STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

)

vs. ) CASE NO. 78-2043

) DABT NO. 28961-A MARY JO KELLY t/a NITE GALLERY, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on 1 March 1979 and 14 June 1979 at Orlando, Florida and Tallahassee, Florida, respectively.

APPEARANCES

For Petitioner: Francis Bayley, Esquire

Division of Alcoholic Beverages and Tobacco 725 South Bronough Street

Tallahassee, Florida 32301

For Respondent: Richard L. Wilson, Esquire

22 East Pine Street Orlando, Florida 32801

and

Gerald S. Livingston, Esquire Post Office Box 2151

Orlando, Florida 32802

By amended notice to show cause dated 18 December 1978 the Division of Alcoholic Beverages and Tobacco, Petitioner, seeks to revoke, suspend or otherwise discipline the beverage license No. 58-1175 issued to Mary Jo Kelly t/a Nite Gallery, Respondent. As grounds therefor it is alleged that on or about 31 December 1977 an employee of Respondent committed a battery upon a law enforcement officer on the Nite Gallery premises; that Respondent unlawfully failed to maintain management and control of all business conducted under said beverage license and wrongfully relinquished all or part of the control to William Robert Waldorf; that Respondent unlawfully failed to file a set of fingerprints for Waldorf, who was interested directly or indirectly in the business; that Respondent knowingly made a false statement in the application for transfer of beverage license by failing to disclose Waldorf was connected with the business; and that Respondent, on 4 June, 1978, 22 May 1978 and 28 June 1978 failed to maintain on licensed premises copies of invoices for the purchase of beer and wine for the preceding three years.

At the initial hearing, Respondent admitted and pleaded guilty to the three counts involving failure to maintain beer and wine invoices on licensed premises. At the close of the initial hearing, at which Respondent was not present, the hearing was continued, upon representation of counsel that his client was in the hospital in Pennsylvania, to allow Respondent to testify.

Subsequent thereto the undersigned was advised that Respondent had surrendered the license. Before the case was closed, additional information was received that Respondent had obtained a different attorney, had demanded return of the license and was desirous of proceeding with the continued hearing.

At the initial hearing 8 witnesses were called by Petitioner and 14 exhibits were admitted into evidence. At the continued hearing one witness was called by Petitioner, two witnesses were called by Respondent and 8 exhibits were admitted into evidence.

FINDINGS OF FACT

1. Prior to October 1977 the Nite Gallery, Inc., a nightclub featuring topless dancers, held license 2-COP No.58-1175 and the stock was owned by Sherrill Ann Perkins and Dorothy Jean Copeland. The owners were anxious to sell and placed an advertisement which was seen by Robert Waldorf, who visited the bar to discuss price. Waldorf was accompanied by Richard Bragg and Mary Jo Kelly. Following discussion, Waldorf, who did all the talking for the purchasers, agreed to purchase the business for $12,000 and gave each of the owners a check for $1,000, receipt of which was admitted into evidence as Exhibit 3.

   
   

2. On 13 October 1977 the operation of the bar was taken over by Waldorf, although the two owners were still holders of the license.

   
   

3. The $1,000 checks given as down payment were on the account of Sharon's Novelties, at Winter Park National Bank, an account on which Waldorf was the only one authorized to sign checks.

   
   

4. During the next few weeks, Waldorf wrote numerous checks on this same account to pay for various equipment, supplies and labor for the Nite Gallery.

   
   

5. In Application for Transfer of Alcoholic Beverage License stamped 8 November 1977 (Exhibit 6), Dorothy Copeland signed the Affidavit of Seller stating the license was transferred to Mary Jo Kelly who signed the affidavit of buyer that "no other person except as indicated herein, has an interest in the alcoholic beverage license for which these statements are made." Nowhere in the application was reference made to Waldorf.

   
   

6. In 1973 Waldorf was convicted in the U.S. District Court for the Western District of Tennessee of offenses involving the transportation in interstate commerce of forged securities and was sentenced to three years confinement with a three years probation period running concurrently with the confinement. (Exhibits 1 and 2). As a result of these felony convictions, Waldorf is ineligible to hold an alcoholic beverage license in Florida.

   
   

7. At the time of these transactions, Waldorf and Mary Jo Kelly had been living together for approximately two years. She worked as a dancer and B-girl in various nightclubs, usually in a club where Waldorf also worked. Kelly had no experience or knowledge respecting the operation of a bar or any other business, and all decisions, including the decision to buy the bar and all management decisions thereafter, were made by Waldorf.

