Chelsea Wine Storage sued again for disposing of customer wine

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Dale Williams
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Chelsea Wine Storage sued again for disposing of customer wine

#1 Post by Dale Williams » May 30th, 2019, 7:29 am

Another Chelsea lawsuit (see Safe Harbour thread for post about M. Moriarty lawsuit)

https://www.thedrinksbusiness.com/2019/ ... ollection/
https://nypost.com/2019/05/25/storage-c ... rror-suit/

You'd think there would be really strict/redundant policies in place regarding notification of storage clients re back fees before "destroying" (or selling) wines.

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Re: Chelsea Wine Storage sued again for disposing of customer wine

#2 Post by Dale Williams » May 30th, 2019, 7:34 am

I'd assume bare minimum would be
emails to every address you have for person (over a period of months)
certified letter to last address
simple google search (Eliza Kwon de Alvarez is not exactly common name, and she seems to have active social media presence) -hard to believe couldn't contact

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Re: Chelsea Wine Storage sued again for disposing of customer wine

#3 Post by Todd F r e n c h » May 30th, 2019, 7:40 am

I'm sure there's some language dealing with non-payment of storage fees, but holy hell what a mess. SO many other options in this regard, instead of putting oneself into legal jeopardy by disposing of the contents of the locker. One significantly smarter option would have been to 'seize' the contents in the store-owned locker (they always have them, for receiving shipments) and not release the contents until paid. Disposing of them is flat out idiocy
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#4 Post by Victor Hong » May 30th, 2019, 8:14 am

I wonder if the storage facility might have sold the wines, as disposal.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#5 Post by Marcu$ Stanley » May 30th, 2019, 8:18 am

Dale Williams wrote:
May 30th, 2019, 7:34 am
I'd assume bare minimum would be
emails to every address you have for person (over a period of months)
certified letter to last address
simple google search (Eliza Kwon de Alvarez is not exactly common name, and she seems to have active social media presence) -hard to believe couldn't contact
Not to mention that they should have client's phone numbers.

This is really inexcusable behavior

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Re: Chelsea Wine Storage sued again for disposing of customer wine

#6 Post by Victor Hong » May 30th, 2019, 8:20 am

The wine owner should file an insurance claim, for operator theft.

THIS THREAD SHOULD BE A STICKY.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#7 Post by John Morris » May 30th, 2019, 8:59 am

Sheesh.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#8 Post by Victor Hong » May 30th, 2019, 9:13 am

My recommendation is that every customer immediately check the storage contents----by sight.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#9 Post by Todd F r e n c h » May 30th, 2019, 9:17 am

Victor Hong wrote:
May 30th, 2019, 9:13 am
My recommendation is that every customer immediately check the storage contents----by sight.
Not by smell or sound?
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#10 Post by J a y H a c k » May 30th, 2019, 9:25 am

Kudos to my partner Asher Rubinstein, who obtained the original temporary restraining order against Chelsea in the Moriarty case. I would add, "after consulting with me on the legal issues associated with the appropriate requirements for dealing with a warehouseman's lien claim under the Uniform Commercial Code," but Asher did all the real work and deserves 100% of the credit.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#11 Post by Victor Hong » May 30th, 2019, 9:30 am

Todd F r e n c h wrote:
May 30th, 2019, 9:17 am
Victor Hong wrote:
May 30th, 2019, 9:13 am
My recommendation is that every customer immediately check the storage contents----by sight.
Not by smell or sound?
Good point. The visually impaired would need to do so by touch.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#12 Post by J a y H a c k » May 30th, 2019, 9:38 am

Dale Williams wrote:
May 30th, 2019, 7:29 am
. . . You'd think there would be really strict/redundant policies in place . . .
Policies don't get you very far. On the other hand, express legal requirements in New York impose specific obligations that are the subject of the lawsuit. Let's just say that the legal papers alleged that Chelsea did some naughty things.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#13 Post by Todd F r e n c h » May 30th, 2019, 9:39 am

Victor Hong wrote:
May 30th, 2019, 9:30 am
Todd F r e n c h wrote:
May 30th, 2019, 9:17 am
Victor Hong wrote:
May 30th, 2019, 9:13 am
My recommendation is that every customer immediately check the storage contents----by sight.
Not by smell or sound?
Good point. The visually impaired would need to do so by touch.
And they'd likely only have a collection of Chapoutier, in that case
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#14 Post by Victor Hong » May 30th, 2019, 10:01 am

