McHenry Cobbs’ liquor license suspended, logo altered as lawsuits continue

One owner’s actions are alleged to be ‘intended to sabotage’ the restaurant, a lawyer for the other co-owner wrote in a court filing

Liquor service has been cut off at the McHenry restaurant D.C. Cobbs by city police who alleged it served alcohol to a minor in June and also sold drinks past 1 a.m. on a weeknight last week, violating municipal rules.

McHenry’s move to suspend the establishment’s liquor license comes amid multiple lawsuits its two owners have pending against each other in county and federal courts.

At the center of the litigation is a fight over a licensing agreement between the two men, Josh Carstens and former Woodstock City Council member Dan Hart.

A previous deal between them, that Carstens unsuccessfully contested the legality of in court, expired without a renewal late last month, leading to new rounds of court filings last week in the initial lawsuit started by Carstens more than a year ago.

About two hours of closed-door talks Tuesday afternoon between attorneys representing Carstens, the city of McHenry and the McHenry Cobbs corporation controlled jointly by Hart and Carstens ahead of a McHenry Liquor Commission hearing failed to yield an agreement, meaning the restaurant still cannot sell booze for now.

The commission hearing was rescheduled for 1 p.m. Thursday. Neither Hart nor his attorney Robert Hanlon returned requests for comment this week.

The lapse in the licensing contract between Hart and Carstens on July 25 also resulted in Hart’s business entity 222 North Main filing a new lawsuit alleging trademark infringement against the McHenry restaurant last week in federal court, court documents show.

Hart’s outfit 222 North Main owns the logos, recipes and other intellectual property of D.C. Cobbs, he said. D.C. Cobbs also has two other locations in Woodstock and East Dundee, which are uninvolved in the lawsuits.

Hart’s entity filed the federal lawsuit against McHenry Cobbs, a corporation in which both Hart and Carstens are 50% owners.

McHenry Cobbs is “likely to mislead prospective and/or current customers of DC Cobbs as to the affiliation, connection or association of its business association” with 222 North Main, according to the federal complaint filed by Hanlon, Hart’s attorney.

The McHenry restaurant’s logo on its sign above its main entrance has been altered since last week so that the letters “D.C.” cannot be seen. The entire logo remained intact as of Monday on another side of the building.

Mayor Wayne Jett declined to comment when asked whether the lawsuits were a factor in the liquor license suspension, but said officials and attorneys for the parties involved in the liquor license matter are working to resolve the issue. He said the city wants a business with a liquor license in the D.C. Cobbs space.

The city’s notice issued to the restaurant, signed by McHenry Police Chief John Birk, alleged that D.C. Cobbs was open at least 10 minutes past 1 a.m. one night last week, served alcohol to a minor one night in late June and does not have an agent living within 10 miles of the city as required by the city’s liquor license rules.

The last violation is the result of Hart informing the city he was no longer acting as the agent for the business as of July 25, the same day the licensing agreement between him and Carstens allowing the use of D.C. Cobbs intellectual property at the McHenry spot had expired, according to court documents.

Carstens has moved to Arizona since D.C. Cobbs opened in McHenry in 2018, and has been helping start a Buddyz pizza restaurant there, Hart has said, a decision Hart has taken issue with in court filings.

Renewal of the liquor license wasn’t needed until spring next year.

Troy Owens, Carstens’ attorney, has asked a McHenry County judge to make Hart explain why he shouldn’t be held in contempt of court for surrendering the liquor license, pointing to a court order issued last week that instructed Hart and Carstens to avoid any action that could “cause an adverse consequence” for the business, which has more than $1 million in its bank account, court filings show.

“Defendant Hart’s actions are intended to sabotage McHenry Cobbs,” Owens wrote in a motion for a temporary restraining order in the McHenry County court case.

A McHenry County court order entered July 30, according to documents shared by Owens, instructed Hart to turn the keys to the restaurant, business banking information and other materials that are not proprietary information of 222 North Main over to Carsten.

The order also said Hart can take a $100,000 withdrawal from the business bank account, which would mean he would match a withdrawal Carstens took last year that had been contested by Hart in court.

The court also said $300,000 should be kept in the business bank account to run the restaurant operations, and the rest of it should be put into an interest-bearing account Hart and Carstens can agree on but not be withdrawn from without further court permission.

A hearing in the McHenry County court case is set for Aug. 25.