8. The sellers, Copel and and Perkins, were informed that Waldorf was the one purchasing the bar and that the license was being put in Kelly's name because Waldorf was ineligible to hold the license. This information came from Waldorf.

   
   

9. On November 2, 1977 Waldorf signed a promissory note (Exhibit 5) promising to pay Copeland $300 per month until the balance of the $5,000 owed her for the purchase of the Nite Gallery was paid.

   
   

10. Immediately prior to and following the transfer of the license to Respondent, Kelly danced at the Nite Gallery occasionally but otherwise had little, if anything, to do with the business. Waldorf did the hiring and firing, kept the accounts, signed checks for the bills owed, zeroed out the cash register, provided the bartender with funds each day to open the bar, and held himself out and performed all the functions of an owner in fact.

    
    

11. Waldorf made arrangements for radio advertising for the Nite Gallery and paid for this service. (Exhibit 10). In his application for telephone service ordered 4-2-78 for his residence, Waldorf stated his occupation for the past two years was owner of the Nite Gallery. (Exhibit 12).

    
    

12. After the license was transferred to Mary Jo Kelly, Waldorf opened another bank account on which both he and Kelly were authorized to sign checks. Kelly often signed blank checks which Waldorf completed to pay various expenses of the Nite Gallery. Kelly made no deposits in this account, maintained no record of expenditures from this account, and she had no information regarding the disposition of, or the amount of, money passing through the cash register at the Nite Gallery.

    
    

13. Respondent testified that she provided all of the money used to purchase the Nite Gallery and to pay the initial bills from her earnings as a dancer. She also testified that this same source of funds provided the capital needed to buy a house, boat and two or three cars including a Continental Mark IV driven by Waldorf.

    
    

14. Respondent further testified that she made $400 per week from tips as a dancer at the. Fiesta Club in Orlando immediately before purchasing the Nite Gallery and that she made $400-$500 per week in tips at the Nite Gallery. Her testimony was that the dancers worked on tips only. Exhibit 8, which is a cash and expense report for the Nite Gallery for December 1, 1977, shows that four dancers shared $17 for their work that evening. Although this was shown on Exhibit 8 as Commissions, other testimony indicated it was accumulated at $1 for each drink the customers bought for four dancers in one evening. These figures strongly militate against Respondent receiving $400-$500 per week in tips at this establishment.

    
    

15. Respondent's testimony that her earnings provided the funds for a house, boat, and three cars in addition to the costs involved in opening the Nite Gallery is simply not credible.

    
    

16. The testimony by Orange County Sheriff's deputies that one of them was struck by an employee of the Nite Gallery while on the premises was unrebutted

    
    

17. All of the witnesses, including Respondent, testified that Respondent performed no role in the day-to-day management of the Nite Gallery and that Respondent did not have the experience or ability to run a business.

18. At the time Respondent surrendered her license to Petitioner in March, 1979 she voluntarily submitted to questioning and the tape of that interrogation and the transcript of the tape were admitted into evidence as Exhibits 21 and

1. Therein Respondent gave her age as 20 years old and stated that Waldorf had directed her absence from the first hearing. At Waldorf's direction she went to Pennsylvania and entered the hospital for a short period so she could truthfully advise her attorney that she was in the hospital in Pennsylvania during the March hearing. During this interrogation Kelly stated that she received no income from the Nite Gallery, that Waldorf ran the business, and that she had no knowledge of how the business was doing.

   
   

   CONCLUSIONS OF LAW

   
   

   1. The Division of Administrative Hearings has jurisdiction over the parties and subject matter of these proceedings

      
      

   2. Section 561.29, Florida Statutes, provides, inter alia, the following grounds for revocation or suspension of beverage licenses by the Division of Alcoholic Beverages and Tobacco when it is determined by the Division upon sufficient cause appearing of:

      
      

      1. Violation by the licensee or his or

         its agents, officers, servants, or employees, on the licensed premises . . . of any of the laws of this state . .

         (e) Violation by the licensee [or], if a corporation, by any officers thereof, of any rule or rules promulgated by the division in accordance with the provisions of this chapter, or a violation of any such rule by any agent, officer, servant, or employee of the licensee on the licensed premises or in the scope of such employment.

         
         

   3. The charge that an employee of the licensee, Joseph Kara, unlawfully committed a battery on James Harris, a deputy sheriff of Orange County, Florida, while on the licensed premises, was supported by the testimony of Harris and was not rebutted. This charge involves the allegation that Kara committed a criminal offense . The adjudication of this offense is beyond the jurisdiction of this tribunal. Rifkin v. FREC, 345 So.2d 349 (Fla 4th DCA 1977). Absent evidence of a conviction in a court with jurisdiction to make such a finding, this charge must be dismissed.

