The 79th annual Poteet Strawberry Festival will take place Friday through Sunday. The Poteet Rotary Club, which says its started the festival, filed a federal lawsuit Thursday after it was suspended from participating in this week’s festival by the Poteet Strawberry Festival Association.
Sam Owens/San Antonio Express-News
The Poteet Strawberry Festival kicks off on Friday. The Poteet Strawberry Festival Association has excluded the Poteet Rotary Club from the event, in part for allegedly failing to pay a $30,000 bill for soft drinks.
Josie Norris / San Antonio Express-News
Fresh picked strawberries arrive to be judged at the Poteet Strawberry Festival in Poteet in 2023. The festival benefits scholarships, farmers and nonprofits.
Josie Norris/San Antonio Express-News
The Poteet Strawberry Festival attracts about 125,000 visitors.
Jerry Lara, Staff / Staff photographer
Maria Villafuerte and daughter Caitlin Villafuerte of San Antonio pose with strawberry mascots at the 2023 Poteet Strawberry Festival. The festival provides scholarships to youth and grants to nonprofits.
Josie Norris/San Antonio Express-News
Strawberry shortcake served at the 2023 Poteet Strawberry Festival.
Josie Norris/San Antonio Express-News
A Poteet Strawberry Festival worker puts strawberries on a skewer to dip them in chocolate during the 2018 event.
Edward A. Ornelas, Staff / San Antonio Express-News
A clash between two nonprofits over the Poteet Strawberry Festival has ripened into bitter legal battles.
The court fights started after the Poteet Strawberry Festival Association Inc., which promotes and stages the event, suspended the Poteet Rotary Club Inc. from participating in this weekend’s festival, in part for allegedly failing to pay a $30,000 bill. The debt is about Pepsi, not berries.
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The Rotary Club filed a federal lawsuit Thursday in federal court in San Antonio seeking a temporary restraining order to prevent its exclusion from the festival. The club alleges the association’s action represents a breach of a contract between the parties.
Not more than 15 minutes later, according to a lawyer for the club, the association sued in an Atascosa County court for its own restraining order to prevent the club from interfering with the upcoming festival and collecting money and donations meant for the association.
Amid the back and forth, though, there’s a more significant claim that could have serious long-term implications for the festival, which has been held for 78 consecutive years.
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READ MORE: 5 things to know about the Poteet Strawberry Festival
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The Rotary Club asserts it’s the sole owner of the Poteet Strawberry Festival name.
But the association officially trademarked the name more than 28 years ago. The group holds five trademarks, including one for organizing and conducting a civic festival. It accuses the Rotary Club of misappropriating the name on flyers, postings and emails.
San Antonio lawyer Robert McRae, who represents the Rotary Club, dismissed the association’s claims to the trademarks.
“Those registrations are invalid because they never had the right to register them,” he said. “So they committed fraud on the trademark office.”
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Melissa Casey, a San Antonio attorney representing the association, responded to a request for comment with a written statement Sunday.
The Rotary Club’s lawsuit “is a huge black eye on what has historically been a been a beloved and charitable event, benefiting over 40 non-profit civic, church and school organizations,” the statement said, adding that the festival supports growers and injects millions of dollars into the South Texas economy.
All of that is now “jeopardized” by costly legal fees that are sure to rise before the litigation is resolved, the statement said.
“Even more troubling is the possibility that the festival will be impacted by the TRO sought by the (club) and the undeserved negative publicity that the (club) is causing as (a) cloud over this otherwise cherished local fundraising event,” it added.
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A hearing had been set for this morning in Atasacosa County Court at Law on the association’s TRO application. But the hearing didn’t go forward because the Rotary Club moved the association’s lawsuit to federal court, where the club is aiming to have its TRO application heard Tuesday, McRae said.
Long history
The Rotary Club takes credit for organizing the inaugural Poteet Strawberry Festival in 1948 to honor World War II veterans and “incentivize them to farm and engage in agriculture in the area,” it lawsuit says.
That first festival attracted 5,000 visitors from around South Texas. It now annually hosts about 125,000 attendees. The 79th annual festival is set for Friday through Sunday.
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The festival is held to promote Poteet’s strawberry production. Other nonprofits assist in hosting the event, including the Poteet Volunteer Fire Department, Poteet Lions Club and Veterans of Foreign Wars Post 6970. The fundraiser awards scholarships to local youth and donates to various community organizations.
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The Rotary Club formed the Poteet Strawberry Festival Association in 1980 to organize and run the festival, McRae said.
Both the Rotary Club and the Poteet Strawberry Festival Association are known as 501©(4) organizations, or nonprofits that work to benefit their community.
