SETTLEMENT AGREEMENT LIBERTY ENTERTAINMENT 02252023.PDF

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SETTLEMENT AGREEMENT AND RELEASE 
 
 
This Settlement Agreement and Release (“Agreement”) is made between 
Liberty Entertainment Group, LLC, dba Dream Palace (“LIBERTY”), and Maricopa 
County (“COUNTY”) and Paul Penzone (“SHERIFF”). COUNTY and SHERIFF are 
collectively referred to as DEFENDANTS. LIBERTY, COUNTY and SHERIFF are 
collectively referred to as the “PARTIES.” In consideration of the mutual covenants 
and agreements of the PARTIES, and other good and valuable consideration, the 
receipt and sufficiency of which is acknowledged by the PARTIES, the PARTIES 
warrant and agree as follows: 
 
RECITALS: 
 
A. 
LIBERTY is an Arizona LLC doing business as Dream Palace, located 
at 815 N. Scottsdale Road near Tempe Arizona, but within an unincorporated 
portion of Maricopa County, Arizona. 
 
B. 
COUNTY is a political subdivision of the State of Arizona, organized 
and existing under the authority of Article XII, § 2 of the Arizona Constitution. 
 
C. 
SHERIFF is the Sheriff of Maricopa County and, having been sued in 
his official capacity, includes any employees or officers of the Sheriff, as well as 
any successor sheriffs of Maricopa County. 
 
D. 
LIBERTY has a 2021 County-issued adult business license and timely 
applied to the Maricopa County Sheriff’s Office for renewal of its adult business 
license on December 15, 2021. 
 
E. 
On January 7, 2022, the SHERIFF notified LIBERTY that it had denied 
its renewal application and that LIBERTY should pick up the $500 renewal fee it 
had paid. 
 
F. 
The SHERIFF informed LIBERTY that the sole basis for the intent to 
deny was that Dream Palace’s hours of operation, as listed in its renewal 
application, were not in compliance with the special adult business hours of 
operation requirements of A.R.S. § 13-1422-B (“the STATUTE”) and § 13-f of 
Maricopa County Ordinance P-10 (“the ORDINANCE”). These were nonetheless 
the same hours of operation Dream Palace had listed in its numerous prior 
successful renewal applications.

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G. 
Both the STATUTE and the ORDINANCE impose hours of operation 
restrictions exclusively on adult entertainment businesses. When referred to 
collectively, the State and County hours restrictions will be referred to as “the 
PROVISIONS.” 
 
H. 
LIBERTY appealed the notice of intent to deny but an official of the 
SHERIFF’s office denied the appeal. 
 
I. 
LIBERTY thereafter brought a timely filed special action in Maricopa 
County Superior Court against DEFENDANTS (case no. CV 2022-004522, 
hereafter the “LITIGATION”) seeking judicial review of the decision to deny its 
license renewal application. LIBERTY asserted: 
 
a. 
that both PROVISIONS are facially unconstitutional under 
Article 2, § 6 of the Arizona Constitution; 
 
b. 
that both PROVISIONS are facially unconstitutional under 
Article 2, § 13 of the Arizona Constitution; 
 
c. 
that the ORDINANCE is ultra vires and/or preempted in 
violation of the authority delegated to counties to enact zoning 
laws under A.R.S §§ 11-812a and 11-811a-5; and 
 
d. 
equitable relief reversing the administrative decision denying 
renewal of the license and compelling its issuance. 
 
J. 
DEFENDANTS deny any wrongdoing relating to the claims set forth 
in the LITIGATION and, by this agreement, do not concede that any of LIBERTY’S 
claims have merit. 
 
K. 
The PARTIES now wish to enter into this Agreement to resolve all 
differences arising between them, including, but not limited to, those claims which 
were brought, or which could have been brought, in the LITIGATION and to release 
and discharge each other from any and all existing, potential and future obligations 
and disputes among them related thereto, except for those obligations specifically 
set forth herein.

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AGREEMENT 
 
 
NOW, THEREFORE, in consideration of the mutual execution of this 
Agreement, and the respective recitals, promises, covenants, releases and 
agreements contained in this Agreement, and intending to be legally bound, the 
PARTIES agree to settle their disputes and covenant and agree as follows: 
 
1. 
Incorporation of Recitals. The Recitals set forth above are 
incorporated herein by reference. 
 
2. 
No Payment Required In Absence of Breach. Except as noted below, 
and only in the event of a breach of this Agreement, no payment of any kind shall 
be made by either LIBERTY or DEFENDANTS to secure the benefits of this 
Agreement. 
 
3. 
Dismissal of Action. Within one week following the signing of this 
Agreement by all PARTIES, LIBERTY will dismiss its Complaint in case no. 
CV 2022-004522 without prejudice, but LIBERTY agrees not to re-file these claims 
in the absence of a breach of this Agreement by either of the DEFENDANTS. 
 
