Bar fight: Ex-Marine says he was duped into leasing debt-ridden Sacramento bar once known as Alley Katz

Property owner owes creditors more than $1 million

Closed less than four months after opening, the Bunker Bar & Grill lost its temporary liquor license and its front door handle following a dispute between the bar’s owner, Miguel Hinojosa, and his landlord, Felipe Olvera, who used to own Alley Katz.

Closed less than four months after opening, the Bunker Bar & Grill lost its temporary liquor license and its front door handle following a dispute between the bar’s owner, Miguel Hinojosa, and his landlord, Felipe Olvera, who used to own Alley Katz.

Photo by John Flynn

This is an extended version of a story that ran in the July 13, 2017, issue.

A little more than three months after Alley Katz was transformed into a military-themed sports bar, the large building situated in Midtown has been shuttered, sparking a nasty skirmish.

The rechristened Bunker Bar & Grill closed on June 21, seven months after owner Miguel Hinojosa signed a lease agreement hoping to realize a long-held dream of running his own bar. Hinojosa, a retired Marine and former Stockton police officer, is accusing the seller of suckering him into purchasing a debt-ridden venue with a frozen liquor license.

Felipe Olvera, the former owner of Alley Katz at 2019 O Street, acknowledges some financial issues but says Hinojosa is to blame for his business’ downfall.

The two men entered into a lease agreement in late November 2016. Hinojosa said he agreed to negotiate the terms without a broker to “save thousands,” and because he trusted Olvera, who has owned several businesses in Sacramento.

Around the time that the lease was signed, Olvera put in an application with the California Department of Alcoholic Beverage Control to transfer his full liquor license to Hinojosa, so the latter could legally serve beer and spirits.

Olvera withdrew that application on June 21, the same day he came to the Bunker, took down its sign, boarded up its windows and placed an eviction notice on the door.

In reality, Olvera wasn’t in a position to transfer his liquor license.

The ABC had placed two holds on Olvera’s license starting in 2013, due to debts Olvera owed to the Franchise Tax Board and the Board of Equalization. According to ABC spokesman John Carr, the license can’t be transferred until those debts are paid.

Olvera told SN&R that he owes $110,000 in sales taxes to the Board of Equalization. But he says he withdrew his transfer application and evicted Hinojosa because Hinojosa had been late on rent payments and unresponsive since February. “When somebody owes you money and they start dodging your calls, that means they’re not going to pay you,” Olvera said.

Olvera’s Chapter 11 filings tell a different story, however, about a businessman who told his tenant one thing while telling the federal courts something else.

According to the bankruptcy disclosure documents, Olvera faces a property tax lien of more than $100,000 from the Sacramento County Assessor’s Office. Additionally, he must settle more than $1 million in claims to both private and public parties, including nearly $800,000 owed to a “secured creditor,” who held an interest on his assets.

On May 15, U.S. Bankruptcy Judge Michael S. McManus dismissed Olvera’s bankruptcy appeal, leaving him still liable for these debts.

After discovering the bankruptcy disclosure and subsequent dismissal, Hinojosa hired a lawyer. Hinojosa said the attorney warned him the location looked to be heading toward foreclosure, and advised him to stop paying rent to Olvera in May because “nothing good is about to come from that.”

Until that point, Hinojosa insisted he and Olvera spoke “multiple times a day” and had a “verbal agreement” to be flexible on the terms of their lease, due to the Bunker’s revenues being dependent on events such as pay-per-view fight nights.

He says he invested his life savings into a location that he now believes will either be foreclosed, sold at auction or reopened under Olvera, who previously owned the now-closed restaurants Vive! Cocina Mexicana & Ultra Lounge, Antigua Cantina & Grill, and Pregame Burgers and Beer.

Olvera expressed interest in finding a new tenant for 2019 O Street, but ABC spokesman Carr said only a temporary alcohol license could be issued until his debts have been resolved.

Olvera has been to court before to settle debts with former business partners. In 2016, Can Capital Asset Servicing successfully sued for $80,140. And in 2014, Robert Perkins of Perkins and Associates won $18,150, federal court records show.

“I’ve had other businesses that failed,” Olvera said. “And when you fail, you get sued. Everyone goes through that.”

There is one pretty big discrepancy in Olvera’s story, however.

Olvera says he evicted Hinojosa in part for not making his lease payments. But, in the bankruptcy disclosure Olvera filed, he claims he “allowed” Hinojosa four months of free rent, with the first payment due in May of this year.

Hinojosa was unaware of any such arrangement until contacted by SN&R. He said that Olvera never offered him “free months.” Hinojosa sent his first rent check for $16,270 on December 5, 2016, because Olvera came to ask for money. He has the cashed check to prove it.

Coincidentally, or not, the bankruptcy disclosure shows that, in December 2016, Olvera started making payments to his secured creditor, claiming the money came from his own funds, “given that the 2019 O Street Property was not producing rental income at the time.”

Hinojosa says he already has his attorney preparing a lawsuit against his former landlord. “Of course we will be suing him,” he wrote in an email.