      
      

   4. Rule 7A-2.14, Florida Administrative Code, provides that an applicant for a beverage license shall file a set of fingerprints for any person interested directly or indirectly with the applicant in the business for which the license is sought at the time the application is made for said license.

      Here no fingerprints were filed for Waldorf, and, whether this rule was violated depends upon whether Waldorf had an interest in the business.

      
      

   5. Rule 7A-3.17, Florida Administrative Code, provides for management of businesses conducted on licensed premises and provides in pertinent part:

      
      

      All business conducted on the licensed premises under the beverage law shall be managed and controlled at all times by the

      licensee managed by [sic] or his authorized employee or employees.

      * * *

      Indicia for determining whether a purported managerial contract conforms to this rule are as follows:

      1. The licensee must retain control of the operation of the business.

      2. Salary or wages must be paid by the licensee to the manager or employee for conduct of the business under the ultimate direction of the former.

      * * *

      1. The licensee must remain at all times responsible for the maintenance and proper operation of equipment on the premises.

      2. The contract must contemplate the formation of the relationship of principal and agent between the licensee and the employee within the limits defined and implied by the contract.

      * * *

      . . . .The Pole Star which will guide the Division in determining whether or not a purported agreement is a bona fide managerial contract as distinguished from a lease will depend upon who has ultimate

      overall control and direction of the licensed premises under the terms of the agreement.

      
      

   6. Here there was no written contract under which Waldorf purported to run the business for the licensee. The gist of his testimony was that he was just "helping out" Kelly because she had insufficient experience to operate the business. He was paid no salary according to his testimony, but only took such funds from the business as he needed from time to time. However, when all testimony is considered in the light of what was the reasonable contemplation and understanding of Kelly and Waldorf, it is clear that Kelly was a mere front for Waldorf. He was disqualified to acquire the license so he purchased the business and placed the license in the name of his then 19-year old girl friend.

      
      

   7. The money to pay the previous owners for their interest came from a hank account under the sole and exclusive control of Waldorf; Waldorf made all managerial decisions without reference to Kelly; it was generally understood that Waldorf was the owner in fact of the Nite Gallery; Waldorf kept the books and records and Kelly was totally uninformed regarding the activities of the nightclub; and Waldorf had complete control over the financial affairs of the club, including the control of all funds and profits. This was certainly no situation where the licensee exercised any managerial control whatsoever, despite her testimony that she had final decision-making authority respecting the management of the Nite Gallery.

      
      

   8. Accordingly, Respondent violated the statutes and rules above quoted in failing to file fingerprints for Waldorf in the application for transfer of license, in failing to list Waldorf as an interested party in the acquisition of the license, and in signing the affidavit on the application that no person not named in the application had an interest in the license.

   9. Respondent's plea of guilty to charges 5, 6 and 7 respecting the failure to maintain the required records of beer and wine invoices on the premises standing alone is sufficient to find Respondent guilty of these charges as alleged. Toler v. State, 196 So.2d 1 (Fla. 4th DCA )967). See also 9 FLA JUR CRIM LAW 358.

      
      

   10. From the foregoing it is concluded that the evidence was insufficient to prove that an employee of Respondent while on the licensed premises unlawfully committed a battery upon a deputy sheriff as alleged. It is further concluded that Waldorf purchased the Nite Gallery from the previous owners and used the name of his live-in girl friend, Mary Jo Kelly, as licensee while he operated the business and made all managerial decisions as owner. In so doing, the licensee violated the various provisions of Section 561.29, Florida Statutes, and Chapters 7A-2 and 3, Florida Administrative Code, as alleged. It is therefore

RECOMMENDED that the license 2-COP No. 58-1175 issued to Mary Jo Kelly t/a Nite Gallery, Inc. be revoked.

K. N. AYERS, Hearing Officer Division of Administrative Hearings Room 101, Collins Building Tallahassee, Florida 32301

(904) 488-9675

COPIES FURNISHED:

Francis Bayley, Esquire Division of Alcoholic Beverages

and Tobacco

725 S. Bronough Street Tallahassee, Florida 32301

Richard L. Wilson, Esquire

22 East Pine Street Orlando, Florida 32802

Docket for Case No: 78-002043

Orders for Case No: 78-002043