Legal Battle Silences Paseo Dining

FILE PHOTO COURTESY OF KEN CARBONE

The Slice House by Tony Gemignani will open on September 14. Will tables and chairs return to the paseo in time?

Last week, the patio between the Marketplace and Knudsen’s Creamery Building on Castro Valley Boulevard became the center of a legal dispute that is currently dampening some customers' outdoor dining plans.

On August 18, tables and chairs were removed from the paseo following a preliminary injunction issued by Alameda County Judge Frank Roesch. Castro Valley Investment Group (CVIG) filed a complaint against the Castro Valley Marketplace, Slice House Pizza By Tony Gemignani, and others, saying the Marketplace group entered into a lease with Slice House with the promise of outdoor dining on property that the Marketplace does not own. The Marketplace counters that the paseo falls under public use in the same way that everyone can use the parking lot, whether behind the Marketplace or Canyons BBQ. 

According to county parcel records, CVIG CEO Robert Chau owns the entire 2,500-square-foot paseo—formerly a driveway to access the back of the Knudsen building. Despite years of concept sketches and discussions of outdoor dining for the public, Chau said the paseo’s official function is as a pass-through to allow people to enter and exit either building. The legal terms include the words “ingress” and “egress.”

Since the launch in 2020 and the aftermath of COVID-19, outdoor seating has been made available. Diners have enjoyed the space with and without music. Pop-up vendors have also set up temporary stands to sell their wares.

CVIG said the trouble began after it subleased part of the outdoor passthrough as a dining space to the Marketplace’s former tenant, the Cannery Kitchen & Tap Room. When the Cannery left, CVIG said it offered to extend the lease so that Marketplace could enter into a new sublease with Slice House Pizza to offer dining on the paseo. 

According to CVIG Attorney Mark Poniatowski, CVIG and the Marketplace have yet to settle the management and maintenance agreement terms and handling seating for the pizzeria and other merchants around the paseo. 

“We tried for over a year to negotiate a settlement that would allow Slice House to operate on the Paseo on terms even more favorable to Marketplace than the Cannery Lease, but Marketplace refused and dug in their heels.  Marketplace proceeded to lease the Paseo to Slice House without Mr. Chau’s consent. Litigation was the absolute last resort for Mr. Chau to protect his property rights.”

Marketplace lawyer Bryan Silverman called the lawsuit an overreach and told the Forum the Marketplace does not need to pay because the paseo is part of a previous shared parking and community gathering space agreement. Additionally, Silverman says any sublease with the Cannery was signed but not required for the specific use of the paseo. 

“The contract between property owners doesn’t allow one property owner to charge another for their shared and equitable use of these spaces,” Silverman said. “This is an attempt by CVIG to profit off a right to an easement agreed upon by the previous owner.”

CVIG’s Chau told the Forum he is very much in favor of allowing dining along the paseo as long as a sublease is in place. 

“I just want the paseo to be beautiful," Chau told the Forum. "For years, the Marketplace has failed to maintain the paseo in a safe and clean condition and allowed the space to fall into disrepair.  I want to make sure it stays in first-class condition for the residents of Castro Valley.”

Meanwhile, the Slice House by Tony Gemignani announced its official opening at the Marketplace on September 14. The company recently installed outdoor signage and is expected to open its doors with limited indoor seating.

On Saturday, the Castro Valley Marketplace owners launched a public campaign, including a petition to “Save the Paseo” (https://castrovalleymarketplace.com/paseo/). The site describes the patio area in great detail and provides its history up until now.

Supporters of the Marketplace, Slice House, and Tony Gemignani have proposed on social media that people bring their chairs from home to sit outside and eat pizza on the paseo. 

However, there may still not be much space for people to sit. CVIG has erected a construction fence on two-thirds of the paseo as part of its multimillion-dollar upgrade to the Knudsen building. Poniatowski said the current construction has been put on hold pending a review by PG&E. 

Lawyers with CVIG and the Marketplace declined to comment on any countersuits or counteractions if the injunction becomes permanent.