What happened at the Liquor Board on September 25, 2014.

Mr. Patrick Mcnichol, of Ober Kaler, represented the Federal Hill Neighborhood Association (FHNA). There were people in the audience present from both sides, but testimony was only taken from one person: Former State Senator George Della.

Woolman made a preliminary motion to dismiss the matter before the Board. He explained that his client’s position was that there was no “remand” but rather a stipulation of dismissal. He said that the licensees have “endured a long history of hardships.” They purchased the liquor license from a small corner bar called Turner’s in 2009 and intended to move the license to Charles Street. That deal to move the license fell through, so the licensees acquired additional properties on Cross Street. There have been numerous protests and numerous renewals of the liquor license since then. Woolman gave a history of the legal issues surrounding the license. The validity of the license, under Article 2B section 10-504(d), according to Woolman, was first raised in 2013. The Liquor Board refused to consider the validity issue at the hearing, which the protestants appealed to Circuit Court. The court reviewed the record and found it insufficient, so the court remanded the issue of the validity of the license to the Board. The hearing on the validity of the license was held on February 20, 2014. Woolman said that the hearing was over three hours long, with 27 pieces of evidence before the Board. A substantial record was created at that time. The protestants then filed a second appeal. The licensees were not notified of this second appeal. Chairman Ward interrupted to say that the licensees did know that the appeal was filed. Woolman acknowledged that they did find out about the appeal “through other sources” but they never received any copies of pleadings. Ward reminded Woolman again that the Crossbar owners did know about the appeal, “so what’s the point?” Woolman said that his clients wanted to be a party to the hearing in Circuit Court, but that the Board’s attorney had already agreed to a stipulation of dismissal of the case, without consulting the licensees. They received a courtesy copy of the stipulation of dismissal from Executive Secretary Michelle Bailey-Hedgepeth. Woolman reminded the Board that the licensees have “spent six figures on this liquor license.” He argued that the Board does not have the authority on its own initiative to rehear the case that they had already heard in February.

Mr. Mcnichol submitted a copy of the order from the court, signed by Judge Pamela White. He pointed out that the licensees did have notice of the appeal, though the Board had not sent them the notice that the law requires. In spite of this notice, the licensees did not file to become parties to the case. Mcnichol said that the law says that state agencies may review errors of law. He said that the Board, in February, had erred in its conclusion. Contrary to the Board’s decision, by law, the principle of estoppel cannot be held against a government agency. Under Article 2B section 16-101(e)(4)(ii)(2) and Maryland Rule 8-604(d), in the interest of justice, a case may be remanded to the Board for further proceedings.

After listening to both attorneys, Chairman Ward denied Mr. Woolman’s motion and said, “we’re going to go on now with the hearing.”

Mr. Mcnichol presented his case, on behalf of the Federal Hill Neighborhood Association. He stated, again, that the Board’s prior ruling that the agency was barred from enforcing the law under a theory of estoppel was incorrect. Chairman Ward said, “I think the whole issue of estoppel was the payment of the fees. I couldn’t understand what the Chairman was saying. It was very confusing.” Mcnichol cited several cases in which Maryland courts have held that the government cannot be estopped from enforcing the law, even when citizens are relying on mistaken government employees. In one example, an individual received approval from a zoning board for a reptile barn; the board later revoked his right to build his project. When the person appealed, the courts found that you cannot rely on the illegal acts of a government agency, and citizens are responsible for knowing what the law says and what agencies can do. In a second case, the state had erroneously paid for some medical charges that it did not have the authority under the law to pay. The state withheld the money for those illegal charges from a future payment. When the health services company tried to sue and assert estoppel, the court again said that citizens and corporations are charged with knowledge of what a government agency is allowed to do. People cannot rely on the unauthorized acts of government.

Former State Senator George Della then testified as the legislator who helped to create Article 2B section 10-504(d) (the section of the law that contains the 180-day rule). He was state senator in the 47th and then the 46th district for 28 years. He said that when the 180 day rule was created, in 2000, both the licensees and the community groups were in favor of it. He said that the rule “absolutely made sense because of the number of liquor license in existence at the time.” The 180 day rule in Baltimore City was modeled on an identical rule in Baltimore County. Della said, “it’s really quite clear.”