4. 
Issuance of License. Within two days of providing emailed notice to 
undersigned counsel for DEFENDANTS of the dismissal of LIBERTY’s Complaint, 
DEFENDANTS will issue the 2022 adult business license to LIBERTY for its 
Dream Palace location.  
 
5. 
Grandfathering. LIBERTY and any of its successors in interest at its 
current location may continue to operate utilizing the hours of operation it has 
traditionally utilized and as shown on its 2022 application. 
 
6. 
Terms of Grandfathering. So long as Dream Palace, or any of its 
successors in interest, operate only within the hours stated in the 2022 license 
application, the County agrees not to enforce any present or future hours of 
operation restrictions against Dream Palace, its personnel, and/or its successors 
in interest, either via license revocation, license non-renewal, or any other manner 
of enforcement. 
 
7. 
Qualified Waiver of Attorneys Fees. Except as noted below, LIBERTY 
waives any claim it may have to attorney’s fees in connection with the LITIGATION.

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8. 
Remedy in the Event of Breach. However, in the unlikely event the 
County should hereafter violate this agreement, COUNTY will pay LIBERTY 
(or any of its successors) $68,000 as liquidated damages, which represents the 
amount LIBERTY expended in legal fees during 2022 in its attempts to resolve the 
hours of operation controversy. Any such payment made while LIBERTY continues 
to own or operate Dream Palace or any successor business shall be made out to 
Liberty Entertainment, LLC, and delivered or mailed to LIBERTY.  
 
9. 
Negotiated Agreement and Severability. The Parties acknowledge 
and agree that this Agreement is the product of negotiation and this Agreement 
shall not be construed against the principal drafter. If, after the date of this 
Agreement, any of the provisions are held to be illegal, invalid or unenforceable, 
such provision shall be fully severable, and the remainder of the Agreement shall 
remain enforceable and not affected thereby. 
 
10. 
Advice. The Parties acknowledge, warrant and agree that they:  
(a) have read this Agreement in its entirety; (b) have been advised fully and 
adequately by their respective legal counsel and tax advisors as to the character 
and legal effects of all recitals and agreements contained in this Agreement; and 
(c) fully understand the nature and effect of this Agreement. 
 
11. 
Additional Acts. At any time, upon request of either party, the other 
shall diligently perform additional acts and execute additional documents 
reasonably necessary to carry out the intent of this Agreement. 
 
12. 
Successors and Assigns. This Agreement shall be binding upon and 
inure to the benefit of the Parties and their respective successors, assigns, 
directors, agents, employees, partners, administrators, executors, representatives, 
and Arizona attorneys.  
 
13. 
Counterparts. This Agreement may be executed in one or more 
counterparts, each of which shall be deemed an original, but all of which together 
shall constitute one and the same instrument. This Agreement may also be 
executed by facsimile transmission. 
 
14. 
Governing Law. This Agreement is made under, and is to be 
construed in accordance with, the laws of the State of Arizona. If any proceeding 
is brought to enforce, interpret or recover damages for breach of this Agreement, 
the prevailing party shall be entitled to recover their reasonable attorneys’ fees and 
costs incurred in such proceeding, in addition to any other costs or relief to which 
he, she or it may be entitled.

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15. 
Entire Agreement. This Agreement is an integration of the total 
agreement of the Parties, sets forth the entire agreement of the Parties and 
supersedes any and all previous oral and written agreements regarding the 
transactions contemplated thereby. No modification of this Agreement shall be 
valid unless made in writing and signed by all Parties. 
 
 
 
 
 
 
 
 
LIBERTY ENTERTAINMENT, LLC, 
an Arizona limited liability company 
 
 
October ___, 2022 
 
 
By _____________________________ 
 
 
 
 
 
 
 
    Its ___________________________ 
 
 
 
 
 
 
 
 
 
COUNTY OF MARICOPA 
 
 
October ___, 2022 
 
 
By _____________________________ 
 
 
 
 
 
 
 
    Its ___________________________ 
 
 
 
 
 
 
 
 
 
MARICOPA COUNTY SHERIFF 
 
 
October ___, 2022 
 
 
By _____________________________ 
 
 
 
 
 
 
 
    Its ___________________________ 
 
 
 
 
 
[signatures continued on next page]

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APPROVED AS TO FORM AND CONTENT: 
 
 
October ___, 2022 
 
 
By _____________________________ 
 
 
 
 
 
 
 
Jerome H. Mooney 
 
 
 
 
 
 
 
  Counsel for LIBERTY 
 
 
October ___, 2022 
 
 
By _____________________________ 
 
 
 
 
 
 
 
Joseph I. Vigil 
 
 
 
 
 
 
 
  Counsel for DEFENDANTS 
 
 
Dream Palace/Litigation/Settlement Agreement 09.28.22.docx