Does the Bank Still Have a Claim on the Hountalas Trademarks for The Cliff House?
The stroke of midnight on 31 December 2020 saw the end of the 47-year run of Dan and Mary Hountalas (and their family) as both the proprietors of the restaurants and bars of The Cliff House, San Francisco, and the “caretakers of record” of this historic property, which has been owned by the National Park Service (NPS) since 1977.
Recently, I outlined the five active Cliff House-related trademarks still owned by Peanut Wagon, Inc., the restaurant management company owned by the the Hountalas family — and through which the family operated its Cliff House business.
In 2003 and 2004, the Hountalas family oversaw a major renovation and expansion of The Cliff House. When the project was completed and the Cliff House reopened to the public 2004, it was widely reported that the tab had been nearly $18 million, with the Hountalas family/Peanut Wagon picking up $12 million of that and NPS providing the rest.
It stands to reason that the family financed most of its $12 million contribution.
Indeed, a series of documents on file at the United States Patent and Trademark Office (USPTO), where the Hountalas trademarks are registered, show that in January 2003—two weeks before groundbreaking for the Cliff House project—Peanut Wagon took out a loan with Detroit-based Comerica Bank, and that the company signed over absolute rights to all of its Cliff House trademarks as part of its collateral security for the loan.
The USPTO database includes three intellectual property agreements pertaining to the trademarks.
Two of these documents detail the arrangement between Peanut Wagon and Comerica. The first was signed on the same date, 10 January 2003, as the original loan (here). The second was signed on 1 September 2016 (here).
In the third document, signed on 14 October 2013 (here), Peanut Wagon, Inc., transfers (“assigns”) the trademarks to another Hountalas family company, PWIIP, LLC.
The most recent agreement, from 2016, opens on page 1 by explaining that the agreement is “by and between PWIIP, LLC (“Grantor”), and COMERICA BANK (“Secured Party”).”
The agreement continues with a series of “Recitals,” the first of which is that:
Secured Party has agreed to continue making certain advances of money and to continue extending certain financial accommodations to Peanut Wagon, Inc., a California corporation (“Borrower”) in the amounts and manner set forth in that certain Loan Agreement, dated as of January 10, 2003, between Borrower and Secured Party…but only upon the condition, among others, that Grantor shall grant to Secured Party a security interest in all of Grantor’s right, title, and interest in, to and under all the Collateral whether presently existing or hereafter acquired.
Shortly, the agreement specifies:
As collateral security for the prompt and complete payment and performance of all of Grantor’s and/or Borrower’s present or future indebtedness, obligations and liabilities to Secured Party…Grantor hereby grants a security interest and mortgage to Secured Party, as security, in and to Grantors entire right, title and interest in, to and under the following:
Amongst the itemized collateral:
(e) Any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the business of Grantor connected with and symbolized by such trademarks, including without limitation those set forth on Exhibit C attached hereto (collectively, the “Trademarks”).
(g) All licenses or other rights to use any of the…Trademarks, and all license fees and royalties arising from such use….
(h) All amendments, renewals and extensions of any of the…Trademarks….
(i) All proceeds and products of the foregoing….
A few paragraphs later, on page 2, the agreement stipulates:
During the term of this Agreement, Grantor will not transfer of otherwise encumber any interest in the [Trademarks], except for non exclusive licenses granted by Grantor in the ordinary course of business or as set forth in this Agreement.
One question one might ask: Has Peanut Wagon, Inc., paid off its loan from Comerica Bank?
If not, then the Hountalas family does not own any of “their” Cliff House-related trademarks outright.
Rather, the trademarks are — Jane Austen-style—“entailed” to the bank.
Once again, the complete 2016 agreement is here. Below are images of pages 1 and 2 of the agreement, referenced above, as well as “Exhibit C,” the list of trademarks covered by the agreement.
In the Exhibit, two listings for “The Cliff House” are asterisked as “Not filed at the United States Patent and Trademark Office.” The Peanut Wagon, Inc., “does business as” The Cliff House. One guess is that those two listings might be for Peanut Wagon’s dba registrations with the State of California.
For more on this issue, see my other articles:
“The 5 Hountalas Trademarks for The Cliff House” (Feb 2021)
“Why Did the Hountalas LLC Apply for a New “Cliff House” Trademark in May 2023?” (Oct 2023)
“The Question at the Heart of the Cliff House Name Dispute” (Oct 2023)
“On Cliff House Name, Mary and Dan Hountalas Continue to Jerk San Francisco Around” (Nov 2023)
