In late 2012, Sakonnet Vineyard, which had operated in Little Compton, Rhode Island since 1975 under two previous owners, was sold to Dionysus Acquisition LLC. The principal and apparently the sole owner of that company was, and remains, Carolyn Rafaelian, who was the founder and, at that time, the majority owner of Alex & Ani, a Rhode Island-based jewelry and “lifestyle” company. In 2012, Alex & Ani was riding high as a growing and reputedly profitable company, which had attracted the attention of private capital fund investors who purchased a substantial minority share in the company.
For her part, Ms. Rafaelian, in addition to acquiring the vineyard property, also bought and renovated “Belcourt,” a 56,000 square-foot mansion in Newport, Rhode Island. As reported in a July 6, 2013 Providence Journal article, Alex & Ani, according to the company’s CEO at the time, Giovanni Feroce, would operate the two Rafaelian-owned properties “as part of the firm’s plan to transition into a lifestyle company.”
“We’re working on two different business plans for the vineyard; one for the manufacturing of the wine and the second is a venues plan that incorporates Belcourt of Newport,” Feroce added. He described plans for “installing a tent on the [vineyard] property near the house to offer a water view for events. ‘The intent is to offer views of the water, vineyard, or winery as venues for events such as weddings and charity dinners,’ said Feroce.”
Rafaelian’s ideas for marketing her “lifestyle company” didn’t necessarily coincide with the lifestyles of some of her Little Compton neighbors, however. After purchasing the approximately 140-acre vineyard property, renamed Carolyn’s Sakonnet Vineyard, she initiated operational changes, including large, frequent concerts and wedding parties, which generated complaints and opposition from many town residents and neighbors concerned about increased noise and traffic. By the summer of 2015, the scale and intensity of such activities led to a series of contentious public meetings. In June 2017, neighbors to the east and west of the vineyard, Brian and Natalie Eliason and Christina Carlson, initiated litigation against the Little Compton Town Council and the vineyard, challenging the validity of entertainment licenses issued to the vineyard and the legality of events like concerts and weddings under the provisions of the town’s zoning ordinance. I was among a number of Little Compton residents who supported their lawsuit, financially and otherwise.
In that year, 2017, Forbes featured Rafaelian on the cover of its magazine issue profiling America’s “Richest Self-Made Women.” “If I want to go public,” confidently asserted the “Bangle Billionaire,” as Forbes dubbed her, “I can pull the switch anytime.” Soon, though, the fortunes of Alex & Ani and Ms. Rafaelian began to turn.
Feroce and other top Alex & Ani left the company in 2014, setting off a period of managerial turnover and turmoil, during which Rafaelian became CEO. But by June 2021, Alex & Ani filed for bankruptcy. At the time, the Providence Journal summarized the series of events leading to the company’s reorganization.
“By 2019, Alex and Ani was cutting costs and falling behind on payments to vendors as sales fell,” the paper reported. “In July 2019, Alex and Ani sued Bank of America, accusing the lender of gender bias and forcing the company into a ‘death spiral’ by placing it into default of a loan.
“By last year,” the Journal concluded, “Rafaelian was forced to give up control of Alex and Ani to investor Lion Capital, which now controls 59% of the company, according to bankruptcy documents.”
In September, 2021, a Delaware bankruptcy court approved a reorganization in which Lion Capital purchased Alex & Ani’s outstanding debt and ended up with a 65% ownership share of the company, reported the jewelry-trade website jckonline.com. “The other 35%—formerly controlled by the company’s founder, Carolyn Rafaelian—has been sold to the Bathing Club LLC, which is owned by celebrity attorney and cable TV mainstay Mark Geragos, who has previously served as company counsel for Alex and Ani.” (Geragos was also retained by Rafaelian for a time as one of the lawyers representing the vineyard in the lawsuit by Little Compton neighbors. In a complicated twist, Little Compton Town Solicitor Richard Humphrey now serves as the registered agent in Rhode Island for Geragos’s California-based law firm.) As part of the bankruptcy proceeding, Rafaelian resigned from the board of the company she had founded in 2004. She had previously been replaced as CEO and then fired from her remaining position as chief creative officer, according to Forbes.
Rafaelian still retained ownership of Carolyn’s Sakonnet Vineyard, however. As was the case with many businesses, the arrival of the Covid-19 pandemic in early 2020 apparently didn’t help the financial condition of the vineyard. The parties to the 2017 lawsuit had reached an arbitrated settlement two years later, confirmed in a May 17, 2019 judgment entered in Rhode Island Superior Court that appeared to secure the vineyard’s right to continue holding concerts and weddings. But such activities were suspended during 2020 and 2021.
Recently, Ms. Rafaelian submitted an application to the Town of Little Compton, on behalf Dionysus Acquisition LLC, seeking a “BV” retail beverage license for the stated purpose of opening a 50-seat restaurant on the property with full liquor service. (Previously, under state law defining and authorizing wineries, the vineyard could sell its own wine on the property.) In her license application, Rafaelian claimed to have invested $18-million in the vineyard property. She also noted that the property is subject to a mortgage with a balance of $2.9-million.