Todd F r e n c h wrote:
May 30th, 2019, 9:39 am
..........
And they'd likely only have a collection of Chapoutier, in that case
Not if Chelsea sold that case too.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#15 Post by Greg K » May 30th, 2019, 10:03 am

Todd F r e n c h wrote:
May 30th, 2019, 9:39 am
Victor Hong wrote:
May 30th, 2019, 9:30 am
Todd F r e n c h wrote:
May 30th, 2019, 9:17 am


Not by smell or sound?
Good point. The visually impaired would need to do so by touch.
And they'd likely only have a collection of Chapoutier, in that case
Adding insult to injury.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#16 Post by D@vid Bu3ker » May 30th, 2019, 10:04 am

This is why I say "own, don't rent." ;)
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#17 Post by Jay Miller » May 30th, 2019, 10:16 am

Greg K wrote:
May 30th, 2019, 10:03 am
Todd F r e n c h wrote:
May 30th, 2019, 9:39 am
Victor Hong wrote:
May 30th, 2019, 9:30 am


Good point. The visually impaired would need to do so by touch.
And they'd likely only have a collection of Chapoutier, in that case
Adding insult to injury.
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It's a shame. They were a class operation for a good many years before the current owner.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#18 Post by CJ Beazley » May 30th, 2019, 10:24 am

J a y H a c k wrote:
May 30th, 2019, 9:25 am
Kudos to my partner Asher Rubinstein, who obtained the original temporary restraining order against Chelsea in the Moriarty case. I would add, "after consulting with me on the legal issues associated with the appropriate requirements for dealing with a warehouseman's lien claim under the Uniform Commercial Code," but Asher did all the real work and deserves 100% of the credit.
Jay, dumb legal question; what does the law say about disposing/selling in lieu of payment a (let’s say) $40,000 wine collection to settle a $5,000 debt?
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#19 Post by Victor Hong » May 30th, 2019, 10:28 am

Generally, because the creditor does not own the assets being sold, excess proceeds belong to the debtor, after satisfaction of outstanding debt.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#20 Post by J a y H a c k » May 30th, 2019, 10:44 am

CJ Beazley wrote:
May 30th, 2019, 10:24 am
J a y H a c k wrote:
May 30th, 2019, 9:25 am
Kudos to my partner Asher Rubinstein, who obtained the original temporary restraining order against Chelsea in the Moriarty case. I would add, "after consulting with me on the legal issues associated with the appropriate requirements for dealing with a warehouseman's lien claim under the Uniform Commercial Code," but Asher did all the real work and deserves 100% of the credit.
Jay, dumb legal question; what does the law say about disposing/selling in lieu of payment a (let’s say) $40,000 wine collection to settle a $5,000 debt?
Complicated question. Let's just say that if I were advising a bank that was holding $40,000 of wine as collateral for a $5,000 loan, I would not advise the bank to blow it out to the first Yellow Tail lover who walks in the door and offers $5,000 for it.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#21 Post by A Rubin Stein » May 30th, 2019, 10:57 am

CJ Beazley wrote:
May 30th, 2019, 10:24 am
J a y H a c k wrote:
May 30th, 2019, 9:25 am
Kudos to my partner Asher Rubinstein, who obtained the original temporary restraining order against Chelsea in the Moriarty case. I would add, "after consulting with me on the legal issues associated with the appropriate requirements for dealing with a warehouseman's lien claim under the Uniform Commercial Code," but Asher did all the real work and deserves 100% of the credit.
Jay, dumb legal question; what does the law say about disposing/selling in lieu of payment a (let’s say) $40,000 wine collection to settle a $5,000 debt?
You would have to look to (i) the terms of the contract between the storage business and the owner of the wine, as well as (ii) the law of the state, including the Uniform Commercial Code. Neither of these were favorable to Chelsea and neither allowed Chelsea to "dispose of" the wine. Part of the problem is that Chelsea wouldn't state how the wine had been "disposed", whether by selling it privately, selling it publicly at retail, selling it via auction, destroying it, drinking it, or otherwise. To your example, in general, a storage business is not allowed under the law to "dispose" of a wine collection worth $40,000 to settle a $5,000 debt, without undertaking various procedures (including, for instance, proper notice to the owner of the wine).
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#22 Post by Victor Hong » May 30th, 2019, 12:26 pm

