STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHARLES BROWN and JOHN L. )

LIUTERMOZA, d/b/a JACOB'S )

LADDER, INC., )

)

Petitioners, )

)

vs. ) CASE NO. 79-897

) STATE OF FLORIDA, DEPARTMENT ) OF BUSINESS REGULATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James E. Bradwell, held a public hearing in this case on April 1, 1981, in Tallahassee, Florida. 1/

APPEARANCES

For Petitioners: Richard B. Collins, Esquire

PERKINS & COLLINS

Post Office Drawer 5286 Tallahassee, Florida 32301

For Respondent: David M. Maloney, Esquire

Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301

ISSUES

One issue posed for decision herein is whether or not the Petitioners are entitled to a transfer of License No. 16-1333 SRX (4-COP), an alcoholic beverage license which currently allows Jacob's Ladder, Inc., to serve liquor, wine and beer as Part of its restaurant business pursuant to Sections 561.32 and 561.321, Florida Statutes. Also at issue is whether or not the Petitioners are entitled to have a default judgment for removal of tenant," issued by the Seventeenth Judicial Circuit in Broward County, against Jacob's Ladder, Inc., recorded by Respondent as a lien pursuant to Chapter 561.65, Florida Statutes.

FINDINGS OF FACT

1. Based upon my observation of the witnesses and their demeanor while testifying, the documentary evidence received including a stipulation by the parties, the following relevant facts are found.

   
   

2. License No. 16-1333 SRX (4-COP) is issued to the premises at 1480 South Ocean Boulevard, Pompano Beach, Florida. Petitioners are owners in fee simple

   to this property. Petitioners leased this property to the past licensee, Jacob's Ladder, Inc. (Petitioners' Exhibit No. 1). Petitioners transferred the subject license to the lessee, Jacob's Ladder, Inc., for use while they operated a restaurant at the subject location (1480 South Ocean Boulevard, Pompano Beach, Florida). The transfer of the license was not a subject of the lease agreement and the record does not reflect that any consideration was exchanged for the license. Petitioner and Jacob's Ladder, Inc., subsequently executed a transfer application transferring the subject license back to Petitioners. The transfer application was then placed in escrow for the stated purpose of facilitating a license transfer in the event that the lessee defaulted on the lease agreement. (Petitioners' Exhibit Nos. 2 and 12.) Petitioners later learned that the property had been converted to a bar instead of a "family type restaurant." Thus, Petitioners concluded that the "conversion" resulted in a use of the premises in a function inconsistent with the lease and Florida's alcoholic beverage laws. Petitioners, therefore, sought and obtained a court order evicting Jacob's Ladder, Inc., from the premises (Petitioners' Exhibit No. 3).

   
   

3. Respondent had notice that the Petitioners were lessors and owners of the property to which the subject license was issued both when Petitioners transferred the license to Jacob's Ladder, Inc., and when the Petitioners' attorneys informed Respondent of Petitioners' status as lessors and owners of the subject property. (Petitioners' Exhibit No. 4.)

   
   

4. On January 22, 1979, Respondent, through its District Supervisor, filed charges and prepared an Administrative Complaint for Rule violations against Jacob's Ladder occurring in June of 1978. On February 1, 1979, Petitioners' attorneys met for an office conference with Respondent's Director and other staff personnel concerning the subject license. During this meeting, Respondent, in addition to being advised that Petitioners were the lessors of the subject premises, was also advised that Petitioners had taken possession and was seeking transfer of the license to Petitioners. During this meeting, Petitioners were advised by Respondent that Jacob's Ladder had continuously violated rules governing the special restaurant license which was issued; that Respondent intended to revoke the license and was presently proceeding to that end.

