The beachfront restaurants along the Esplanade in Capitola Village look out over paradise. More than a half-dozen bars, restaurants and cafes line Capitola Beach, a sandy strip often crowded with tourists there to enjoy the gentle waters of Monterey Bay.

Capitola Bar & Grill is the last restaurant on the west end of the Esplanade, on a second story above Margaritaville. The dining room and balcony overlook the candy-colored row of historic beach bungalows, across the mouth of Soquel Creek as it empties into the bay. It was the view that inspired Lasalle and Michelle Strong to open a restaurant here while on vacation in the village in June 2021.

“We always loved coming to Capitola. This is our go-to place to get away for the weekend,” says Michelle. She and Lasalle were visiting the Capitola Wharf when she saw a sign in the window that the restaurant was for sale. They emailed the broker, did a walk-through of the space the very next day and decided to rent it. A few weeks later in August, Capitola Bar & Grill opened for business.

The property includes three residential units, and the Strongs decided to rent the one adjacent to the restaurant space on a separate residential lease. It had been used as a storeroom for the restaurant, but they lived in Martinez at the time and wanted a place to stay locally.

Since the restaurant opened, a disagreement over whether Capitola Bar & Grill is permitted to play live music has erupted into an ugly conflict with the landlord, Steve Yates, and his son, Ryan Yates, who lives above the restaurant. Though the restaurant’s patrons are likely unaware that anything is amiss, over the past two years, the Strongs and Steve Yates have become mired in multiple lawsuits. Both parties accuse the other of irresponsible and aggressive behavior and claim that their personal and professional lives have been damaged.

At this point, as multiple cases move through arbitration and the court system, the restaurant remains open seven days a week, but hasn’t hosted live music since February.

The dispute has played out in Santa Cruz County Superior Court as well as on social media, where the Strongs have been vocal about their side of the issues. They have posted about the feud on Facebook and Instagram, and created a page on Capitola Bar & Grill’s website titled “Save Capitola Bar & Grill” with notes about the conflict. On Nov. 6, they appeared on a Santa Cruz-based podcast, “Speak For Change with Thomas Sage Pedersen,” titled “Save Capitola Bar & Grill from an Unjust Eviction.”

Lasalle and Michelle Strong, owners of the Capitola Bar & Grill in Capitola
Lasalle and Michelle Strong, owners of Capitola Bar & Grill in Capitola Village. Credit: Kevin Painchaud / Lookout Santa Cruz

The Strongs accuse the Yates family of trying to put them out of business, both through frivolous lawsuits and by refusing to sign what they consider a vital entertainment permit that would allow them to feature live music at Capitola Bar & Grill. They allege that Steve and Ryan Yates’ actions are racially motivated because Lasalle is Black and that their aim is to drive the Strongs from the property.

Both Steve and Ryan Yates say the accusation that they are racist is untrue and harmful. “It’s absolutely absurd,” says Steve Yates.

For the first year and half Capitola Bar & Grill was in business, the restaurant hosted live music several times a week. Ryan Yates says the noise in his apartment from bands below him was “completely out of control” and made being in the apartment unbearable.

Steve Yates says that he recorded a noise level of 110 decibels — as loud as a jackhammer or a live concert — in the apartment while music was playing. According to the Capitola Police Department, at least three different parties made five unique complaints against Capitola Bar & Grill between April and July 2022, related to noise and conduct.

But it wasn’t just the volume that was the issue, says Yates; it was the fact that live music of any kind was occurring at all. Yates points out that the commercial lease for the restaurant prohibits live music because it shares the building with residential tenants. Moreover, he points out that the alcoholic beverage license for the restaurant also prohibits live music for the same reason.

“The terms of their lease state that it should be used as a restaurant as defined by the City of Capitola,” says Yates, and not a music venue. He says he asked the Strongs to stop, but that they refused and he eventually gave them a breach-of-lease notice. “Under the terms of the lease you need to notify what a tenant is doing wrong per the lease and give them time to correct it,” he says. “[The Strongs’] answer to me was to go to the NAACP and file a complaint with the NAACP against me for racial discrimination.”

“At that point, I had no idea that Mr. Strong is African American, and it wouldn’t matter if he was. It was a violation of the lease,” says Yates.

The question of whether the lease for Capitola Bar & Grill allows live music is now in arbitration, one of several lawsuits between the two parties regarding the Strongs’ commercial and residential leases in the building.

The claims

The Strongs say their troubles with their landlord started after Lasalle met Steve Yates in person for the first time outside of the restaurant in April 2022.

Because of this, and other specific interactions, the Strongs believe that Ryan and Steve Yates’ negative behavior toward them is racially motivated.

“Music doesn’t cause this much anger. Music doesn’t cause this much dispute,” says Michelle Strong. “And when we’re willing to work with him, and he’s refusing to work with us … that’s when I was like, ‘Any other landlord would meet with you.’”

In December 2022, the Santa Cruz County branch of the NAACP reached out to Steve Yates on behalf of the Strongs to investigate a complaint of racial discrimination filed by the Strongs. Yates says he spoke with a member of the NAACP for “more than an hour,” and that person determined that there was no racial discrimination.

Secretary Jane Sooby of NAACP Santa Cruz County confirmed that the organization received a complaint regarding Capitola Bar & Grill and sent a letter to Steve Yates. It’s not at liberty to share any conversations it might have as a result of the correspondence, she told Lookout via email. But NAACP did submit a letter of support for Capitola Bar & Grill’s appeal of the denial of its entertainment permit to the Capitola City Council in June.

The Strongs said in their business plan that they intended to host live music at the restaurant, and were able to do so for the first year and a half in business. They applied for and received an entertainment permit from the City of Capitola in 2021 to do so. Before the entertainment permit expired at the end of the year, they renewed it for 2022.