This is a tough reminder to insure your wine with a strong, reputable, third-party insurer.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#23 Post by J a y H a c k » May 30th, 2019, 12:28 pm

The short version - a lien holder must dispose of the underlying property in a "commercially reasonable manner." Example of what is not reasonable? The lien holder owns an affiliated retail store and sells $50,000 of wine held as collateral to the retail store for $5,000 and then the retail store puts it on the shelf for $50,000 and pockets the $45,000.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#24 Post by Victor Hong » May 30th, 2019, 12:31 pm

J a y H a c k wrote:
May 30th, 2019, 12:28 pm
The short version - a lien holder must dispose of the underlying property in a "commercially reasonable manner." Example of what is not reasonable? The lien holder owns an affiliated retail store and sells $50,000 of wine held as collateral to the retail store for $5,000 and then the retail store puts it on the shelf for $50,000 and pockets the $45,000.
Sounds like a familiar story.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#25 Post by Robert M yers » May 30th, 2019, 12:55 pm

Is that why the storage locker type places don’t look at what’s in the locker when the renter doesn’t pay?

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Re: Chelsea Wine Storage sued again for disposing of customer wine

#26 Post by Tom Reddick » May 30th, 2019, 11:07 pm

Victor Hong wrote:
May 30th, 2019, 12:31 pm
J a y H a c k wrote:
May 30th, 2019, 12:28 pm
The short version - a lien holder must dispose of the underlying property in a "commercially reasonable manner." Example of what is not reasonable? The lien holder owns an affiliated retail store and sells $50,000 of wine held as collateral to the retail store for $5,000 and then the retail store puts it on the shelf for $50,000 and pockets the $45,000.
Sounds like a familiar story.
Yup. With the number of these cases starting to appear, I am wondering if maybe the wine storage business could use its own version of the Glass-Steagall Act.

When I started collecting wine here in Texas almost 25 years ago, offsite storage options were rare. Typically they were in the basements of office buildings or moving company warehouses where an owner or key client had paved the way for an option to allow those who were in the know to have offsite storage. And always- at least around here- you had sole access to your lockers and your wine.

Then in the late 90s many of the national storage companies got into that business with special wine rooms kept at 55 within facilities that were climate controlled to a lesser degree. And again- superb security, only you can get to your wine etc.

Now that has all changed and wine storage has become a profitable business unto itself. It is still possible to get your own lockers to which only you have access, but increasingly I am seeing collectors go for a less expensive route where their inventory is co-mingled in large open storage facilities. I know that has been common in NYC for some time, but even here in Texas that is now common where it was once unheard of.

Making matters more complicated, many wine storage facilities are also retail venues of some sort. Add in the fact many clients rarely- if ever- set eyes on their wines, PLUS the fact there are many instances where clients are always willing to sell something for a certain price via the wine storage facility's retail outlet or just via word of mouth- and all kinds of terrible possibilities emerge.

Even leaving aside the obvious acts of dishonesty, all it takes is one person not paying attention or in a hurry to run into a warehouse with comingled inventory, pull a case to be sold with the right branding but not the right customer tag, and suddenly someone loses a case of wine in a mistake that could go undetected for years, if at all.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#27 Post by Victor Hong » May 31st, 2019, 2:46 am

That is a reason to have the operator perform its own inventory count, which a customer can then reconcile versus his or her own records.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#28 Post by Jayson Cohen » May 31st, 2019, 6:04 am

J a y H a c k wrote:
May 30th, 2019, 12:28 pm
The short version - a lien holder must dispose of the underlying property in a "commercially reasonable manner." Example of what is not reasonable? The lien holder owns an affiliated retail store and sells $50,000 of wine held as collateral to the retail store for $5,000 and then the retail store puts it on the shelf for $50,000 and pockets the $45,000.
Under these circumstances do UCC/statutory causes of action and remedies preempt common law or are common law (non-equitable) causes of action like conversion on the table? (I didn’t look at the counterclaims and defenses.)