   
   

5. On February 5, 1979, Petitioners signed a letter of agreement, stipulating to their future conduct and to the conduct of any future lessee. (Petitioners' Exhibit No. 6.) On February 9, 1979, Petitioners executed an application for transfer of License No. 16-1333 SRX (4-COP)(Petitioners Exhibit No. 12). Also on February 9, 1979, Respondent executed and forwarded two documents captioned a Notice to Show Cause/Notice of Informal Conference and a Notice of Informal Conference both of which were received at two locations by J. Epsimos, President of Jacob's Ladder, Inc., on February 13 and 15, 1979. (Petitioners' Exhibit No. 7.) Petitioners' letter of agreement, application for transfer and request for lien filing were mailed to Respondent on February 16, 1979. On March 8, 1979, Respondent returned Petitioners' transfer application, request for lien recording and letter of agreement. (Petitioners' Exhibit No. 5.)

   
   

6. In May, 1979, Respondent drafted a revocation order which was not executed, at least in Part, due to Petitioners application for and receipt of a temporary injunction enjoining Respondent from executing the revocation order. The file on the revocation proceedings was closed on May 29, 1979. (Respondent's Exhibit No. 3.)

7. Following the March 8, 1979, letter wherein Respondent returned Petitioners' application and advised that a revocation proceeding was Pending, Respondent proceeded with this effort to suspend or revoke License No. 16-1333 SRX (4-COP). (DOAH Case No. 79-898.) The licensee, Jacob's Ladder, Inc., communicated to Respondent that it did not contest the charges in the Notice to Show Cause filed February 9, 1979, and therefore, did not want a hearing. The matter was, therefore, closed by this Division on May 29, 1979. (See Respondent's Exhibit Nos. 2 and 3.)

   
   

8. The licensed premises is one unit of a 57-unit condominium. The remaining 56 units are all residential. There are currently 41 Parking spaces which serve the condominium. According to the Director of Building and Zoning Enforcement for Broward County, the 41 Parking spaces are inadequate to serve the condominium units and are "clearly inadequate to serve 56 residential units in addition to the subject restaurant.

   
   

9. Since the Premises were first licensed to serve alcoholic beverages in 1974, condominium residents have complained to the Director of the Respondent about problems they perceived were being created by the service of alcoholic beverages at the restaurant. (Testimony of Nuzum and Nerzig.)

   
   

10. Respondent's Director denied the license transfer for two reasons. First, the premises could never serve as a legitimate restaurant but would continue to operate as a bar due to inadequate parking facilities and thus, would be unable to comply with pertinent rules, regulations and statutes governing special restaurant licenses. (Chapter 561, Florida Statutes.) This is so due to the inadequacy of the parking facilities. Secondly, the licensee bad been in violation of the beverage law in 1977 for the same type of violations charged in the subject complaint when the transfer application was submitted.

    2/

    
    

11. The Department (Respondent) has an ongoing policy of refusing to record documents pursuant to Section 561.65, Florida Statutes, when the license against which the document is to be recorded is in a revocation proceeding. (Testimony of C. L. Ivey, Regional Supervisor, Barry Schoenfield, Bureau Chief of Licensing, and C. Nuzum, Respondent's Director.) Also, Chief Schoenfield testified to Respondent's policy of only recording liens from lenders that are licensed by the State. This policy appears to be sanctioned by Chapter 561.65, Florida Statutes.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action. Chapter 120.57(1), Florida Statutes.

    
    

13. The parties were duly noticed pursuant to the notice provisions of Chapter 120, Florida Statutes.

    
    

14. The authority of the Petitioners is derived from Chapter 561, Florida Statutes.

    
    

15. Petitioners have the burden of proof of showing that they are entitled to the transfer of the subject license. See Florida Department of Health and Rehabilitative Services v. Career Service Commission, 287 So.2d 412 (Fla. 4th DCA 1974).

16. License No. 16-1333 SEX (4-COP) is a special restaurant license. Chapter 561.20, Florida Statutes. The bolder of such a license is required to derive 51 percent of its gross revenue from the sale of food and non-alcoholic beverages. Section 561.20(2)(a)3, Florida Statutes.

