Owner of Castle Superstore sex shop seeks bankruptcy
The Chapter 11 filing stems from what appears to be a landlord-tenant dispute.
Castle's Chief Executive Taylor Coleman says the company filed, in part, to protect its assets as the battle drags on with Oscar Pong, who owns the property where the store sells its wares.
Coleman claims Pong wanted Castle out so he could sell the land to Vulcan, the development company owned by billionaire Paul Allen and the largest landowner in the South Lake Union neighborhood.
Pong declined comment for this story. Court documents filed in the dispute make no mention of Vulcan. And Vulcan spokesman Michael Nank said the property was "not slated to be sold" to the company.
Based in Phoenix, Castle has 15 stores in four states, but only the Seattle store, located at 613 Fairview Ave. N., is involved in the bankruptcy filing. Until a reorganization plan is approved, Coleman doesn't have to pay the $18,000 a month for the one-story building. It's been four years since Coleman and Pong agreed to a lease for the blocky, windowless building and parking lot.
Pong says in court documents that he had concerns about the business nature of the store but said he still tried to work out a lease deal with Castle.
But the two had trouble agreeing on specifics, each drawing up terms rejected by the other. When they finally signed a lease, neither signature was certified by a notary public, according to court papers.
Coleman said his assistant forgot to do it. Pong said he was waiting for Coleman, according to court documents.
Regardless, Coleman began paying rent shortly thereafter, in July 1998, and began making improvements to the building.
But a year later, Pong temporarily boarded up the doorway and chained off the parking lot, leaving the alley as the only access. In a court statement, Pong said he did it to deter homeless people from sleeping in the area.
Coleman sees it differently. "He tried to lock me out."
Court papers say Pong told Coleman to stop making the improvements. He also told him the lease was month-to-month since they hadn't agreed on the terms, and that he had 30 days to get out.
Coleman then sued and a King County Superior Court judge ruled that the lease was valid because the rent was paid and accepted for more than a year. The store then opened in April 2000.
In a separate ruling, Coleman was awarded $221,718 in damages because the lease dispute caused a delay in opening the store.
But Coleman said he has yet to receive any money, so he has decided to stop paying rent.
Lisa Heyamoto:206-464-2149 or lheyamoto@seattletimes.com.