Also is the IRS or NYS tax authority taking a closer look st Chelsea?

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Re: Chelsea Wine Storage sued again for disposing of customer wine

#29 Post by Victor Hong » May 31st, 2019, 6:45 am

Jayson Cohen wrote:
May 31st, 2019, 6:04 am
J a y H a c k wrote:
May 30th, 2019, 12:28 pm
The short version - a lien holder must dispose of the underlying property in a "commercially reasonable manner." Example of what is not reasonable? The lien holder owns an affiliated retail store and sells $50,000 of wine held as collateral to the retail store for $5,000 and then the retail store puts it on the shelf for $50,000 and pockets the $45,000.
Under these circumstances do UCC/statutory causes of action and remedies preempt common law or are common law (non-equitable) causes of action like conversion on the table? (I didn’t look at the counterclaims and defenses.)

Also is the IRS or NYS tax authority taking a closer look st Chelsea?
Heck, if the State Liquor Authority examines, its business licenses are at risk.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#30 Post by Dale Williams » May 31st, 2019, 12:36 pm

here's the lawsuit
https://iapps.courts.state.ny.us/fbem/D ... ystem=prod

I know this is one side, but still looks pretty damning.

and it turns out the plaintiff is Pablo Alvarez's (Vega Sicilia) wife.

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Re: Chelsea Wine Storage sued again for disposing of customer wine

#31 Post by Victor Hong » May 31st, 2019, 12:48 pm

Dale Williams wrote:
May 31st, 2019, 12:36 pm
here's the lawsuit
https://iapps.courts.state.ny.us/fbem/D ... ystem=prod

I know this is one side, but still looks pretty damning.

and it turns out the plaintiff is Pablo Alvarez's (Vega Sicilia) wife.
I hope that the plaintiff has notified the Noo Yawk state liquor authority.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#32 Post by Travis Fantz » May 31st, 2019, 3:28 pm

I used to store my wine at an off site storage. It was treated like a storage unit business. There is one time that I know of when they couldn't find a client. I am not sure how long they waited, but it could have been a year. It was auctioned like in the storage wars tv show, before the show was around. This was 15 or so years ago. But the unit was sold to a high bidder, you could not sort through the wine or see what was in boxes. Is this a legal way of doing it? Oregon has unique laws around selling alcohol, so maybe that is why it happened this way.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#33 Post by scamhi » May 31st, 2019, 3:53 pm

Dale Williams wrote:
May 31st, 2019, 12:36 pm
here's the lawsuit
https://iapps.courts.state.ny.us/fbem/D ... ystem=prod

I know this is one side, but still looks pretty damning.

and it turns out the plaintiff is Pablo Alvarez's (Vega Sicilia) wife.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#34 Post by G. Bienstock » May 31st, 2019, 4:45 pm

I am glad to have a self service locker. No funny business.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#35 Post by Arv R » June 1st, 2019, 2:23 pm

These guys sound like thieves frankly
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#36 Post by Ian S » June 1st, 2019, 6:42 pm

Victor Hong wrote:
May 30th, 2019, 9:30 am
Todd F r e n c h wrote:
May 30th, 2019, 9:17 am
Victor Hong wrote:
May 30th, 2019, 9:13 am
My recommendation is that every customer immediately check the storage contents----by sight.
Not by smell or sound?
Good point. The visually impaired would need to do so by touch.
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#37 Post by JDavisRoby » June 1st, 2019, 7:01 pm

Ian S wrote:
June 1st, 2019, 6:42 pm
Victor Hong wrote:
May 30th, 2019, 9:30 am
Todd F r e n c h wrote:
May 30th, 2019, 9:17 am


Not by smell or sound?
Good point. The visually impaired would need to do so by touch.
Do wineries have Brail on their labels? [scratch.gif]
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Re: Chelsea Wine Storage sued again for disposing of customer wine

#38 Post by J a y H a c k » June 3rd, 2019, 7:18 am

One of the owners of Chapoutier told me years ago that one of the members of the family was blind so they started putting Braille on the labels so he could go down to the cellar and select a wine without assistance. Nice touch.
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