After the 180-day rule was passed, the Baltimore City Liquor Board administration at the time, Deputy Executive Secretary Jane Schroeder and Nathan Irby, complained to Della that the rule was causing them to lose license revenue. They asked whether Della would please consider changing the law to allow the Board to continue receiving that revenue because licenses were being killed due to inactivity. Della agreed to submit SB 138 in 2001, which said that a license would be allowed to stay active if license fees have been paid and if the license is inactive due to unusual circumstances. Della said that when he introduced the bill, “the feathers hit the fan.” The licensees were upset, and the neighborhood groups were upset. Della went back to Irby and Schroeder and said that he was withdrawing the bill. SB 138 was given an unfavorable report by the committee and was withdrawn. Della then explained the rule as it currently exists: a license may remain dormant for 180 days. If there’s a hardship, the licensee can come back to the Board and make their case. The Board could grant them another extension of 180 days. Chairman Ward asked, “what limitations are on the extension?” Della replied, “none.” Ward asked, “can it be reextended?” Della said, “no… beyond that, if they don’t activate that license, that license is dead.” After the rule passed and the 2001 bill failed, Della worked with Irby and Schroeder to increase license fees. Della said, “the 180 day rule is the 180 day rule.”

Commissioner Moore asked whether there was any legislative discussion as to what constitutes a hardship. Della replied, “no.” Moore asked whether the 180 day rule should apply to transfers (under Article 2B section 10-503). Della responded that the rule should apply.

Chairman Ward said that he noticed that Senator Della had brought a large posterboard with him; he asked, “is that an exhibit or something you carry around for fun?” Della brought forward the poster, a map of the 46th legislative district, showing the location of each liquor license. One of the commissioners asked about whether there was any result in the density of licenses based on the 180-day rule. Della responded, “the Board initially killed licenses, if in fact they had been dormant during that period of time. I know that because I know the licensees: they were yelling, screaming, kicking, hollering.”

Commissioner Moore said, “so what you’re saying is, if the licensee doesn’t apply [for a hardship extension] within the 180 days, on the 181st day, it’s too late?” Della replied, “yes.” Moore continued, “one of the arguments that we hear often is, because large amounts of money have been spent in advancement of opening an establishment, the Board should take that into consideration. In other words, so much money has been spent and the time period has elapsed, but disregard that. Was that ever a factor [for the legislators]?” Della replied, “no. If people are spending a ton of money, I would imagine that they hired a big shot lawyer to protect their interests.” Moore asked Della if he meant that the licensees are assuming the risk of losing their license, and Della replied, “yes.”

Mr. Woolman, for the licensees, then began his argument. He argued that in the cases cited by the neighborhood group, each one had talked about a government employee’s mistake. He asked, “where was a mistake ever made here?” Chairman Ward asked Woolman whether he admits that his clients never applied for a hardship extension since they took over the license in 2009. Woolman did agree. However, he said that the recent Court of Special Appeals case, Yim v. Tuzeer, held that a license renewal tolls (or restarts) the 180-day period in the statute. Woolman quoted from the case that the “total time period for which the licensee could be deemed unexpired is 360 days from April 30, 2008.” The licensees filed their application for renewal of their license (which was due in March) in October 2008. The Court held that the Board was within its rights to accept that renewal application. The establishment survived beyond the business itself and lived on to be renewed or transferred. Woolman pointed out that the Board has renewed his client’s license every year. He said, “I don’t know if I’m a bigshot lawyer like the senator said” but that his clients followed the directions of the Liquor Board and argued that the annual renewal of the license tolls the 180-day time period.

Mr. Mcnichol pointed out that Woolman had not cited the Yim v. Tuzeer case in his brief, so Mcnichol had not familiarized himself as much as he would have liked with the case. However, he said that Woolman is merely citing the proposition that the license survives the cessation of the business, which is true. Article 2B section 10-504(d) says that the license survives the cessation of alcohol sales for 180 days, or 360 days if an extension is granted. This is not inconsistent with the neighborhood association’s position. Commissioner Jones asked, “if indeed the liquor license is renewed, does that toll anything?” Mcnichol replied that, according to the statute, only three occasions toll the 180-day rule: (1) the submission of a transfer application for the license, (2) the submission of a hardship extension request, and (3) the death of the licensee.

