too topless bar. It also reminds me that beating and robbing people is supposed to be illegal!

During the past seven years, abundant news reports by media other than the Las Vegas Tribune should have captured Ms. Schiff's attention. Even if she were out of town, someone in her organization, I presume, would tell her of the news stories of violent events allegedly reoccurring on her property - specifically at the Crazy Horse on Industrial Rd.

Amazingly, instead of exercising her DEFAULT rights under the COMPLIANCE WITH LAWS condition in her lease, Renata allegedly tried to evict neighboring tenants who complained about the reported violence and law breaking. Coincidentally, at the time she was trying to evict bothersome tenants, the Crazy Horse's owners were allegedly showing off plans for an expansion into the neighboring tenant's space - an expansion that might result in an even bigger threat to public safety according to bar neighbors.

Meanwhile, lawsuits were being filed; one for a wrongful death; another for a broken neck. Headlines blared with stories of violent events, but Renata did not exercise her DEFAULT rights in order to stop the problems.

Renata Schiff is the holder of an unlimited gaming license, therefore she is obligated to maintain the highest of standards in order to remain a licensee at the Nevada Palace and Renata's Casino in Green Valley. Maybe that's why she is selling one of her properties - the one that is having all the problems - to Rick Rizzolo the owner of the topless bar that is the subject of the personal injury and wrongful death lawsuits?

As a trustee on a land lease to an adult business, I am very aware of the exposure a landlord faces when a judgment exceeding umbrella insurance coverage - usually capped at $5 million - is affirmed against such a controversial tenant. In these cases, juries are known to quickly look for additional deep pockets and reasons why landlords are also responsible when losses occur. Even the strongest of INDEMNITY clauses in leases do not protect the landlord from such exposure.

If I were a landlord and became aware of illegal activities occurring at one of my tenant's businesses, I would quickly move to terminate their lease before I'd be exposed to liability caused by my inaction.

There are three separate, verbose sub-chapters pertaining to indemnity contained in the Purchase Agreement signed on March 22 by Renata Schiff and Rick Rizzolo. Chapter 16.01 of the agreement states:

"INDEMNIFICATION. Buyer convents and agrees to indemnify and save and hold Seller harmless at all times after Closing in respect to any and all expenses, losses, claims, damages, or causes suffered or incurred by Seller, relating to or arising from, by reason of or in connection with the Property or the leases described in Section 10.03.01 of this agreement accruing on, before or after the Closing Date."

On September 20, 2001, Crazy Horse employees reportedly threw Kansas tourist Kirk Henry out of the bar. The bouncers allegedly beat the man then robbed him and left one dollar in his wallet. Then, witnesses claim that one of the bouncers grabbed the man and snapped his neck severing his spinal cord. Las Vegas attorney Donald Campbell is currently representing Henry in a multimillion-dollar personal injury lawsuit against the Crazy Horse Too.

A wrongful death lawsuit dating back to 1995 is currently threading its way through the court system. It involved Scott David Fau who was allegedly beaten by Crazy Horse employees and left to die on the tracks behind the bar. This case also alleges damages amounting to tens-of-millions of dollars.

These two events are not the first of their kind reported at the Crazy Horse Too.

According to the attorneys and the senior insurance adjuster I consulted for this column, Renata, by allegedly postdating her responsibilities as landlord through an INDEMNIFICATION condition in the sales agreement, will not gain immunity or escape exposure if either of these cases result in judgments for the Plaintiffs that are in excess of liability insurance coverage.

I agree.

Steve Miller is a former Las Vegas City Councilman. Visit his website at: http://www.SteveMiller4LasVegas.com