I will return in future posts to other aspects of this protracted and complex story. I have included below a recent letter to the Little Compton Town Council (on which I served from late 2018 through late 2020) expressing my concerns about issues raised by the Dionysus Acquisition LLC license application.
* * *
April 5, 2022
Little Compton Town Council
PO Box 226
40 Commons
Little Compton, RI 02837
RE: Carolyn’s Sakonnet Vineyard application for BV retail beverage license
Dear Council Members:
At its March 24, 2022 meeting, the Little Compton Town Council received and considered an application for a BV retail beverage license from Dionysus Acquisition LLC, doing business as Carolyn’s Sakonnet Vineyard (“Vineyard”). At the meeting, Town Solicitor Richard Humphrey recused himself “from any and all matters involving Dionysus Acquisition, LLC and Carolyn’s Sakonnet Vineyard,” citing a “prior recusal dated February 20, 2020.” The Council at its March 24 meeting, after a brief presentation from Ms. Cynthia Rocha, general manager of the Vineyard, and a brief conversation about the application, decided to take the matter up again at a later date in consultation with attorney Girard Galvin.
As you well know, there has been considerable concern and controversy about activities and uses at the Vineyard in recent years, which resulted in protracted litigation.¹ I believe that the Vineyard’s BV license application demonstrates clearly that the settlement arrived at by the parties to the litigation by virtue of a May 17, 2019 Superior Court Judgment did not resolve the underlying issues that generated the litigation in the first place. Moreover, despite opportunities to do so dating back to at least 2011, the Town Council itself has not taken other measures within its authority, namely amendment of the town’s Zoning Ordinance, that could clarify which non-agricultural activities can be permitted in support of such agricultural business, and do so in a manner fair to all town residents and property owners—especially and importantly others involved in agricultural business enterprises.
This is a complicated issue and story. For current purposes, however, I think the issue confronting the Council is not that complicated. First, I believe it would be inappropriate and premature for the Council to approve this application at this time, in light of the March 16, 2022 opinion issued to the Town Council by Zoning Official Peter Medeiros, a copy of which I received from Mr. Medeiros on April 4. (It is not clear why this letter was not included in the Council’s document packet for its March 24 meeting or why it wasn’t cited at that meeting.) The full text of this letter (a copy of which is attached) reads as follows:
Dear Town Council:
The Little Compton building and zoning department acknowledges that the subject property is a legal non-conforming use with an operating vineyard and winery. The subject property is located in a residential zone within the town of Little Compton. The current use of the subject property is in compliance with the Little Compton Zoning Ordinance, chapter 14.
The property is primarily used for agricultural purposes and operates an active winery. See zoning table 14-3, table 1a-a1.
The owners of the property are applying for a b/c retail beverage license, which may coincide with a restaurant setting, as per the proposed menu. Per use table 1-a use c13, a restaurant is not permitted in a residential zone. [emphasis added]
Peter Medeiros
Zoning Official
Mr. Medeiros’s opinion letter is concise and to the point. The proposed use for which the Vineyard seeks a BV license, he concludes, “is not permitted in a residential zone.” Based on that opinion alone, a BV license cannot and should not be granted, at least at this time. Mr. Medeiros writes that the application for the license “may coincide with a restaurant setting, as per the proposed menu.” In fact, the materials accompanying the application presented to the Council by the Vineyard on March 24 leave little doubt that its plan is to operate a 50-seat restaurant throughout the year. In her March 18, 2022 letter to the Council, Ms. Rocha expressly described the use associated with the requested BV license as an “extension of our current product line and business model,” requiring “additional revenue streams to survive” and as a “restaurant experience” in which “Our hours of operation will vary seasonally.” In a March 21, 2022, email addressed to Town Clerk Carol Wordell to accompany the application, Ms. Rocha wrote: “The restaurant seating would be for 50 seats.” The proposed use, as described, appears to be a new use—a restaurant—not just an expansion and intensification of any current use.
Again, as Mr. Medeiros noted in his letter, “a restaurant is not permitted in residential zone.” The fact that the Town Council may previously have issued victualling licenses to the Vineyard, as I believe Council President Mushen noted at the March 24 meeting, does not address the zoning issue identified by Mr. Medeiros or make previous “café” uses legal under the Zoning Ordinance. I don’t believe that it is within the Council’s legal purview to attempt to resolve or address what is essentially a zoning matter by granting yet another license – in this case a BV retail liquor license. Furthermore, Mr. Medeiros stated in his letter that his department “acknowledges that the subject property is a legal non-conforming use with an operating vineyard and winery.” His letter appears to distinguish a “vineyard and winery” from a “restaurant.” In any case, he does not expressly or specifically identify a restaurant as “a legal non-conforming use” of the property.