They’re skeptical that the sound could have been disruptive to the residential tenants.

“I mean, the crowd is in their 60s and up, so it’s not like we could blast music; people would be uncomfortable,” says Michelle Strong, describing the typical patrons at the restaurant for the live shows. They typically hosted music from 4:30 p.m. to 8 p.m., she says.

Ryan Yates, who lives in the apartment above the restaurant, remembers it differently. When Capitola Bar & Grill opened, he noticed that live music became an increasingly regular occurrence, first on Fridays and Saturdays, then more days throughout the week, and often went late into the evening.

He says the sound level was “unbearable.”

“Imagine enduring sound louder than a subway train for hours on end. You can’t have a conversation on the phone,” says Yates.

Ryan Yates spoke to employees at Capitola Bar & Grill at least two times in regard to the noise, he says. On one occasion, Lasalle Strong and Ryan Yates spoke over the phone about the sound level, but the two weren’t able to come to an agreement.

Steve Yates says he believes that the first two entertainment permits, which require a landlord’s approval, were granted in error by the city. He did not sign the permits in 2021 or 2022.

When it came time to renew the entertainment permit for 2023, the city asked for landlord signoff, and Yates withheld his signature on the grounds that signing the document would violate the commercial lease. Furthermore, he pointed out that hosting live music could result in Capitola Bar & Grill losing its beverage license. He also notified the city that he and the restaurant owners were currently in arbitration and asked it to withhold the permit until the arbitration was complete.

The City of Capitola did not reissue the permit. The Strongs appealed the decision, and the appeal was denied.

Over the next year, both sides accused each other of numerous instances of inappropriate, even threatening, behavior.

Michelle and Lasalle Strong held a community meeting at Capitola Bar & Grill on Oct. 2
Michelle and Lasalle Strong held a community meeting at Capitola Bar & Grill on Oct. 2 to address what they feel is an “unlawful eviction.” Credit: Kevin Painchaud / Lookout Santa Cruz

In January, the Strongs received a notice from Steve Yates’ company, La Serena Properties, informing them that their commercial lease of the property had been terminated due to playing live music and for “disturbing the peace,” both of which he says are prohibited by their lease. Capitola Bar & Grill is now on a month-to-month tenancy, rather than a lease. Suits related to the commercial lease and money owed are also in arbitration. Yates insists the cases are valid, while the Strongs say the suits are another tactic to remove Capitola Bar & Grill from the building.

In April, the Strongs received a 60-day notice that their residential lease of the apartment would be terminated because the owner intended to withdraw the premises from the rental market.

Steve Yates says the residential lease was terminated because the city notified him that the Strongs were offering it as a short-term rental, which was prohibited in the lease.

Is resolution possible?

With multiple suits pending, all parties say a resolution could be difficult to reach.

In July, Yates offered to create a new lease that would allow the Strongs to sell their business and move on to a place that would better suit their desire to have live music. “I said, ‘Look, maybe this isn’t the location for you. Maybe it’s not the right venue. You want to do music. Let’s get it on the market,’” he says. “And they twisted it to somehow say that I think they don’t belong in Capitola.”

“We have no choice but to fight because he’s not given us any other choice,” says Michelle Strong. She and Lasalle have launched a GoFundMe campaign and hope to raise $100,000 to help cover their legal fees. As of Tuesday morning, it had raised $2,760.

Michelle received a cease-and-desist notice from Yates’ lawyer related to the restaurant’s website, and has been advised by her own lawyer to be cautious about to posting on social media. She says she will continue to post because everything she says is the truth.

“I can no longer be silent,” says Michelle, who is Hispanic. “It’s not like he’s writing the N-word on the wall, but we’re the only people in here with color. I’m over asking, ‘Why am I being treated differently?’”

On Oct. 13, the Strongs were granted a temporary restraining order against Ryan Yates by the Santa Cruz County Superior Court. The order, which expired Oct. 31, forbade him from being a “nuisance” to the business, vandalizing the property, making defamatory statements on social media and other behaviors. “I feel validated that someone finally heard what I was saying and the distress that I’ve been dealing with,” Michelle Strong told Lookout at the time.

“There’s been nothing racially motivated throughout this whole time yet they persist in trying to make it so,” says Ryan Yates. “In my opinion it’s one of the most appalling, abhorrent things somebody can do, to try and justify their own bad behavior.” Yates claims that the allegation and restraining order have damaged his reputation, and been used against him by his ex-wife in a custody battle for their children.

“You have a restaurant on the beach,” says Ryan Yates. “Why not just run the restaurant and do the best that you can at that, and make good food and service the focus?”

“I’m scratching my head on this need for them to have five-piece live bands in there when they rented it as the restaurant,” says Steve Yates. “I wish they were successful, but I don’t think they really know how to do a restaurant like a restaurant, or they wouldn’t be complaining.”

The Strongs say that live music provided a vital income stream and sales are down since it stopped. Moreover, they say Steve and Ryan Yates’ behavior toward them could lead to a new complaint in court.

“There are civil rights attorneys that we’re hoping to find that will take on our case because it’s so black and white,” says Michelle. They are choosing to stay and fight, but regardless of the outcome, they say they will eventually leave the property.

“We are in a position where we kind of have to fight in order to make our next move. But we’ve decided that we’re not going to fight for five more years. If we get the lease and we win everything, we’re not going to stay here,” says Lasalle. “Once we can get our investment back — and we know it’s owed to us — we will start looking for another place.”

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Lily Belli is the food and drink correspondent at Lookout Santa Cruz. Over the past 15 years since she made Santa Cruz her home, Lily has fallen deeply in love with its rich food culture, vibrant agriculture...