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The association brought in about $2.5 million in 2023 and spent roughly the same amount on its programs, including the festival, while paying out about $100,000 in grants, according to its most recent publicly available tax filing. It doled out 35 scholarships totaling $51,150, while awarding grants of $25,000 to the Poteet fire department and $6,000 to the Poteet Independent School District.
For 2023, the Rotary Club filed a brief IRS form used by nonprofits reporting less than $50,000 in annual revenue, rather than a more detailed filing.
Yet in its lawsuit, the club says it “typically receives $75,000 to $90,000 from its participation in the Poteet Strawberry Festival.”
Rift develops
The conflict between the Rotary Club and the Poteet Strawberry Festival Association surfaced earlier this year.
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Chris Lopez, the association’s president, in February fired off a five-page letter to his counterpart at the Rotary Club outlining a number of issues that could put an end to the group’s involvement with the festival.
In his missive, Lopez threatened potential legal action against the Rotary Club to recover an alleged $30,000 Pepsi debt. The club sells soft drinks during the festival to generate revenue. The association paid PepisCo for the beverages and now wants the club to reimburse it.
“We remain willing to pay the invoice for the Pepsi issue, the beverage issue, if they will provide documentation,” McRae, the Rotary Club’s lawyer, said.
Lopez also demanded the Rotary Club produce five years of tax filings and proof the nonprofit is in good standing with the IRS, the Texas Secretary of State’s Office and the Texas Comptroller’s Office.
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A club lawyer, Lucinda Vickers of Pleasanton, responded to Lopez three days later on Feb. 20. She vowed her client would sue the association if it blocked the Rotary Club from participating in this year’s festival. She added that the association is not entitled to the club’s tax records and documents related to its nonprofit status.
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Nevertheless, the association recently learned that the Rotary Club’s tax-exempt status was revoked for failing to pay taxes as required by law, according to the statement issued by Casey. Indeed, the IRS’ website shows the revocation occurred Nov. 15, 2024. It also shows the brief IRS notice that the club filed relating to its 2023 taxes wasn’t filed for tax years 2018, 2019, 2021 or 2022.
The association cited the revocation of the club’s tax-exempt status as another reason for cutting off the club’s involvement in this weekend’s festival.
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McRae, the club’s lawyer, said the club has regained its tax-exempt status with the state and is in the process of doing the same with the IRS. It’s awaiting IRA approval, he added.
In the meantime, state corporate records show the Rotary Club on March 18 formed another nonprofit organization, the Poteet Rotary Club Inc. — Charitable Activities, to provide scholarships, support local causes and help run an annual strawberry auction at the festival. It lacks valid tax-exempt status, according to the statement issued by Casey, the association’s lawyer.
The new Rotary Club organization also is a plaintiff in the lawsuit against the association, a fact that the association finds odd given it has never had any dealings with the newly formed group. It’s unclear if the Rotary Club International has granted a charter to the new organization, the statement said.
Ramifications
The Poteet Strawberry Festival Association’s move to exclude the Rotary Club from this week’s festival already has had ramifications.
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The club couldn’t participate in the Strawberry Sift, held Saturday, McRae said. The sift determines which strawberries are deemed festival-worthy. During the festival, those strawberries are judged and then auctioned.
In its TRO application filed Friday, the Rotary Club says the contract between it and the association regarding the festival expired Dec. 31. The club submitted a new contract on Feb. 9 and Lopez, the association’s president, stated at a board meeting that the contract would be extended until the end of this year, the application added. So the club says there’s currently a valid contract by the association’s “own admission.”
There are no terms in the contract that give the association the right to exclude the club from the festival, the club says in the TRO application.
The club wants a federal judge to issue a ruling allowing it to participate in this week’s festival. A hearing on the request has not yet been scheduled as of early this morning.
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“Right now, what we’re really asking the court for is just to maintain the status quo for the festival and allow us to participate in the festival,” McRae said.
Trademarks
After the disputes erupted, McRae said the club discovered that the association had applied to register the Poteet Strawberry Festival name with the U.S. Patent and Trademark Office in 1996. The agency issued the association five trademarks the following year, including for use on various merchandise, such as T-shirts, caps, pins and bumper stickers.
The association’s bylaws, created in 1980 and included as an exhibit in the club’s lawsuit, say the registered name Poteet Strawberry Festival is used with the club’s permission.
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“There was never any assignment of Trademark rights” to the association, the club says, adding that the “registrations are invalid as a matter of law.” False ownership claims can result in the revocation of a trademark.
The Rotary Club wants the federal court in San Antonio to declare those registrations invalid and rule that the club is the sole owner of the name.
And if the Rotary Club prevails? It could go several different ways, McRae answered.
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“The most obvious way is that (the association) would have to change their name, and we wouldn’t be involved anymore,” he said. He quickly added, “That’s not what we desire. My goal is to really get these organizations to start working together again peacefully.”