Forgotten in all the fuss over whether the city should give the proposed Crossbar beer garden the liquor license transfer it needs is a more fundamental problem – the license had expired long ago.
If the Liquor Board followed the law in this matter, the hoo-ha over whether the applicants should be granted the transfer – you know, whether the German-style drink-ery will be a neighborhood nuisance or not – would be moot.
The license at the center of this Federal Hill flap is what’s come to be known in town as a “zombie” liquor license.
As Rebecca Lundberg Witt explains in the Community Law Center’s watchdog blog Booze News, when the facts were reviewed at last month’s Liquor Board hearing, all parties agreed as to the basic timeline.
They acknowledged that there has been no establishment serving liquor at 12-14 East Cross Street since the summer of 2009.
Meanwhile the law states that “180 days after the holder of any license issued under the provision of this article has closed the business or ceased active alcoholic beverages business operations. . . the license shall expire.”
It’s worth pondering the potential problem this poses for the licensees, as they await the results of their Zoning board appeal, being written up by the Board’s executive director amid some high-level lobbying at City Hall, as The Brew reported this week.
Not Dead Yet!
So who allowed the license to remain valid, to the point where the Crossbar project’s backers could could spend millions, come up with a concept and floor plan, whip up a big debate over Federal Hill “mega-bars” and (in a separate case, considered that same day by the three-member Liquor Board) win a transfer decision?
The Liquor Board itself. (The 180-day problem has been highlighted in The Brew, explained in detail by the attorney bloggers at the Community Law Center, and red-flagged last year in a scathing state audit of the Liquor Board.)
Again there seems to be little dispute about what happened. Representing the Federal Hill Neighborhood Association (FHNA), attorney Sharon Krevor-Weisbaum recited the facts. Here’s how Booze News summarized what she said:
The Board approved the transfer on July 23, 2009. She noted that 180 days after July 23, 2009, some kind of hearing or meeting was held with Mr. Sam Daniels granting an additional 180 days to the licensees. She stated that it was unclear from the file exactly what happened during that meeting.
The BLLC staff sent several letters to the applicants during this time, reminding them that they have not completed their transfer of ownership. The applicants’ LLC’s charter was forfeited on October 1, 2012. The Board gave more and more extensions throughout this time.
She pointed out that the licensees have been completing this license transfer for 1673 days, which works out to 4.5 years. Obviously, 1673 days is many more days than the 180 days provided by the statute.
Applicant’s Argument: It’s the Board’s Fault!
Joseph R. Woolman III, the attorney for the applicants, said they should not be punished for the Liquor Board’s actions, repeatedly renewing the license. Here again is how Witt describes the testimony:
He noted that the license has been renewed every year and that his clients interpret Article 2B to say that a license renewal stops the 180-day clock. In caselaw, the Maryland courts, according to Woolman allow the Board discretion and authority in interpreting Article 2B. He emphasized the $2 million financial investment that the licensees have made in the project as a whole and in the continual payment of fees to the Liquor Board for license renewals every year. He asked, ‘why would someone spend $1300 per year if there is not a transfer pending?’ He noted that his clients relied on the communications from the Liquor Board staff and followed their directions.
In response, Krevor-Weisbaum maintained that there is nothing in Article 2B that would suggest that renewal of a license would stop the 180-day transfer clock.
“The licensees never filed a hardship extension request in this case, so it is unclear why the Board would have given the licensees an extension at all,” she said. “She argued against the idea that a private party would get to benefit from a government’s mistake.”
How the Board Ruled
The three commissioners came out unanimously in favor of the applicant.
Fogleman cited the concept of estoppel, a legal bar to alleging a fact because of one’s own previous actions or words to the contrary.
“We are left pondering the idea of estoppel. The idea that our actions or failure to act as an agency may play some role in what we do here today,” Fogelman said, as Witt recounts it. “The only question that we would have to answer – did our acceptance of renewal fees – does that preclude us from declaring license invalid as of today. It’s obvious that significant sums of money have been invested in reliance [on what Board staff told the licensees].”
So, that was the outcome. Based on estoppel arguments – and acknowledging they did not follow the law in the past – the Board said it would not be fair to punish the applicants now. They held the license to be valid.
Meanwhile the FHNA is girding for an appeal. On behalf of FHNA and about two dozen private citizens, an attorney from Ober/Kaler filed it yesterday.