As a citizen who has followed this matter closely, especially since 2015, and who had some familiarity with it as a Council member from 2018-2020, I believe the Council cannot consider the Vineyard’s current request until the zoning issue is addressed and resolved. In light of the Zoning Official’s opinion, the Vineyard can—and perhaps must—seek relief in the form of a variance from the Zoning Board of Review if it wishes to operate a full-service restaurant on the property. The logic of Mr. Medeiros’s letter would seem to require such relief before the Council could consider the BV license application.
At the same time, the Council can and should immediately return to the initiative that I and others have urged since at least 2016 and that the Council and the Planning Board pursued during 2019-2020: namely reviewing and considering amendment of the Zoning Ordinance to define clearly accessory uses associated with agricultural properties—including possible restaurant operations in a residential zone, perhaps subject to a special use permit. As you will recall, the Planning Board, at the Council’s specific request, developed a draft ordinance amendment for such accessory uses, which the board presented in early 2019. Members of the public and the town’s active farming community criticized and expressed concerns about elements of the draft amendment, as well as the process by which it was developed. The Council asked the Planning Board to develop a new draft, based on further input from and involvement of farmers and other citizens. It is my recollection and belief that such an effort made some progress. But with the onset of the Covid pandemic, which created impediments to meeting, and perhaps due to other considerations (such as an election season), the process ground to a halt and has apparently not been revisited or revived by the Planning Board or the Council.
The current request from the Vineyard demonstrates that this and future Councils may well be presented with continuing dilemmas, controversies, and possible litigation if they don’t address the inconsistencies and inadequacies of the current ordinance head-on and without further delay. This is all the more important due to the fact that the Town of Little Compton itself, through the Little Compton Agricultural Conservancy Trust, is no doubt the predominant owner of agricultural property and property interests such as conservation easements and deeds of development rights.
I wish to make clear that I am not opposed in principle to a restaurant operation in association with the Vineyard – or with any other legitimate agricultural operation that is compliant with conditions set forth in an amended ordinance. The Covid crisis, along with other crises in the world in this very moment, have only reinforced the importance of local agriculture and the need for the town to support such agricultural enterprises. But the town should do so in a way that treats all agricultural enterprises fairly, equally, and transparently, rather than by standards that may appear to be arbitrary or to reflect favoritism. An amended ordinance should also take into account concerns of neighbors and property owners not engaged in agriculture. I fully appreciate that other operators of agricultural businesses in town, who have acted responsibly and within the law, may be skeptical about changes to the status quo. I believe strongly, however, that a carefully and thoughtfully drafted ordinance amendment may provide opportunities for such agricultural businesses to productively augment their business activities without unduly infringing on their rights or current operations.
The current Zoning Ordinance regarding agricultural uses, as best I can tell, has not been substantially revised or revisited since 1994 or thereabouts. Much has changed during that time, both on the Little Compton landscape and in certain legal respects. For one thing, the current zoning ordinance is not necessarily consistent with, nor does it reflect the current provisions of, the Right to Farm Act (RI General Laws, Title 2, Chapter 23) or subsequent legal decisions involving that legislation (e.g., Gerald P. Zarrella Trust v. Town of Exeter, 2018). Other Rhode Island communities have amended their Zoning Ordinance to incorporate explicitly the specific uses permitted by the Right to Farm Act, as well as to include identified non-agricultural uses that may be permitted in association with agricultural enterprises, subject to certain conditions. Little Compton could and should do the same, for the benefit of farmers and non-farmers alike.
Thank you for your consideration of my concerns.
Sincerely,
Larry Anderson
¹ By way of disclosure, I was actively and publicly involved in various ways in supporting the plaintiffs, Vineyard neighbors Brian and Natalie Eliason and Christina Carlson, in the lawsuit they filed against the Little Compton Town Council and the Vineyard in 2017. I believed then, and believe still, that their lawsuit was principled and well-founded, based on legitimate legal concerns. My support included, among other things, financial donations to defray their legal expenses, cooperation with others to raise additional support for legal expenses, and procuring public documents for their attorneys. When I was elected to the Town Council in November 2018, I in effect became a defendant in the lawsuit. I immediately requested an Advisory Opinion from the RI Ethics Commission regarding my situation, which by then involved a counterclaim filed by the Vineyard against the plaintiffs, in which the Vineyard also indicated that the counterclaim might be expanded to include unnamed “John Does.” The Commission advised that I recuse myself from matters involving the Vineyard as long as the litigation was pending, which I did. Based on the terms of a settlement among the parties in May 2019, all claims and counterclaims were withdrawn. I then returned to the Ethics Commission to request another Advisory Opinion based on the changed circumstances. The Commission advised that I need no longer recuse myself from Council business involving the Vineyard.
Apparently some elements of the litigation are still unresolved. The RI Judiciary Public Portal indicates that a hearing was held in Rhode Island Superior Court before Associate Justice Brain P. Stern on March 31, 2022, to consider a “Motion to Vacate” and a “Motion to Confirm Arbitration Award” filed by parties to the suit, which I believe include the plaintiffs and the Vineyard. The Public Portal indicates that at the hearing the motions were “Heard and Reserved” by Judge Stern.♦