    
    

17. Section 561.32, Florida Statutes, governs the transfer of licenses. As noted therein, licenses are to be transferred only when the conditions of transfer as set forth therein are followed. Petitioners are not entitled to a transfer of the subject license for the following reasons.

    
    

18. Chapter 561.32, Florida Statutes, provides, in pertinent part, that:

    
    

    1. Licenses issued under the provisions of the Beverage Law shall not be transferable except as follows:

       When a licensee shall have made a bona fide sale of the business

       which he is so licensed to conduct,

       he may obtain a transfer of such license to the purchaser of said business, provided the application of the purchaser shall be approved by the division in accord with the same procedure provided for in Sec. 561.17, 561.18, and 561.19, in the case of issuance of new licenses. However, no one shall be entitled as a matter of right to a transfer of a license when revocation or suspension proceedings have been instituted against

       a licensee, and transfer of license in any such case shall be within the discretion of the division. . .

       
       

       Petitioners have not made a bona fide sale of the business as evidenced by the facts herein. Additionally, the Division Director has discretion to grant or deny an application for transfer of a liquor license when revocation or suspension. The proceedings have been instituted against the licensee.

       Transfer in any such case lies with the discretion of the Division. In this regard, the facts herein reveal that the Division Director had initiated and filed a Notice to Show Cause/Notice of Informal Conference against the licensee prior to any receipt by the Division Director of a transfer application. Nor was Respondent entitled to receipt of a temporary license inasmuch as it can not be considered a purchaser within the meaning of Chapter 561.321, Florida Statutes.

       
       

19. Respondent initiated suspension and/or revocation proceedings by the filing of its Notice to Show Cause/Notice of Informal Conference on February 9, 1979. It is, therefore, concluded that Respondent initiated its suspension/revocation proceedings prior to Petitioners' tender of its transfer of license application and request to record its judgement and lien filings. In these circumstances, in view of Respondent's policy of refusing to record non- licensed lender's liens and to deny recordation of those liens once suspension or revocation proceedings have been instituted against a licensee, Petitioner, a non-licensed lender, was not entitled to have its lien recorded. And, in view of Petitioners' non-licensed status, it has not demonstrated that such a policy clothed with statutory authority, contradicts the requirement of Section 561.65, Florida Statutes. Finally, these requests all appear to fall within the sphere of discretionary powers vested within the Director's authority. There has been

no showing of any abuse of that discretion by the Director. I shall recommend that his actions be sustained.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby

RECOMMENDED:

That the action of Respondent in refusing to transfer License No. 16-1333 SRX (4-COP), and refusing to record Petitioners' judgement and lien filings be SUSTAINED.

RECOMMENDED this 27th day of May, 1981, in Tallahassee, Florida.

JAMES E. BRADWELL, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 27th day of May, 1981.

ENDNOTES

1/ The hearing officially closed on April 28, 1981, the date the parties were afforded leave to submit memoranda supportive of their respective positions.

Said memoranda were received and considered by me in preparation of this Recommended Order. To the extent that the proposed findings are not incorporated in this Recommended Order, they were deemed irrelevant, immaterial or not otherwise supported by the evidence of record.

2/ In this regard, it was noted that during 1977, Jacob's Ladder, Inc., was charged with five (5) violations of rules governing alcoholic beverage licenses to restaurants which resulted in a stipulation and finding of a $3,000 fine and a 30-day suspension of the license. Also, the subject Notice to Show Cause which issued February 5, 1979, stemmed from violations which have allegedly occurred in June of 1978. Again, Jacob's Ladder was charged with seven (7) special restaurant violations.

COPIES FURNISHED:

Richard B. Collins, Esquire PERKINS & COLLINS

Post Office Drawer 5286 Tallahassee, Florida 32301

David N. Maloney, Esquire Department of Business

Regulation

725 South Bronough Street Tallahassee, Florida 32301

Docket for Case No: 79-000897

Orders for Case No: 79-000897