Commissioner Jones asked about the hardship to the licenseholder. He pointed out that nobody from the Board ever told the licensees that the license isn’t any good, and the Board kept accepting the renewal fees. Jones said, “that’s an indication to me that you’re saying to me that my license is good.” Mcnichol replied that, while the Board might be doing the individual licensee a favor by not enforcing the law, “you’re doing a disservice to the general public.”

Moore asked about the timeline of the license in the Yim case. She said that the holding of that case seems to be that a license can survive the cessation of the business, which is not the issue in the Crossbar case. What is important to Commissioner Moore is whether or not the Court of Special Appeals specifically found that the license is revived after its death by the acceptance of a renewal fee. Woolman responded that he would argue that his client’s license is not dead but is rather “dormant,” which is the word that Former Chairman Fogleman used in February. Woolman said that the Court found that the license was dead in April 2008, and the renewal application was filed in October 2008.

In the course of his argument, Woolman asked, rhetorically, “why are we here?” Moore replied, “a prior Board made decisions that are not wholly consistent with the law, that’s what I think.” Woolman continued, re-emphasizing his prior argument that the Board has made no mistake in renewing the license. Moore replied, “I do think there was a mistake here. There was a combination of mistake, judgment misapplied, benefit given. The Yim case doesn’t go to the crux of the issue here. The crux of the issue is whether or not mistake, error, wrongdoing by an administrative agency can be disregarded once it’s been learned of. Was the Court of Special Appeals even given that issue?” Woolman replied that the ruling is very clear that 360 days had gone by in the Yim case. Moore responded that unless the Board can get information that the Court was asked the specific question that she raised, the question remains open and undecided.

Woolman closed with a policy argument; he argued that it is better to transfer an old license than to apply for a new license. If the Board rules the Crossbar license invalid, that would mean developers could not purchase a license from another location. Development takes years. He has a client who is shopping for a liquor license whose project may not be done for several years. Developers should be allowed to renew licenses to preserve them. Ward responded, “you present an interesting point.” Mr. Mcnichol replied that the licensees and developers should take up that issue with the state legislature. If the Board upholds the license as valid, they will be rewriting the law.

Ward said that the prior Board had ruled to keep the license alive with a “total lack of regard to binding laws.” He said that citizens are charged with knowledge of the law, and certainly the licensees’ lawyer should have known. The Board ignored “the clear command of the law.” An action of an administrative agency outisde of its statutory authority cannot form the basis of estoppel. Article 2B section 10-504(d) is tolled only upon death, hardship extension, or a transfer application. The acceptance of a renewal application does not toll the 180 day time period. A government body cannot be estopped from enforcing the law by the unauthorized actions of employees. The licensee argues they weren’t notified of the appeal, but, ten days after the case was docketed, in a letter dated April 9, 2014, the counsel for the licensees acknowledged that they knew that FHNA had filed an appeal in Circuit Court. Ward said that the Board has the responsibility to rectify “prior illegal incorrect inexplicable decisions.” The sale of liquor is a privilege, not a right, and the license has expired for all the reasons stated above.

Commissioner Moore said, “I agree with Chairman Ward, for all of the reasons stated. I can’t state them any better or any more clearly.”

Commissioner Jones disagreed. He said, “it’s easy for us to sit here and say, well, the last Board. We as a body are charged with reviewing the law, listening to the information coming before us and us making a sound decision. That decision may differ from the last Board. Sometimes presentation before the new Board is slightly different from the last Board.” Jones said that he thinks the case should be at the Circuit Court, not at the Liquor Board, because he thought that “this case is bigger than this body.” He concluded by saying, “I don’t agree that we as an agency did all the things that we needed to do to convey to the licensee that they were responsible… I think a second chance is needed.”

Moore added, after Jones, that she does think that licensees are charged with understanding the law of liquor licenses. They all have the opportunity to retain counsel if they wish. In this case, the Crossbar licensees have able counsel. The size of the filings alone attest to that. They’ve been well represented by counsel. They have an attorney who could advise them every step of the way. I have to believe that the licensee’s attorney informed them. I clearly agreed with Chairman Ward. This is not a case of confusion or lack of very very good legal counsel for the licensee. There’s no mystery here.

