Bar Gives Up Liquor Permit to Keep Nude Dancing : Regulation: Paddy Murphy’s had tried and failed to obtain an altered license that would have allowed both alcohol sales and nudity, in separate areas.

The city’s oldest nude bar has surrendered its liquor license rather than shut down its nude entertainment, ending a battle with the California Department of Alcoholic Beverage Control, authorities said Tuesday.

The state had sought to prohibit nudity at Paddy Murphy’s under a law that prohibits the sale of alcohol in places that stage nude dancing. Instead, the bar voluntarily canceled its liquor license last Friday, said Dale Rasmussen, ABC district administrator in Santa Ana.

State law prohibits the sale of alcohol in places that stage nude dancing.

The bar’s decision came just two days after Orange County Superior Court Judge Frederick P. Horn issued an injunction at the request of the ABC that prohibited the business from providing both nude entertainment and alcohol, Rasmussen said.

“The injunction left us with us two options: to stop the nude entertainment or to stop serving alcohol, and because we wanted to continue to offer nude entertainment, (surrendering the liquor license) was the option we chose,” said Marc Lebovitz, attorney for Paddy Murphy’s, which has served alcohol since 1982.

The legal battle between Paddy Murphy’s and ABC began more than 1 1/2 years ago when ABC filed a request in Orange County Superior Court to close down the bar at 2920 W. Warner Ave., contending that it had continued to operate illegally while battling the ABC.

For years, Paddy Murphy’s had operated as a topless establishment, but in early 1993 it asked the ABC to alter its alcohol license to allow one part of the business to feature nude entertainment without alcohol, and the other part to feature topless dancing with alcohol, Rasmussen said.

The ABC investigated but denied the request.

“We felt that Paddy Murphy’s did not make an adequate showing that this was a separate business,” Rasmussen said. “It was essentially the same operation, we concluded, and therefore should not be delicensed.”

The bar appealed, but an administrative law judge upheld ABC’s ruling. In June, 1993, however, Paddy Murphy’s notified the ABC that it would continue to offer nude entertainment and alcohol in separate areas of the business, Rasmussen said.

In October, 1994, another administrative judge again ruled in favor of ABC and revoked the bar’s liquor license. Paddy Murphy’s appealed the cases and meanwhile continued to serve alcohol on the premises while providing nude entertainment. A month and a half ago, the ABC requested the injunction. Now, since the bar has given up its license, its appeal to alter the license is moot, Rasmussen said.

“This is saving the taxpayers a good amount of money because the state doesn’t have to pursue the case,” he said. “Our goal was to get the violations to cease at the earliest possible date, so we view this definitely as a victory.”

Paddy Murphy’s meanwhile expects to prosper because the minimum age for its patrons has been reduced to 18 years, as the establishment serves no alcohol.

“We anticipate to lose some customers and gain some customers who might not have come before,” said attorney Ronald Talmo, who also represents Paddy Murphy’s. “We’ll have 18- to 21-year-olds for the first time.”