The case highlights the insufficient policies and procedures administered by BLLC staff and the lengths to which the Board has gone to keep dead licenses artificially alive.

The Yim v. Tuzeer case, cited by Mr. Woolman for the licensees, did not support Woolman’s argument. You can read the case here, at the link. The Yim case dealt with the intersection of two kinds of expiration of licenses. The first kind of “expiration” occured in Yim because the licensee did not renew his license, as required by statute. All liquor licenses in Baltimore City run from May 1 to April 30. Renewal applications are due to the Board by the end of March each year. The licensee in Yim did not submit their renewal application until October 2008, so their permission to sell alcoholic beverages “expired” on April 30, the last day of their license period. This is a different kind of expiration from the 180-day rule in Article 2B section 10-504(d). The licensee’s last legal day of operation was April 30, 2008, but the license survives the cessation of the business under 10-504(d) for 180 days (a total of 360 days from April 30, 2008, if the licensee received a hardship extension). This is why the Court said that the license expired on April 30, 2008; the Court was referring to a different section of the Code. Contrary to Woolman’s statements, the case was not on-point for the Crossbar case at all.

$750 fine plus costs.

Violation of Rule 3.02 Cooperation — “Licensee shall cooperate with representatives of the Board, members of the Police Department, Health Department, Building Engineer’s Office Grand Jury and representatives of other governmental agencies whenever such persons are on official business” — September 3, 2014 — Bar manager became argumentative with police officer.

Police Detective Akinwande and Police Cadet Emily Neisser were present to testify about the incident of September 3. Ms. Neisser, who was under the age of 21, purchased a Coors Lite beer for $3. When the cadet notified the detectives waiting outside that she had purchased an alcoholic beverage, the detectives came inside the bar and saw Ms. Neisser sitting in front of a Coors Lite beer. While they were trying to gather information from the bartender and the cadet, the bar manager, Mr. Franklin Garcia, “became argumentative and distracting.” He argued that the police had used Cadet Neisser “as a decoy” to confuse the bartender. Garcia also told the police officers that “[they] were the bad guys.” He refused to give the police any ID and also told the bartender not to give the police her identification. Most of this detail was not included in the police report. Commissioner Moore asked why Akinwande did not include more detail about the manager’s lack of cooperation, and Akinwande responded that they were mainly in the bar for the underage drinking violation. Kodenski, on cross-examination, asked Akinwande whether he was able to get all of the information that he needed for his investigation. Akinwande replied that he did collect all the money, photographs and information that he needed, but it took longer because of the noncooperation.

Mr. Kodenski told the Board that his client has “had a series of managers who weren’t quite up to snuff.” He will have his staff take the alcohol awareness course, and he has admonished his manager to fully cooperate with the police. Chairman Ward noted that the licensee been found responsible for four violations in 2011, but they were over three years ago. (The violations were for: (1) assaulting a Liquor Board inspector, (2) being unable to produce records for the alcohol purchased, (3) allowing patrons to consume alcohol after hours, and (4) being unable to produce employee records.)

Ms. Carol McCoy, from the Morrell Park Community Association testified about the bar. She told the Board, “the youth in Baltimore City are off the hook!” (meaning, out of control). She said that her neighborhood has nine liquor establishments in a three-block radius. She testified that she had tried to invite Mr. Patel to come to a community meeting, but he has not come. She also asked the business to sponsor the local Little League team, and they did not. She pointed out that the business has had a few other violations in the past several years. The Executive Secretary counted four or five previous violations for underage drinking, going back to 2005. Ms. McCoy said, “three strikes, you should be out! You have to learn a lesson. How many times are we going to keep doing this? I think it needs to be closed. We have too many bars in our neighborhood as it is.” Mr. Patel responded that he will go to a meeting and will try to support the community.

Chairman Ward asked, “Mr. Kodenski, what do we have to do to stop this from happening again? Do we have to close this bar for good?” Kodenski responded that Patel had already agreed to meet with the community association. Kodenski added that he wasn’t trying to downplay the violation, but “it’s not like this cadet wasn’t served anywhere else.”