Licensing Board v. Alcoholic Beverages Control Commission

16 Mass. L. Rptr. 777
CourtMassachusetts Superior Court
DecidedOctober 6, 2003
DocketNo. 012136G
StatusPublished

This text of 16 Mass. L. Rptr. 777 (Licensing Board v. Alcoholic Beverages Control Commission) is published on Counsel Stack Legal Research, covering Massachusetts Superior Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Licensing Board v. Alcoholic Beverages Control Commission, 16 Mass. L. Rptr. 777 (Mass. Ct. App. 2003).

Opinion

Hines, J.

Introduction

The Licensing Board for the City of Boston (“Board”) and Lower Washington Street Task Force1 (“Task Force”) have brought these administrative appeals pursuant to G.L.c. 30A, §14. They challenge the decision of the Alcoholic Beverages Control Commission (“Commission”) to grant Oznemoc, Inc.’s (“Oznemoc”) petitions to: a) adopt a management agreement with 320 Advisors, Inc. (“Advisors”); b) transfer 10% of its stock to William Deyesso (“Deyesso”); c) change the manager of its business known as ‘The Naked I” from Geoffrey Horowitz (“Horowitz”) to Steven Hurd (“Hurd”); and d) change the name of the business from “The Naked I” to “Centerfolds.” In accordance with the procedure required under Superior Court Standing Order 1-96, both plaintiffs have filed a motion for judgment on the pleadings. For the reasons set forth below, the motions are DENIED.

BACKGROUND

The factual record on which the Commission relied in reversing the Board’s denial of Oznemoc’s petitions includes the proposed management agreement (“Agreement”), affidavits submitted by Deyesso, Hurd and Horowitz and the transcript of the Board hearing. At that hearing, interested parties testified in favor of and in opposition to the petitions. The procedural history of this case and a summary of the evidence before the Commission are set forth below.

Oznemoc is licensed to do business under the name of “The Naked I,” which operates a club at 12-18 LaGrange Street in downtown Boston. The particular business of “The Naked I” is adult entertainment, [778]*778including nude dancing and the sale of liquor by the drink. Horowitz was Oznemoc’s sole shareholder in October 2000 when he proposed to transfer a 10% interest in the business to Deyesso in return for a payment of $25,000. As the owner of a 10% interest, Deyesso would then assume the title of Vice President of Oznemoc. Deyesso also pledged at least $250,000 for improvements and renovations to the club premises.

On October 11, 2000, concurrent with the proposal to transfer shares to Deyesso, Oznemoc entered into the Agreement with Advisors, an entity in which Deyesso owns a 50% share. It is this Agreement between Oznemoc and Advisors which lies at the heart of this dispute. The Agreement contains a curious mix of rights and duties suggesting both Oznemoc’s primacy over and subservience to Advisors. Consistent with Oznemoc’s primacy, the Agreement provides in part that: 1) Advisors shall consult with Oznemoc on management and operations; 2) the Agreement is effective for a time certain and Oznemoc may terminate the agreement under certain conditions; 3) Oznemoc can expand the scope of the business; 4) employees hired by Advisors are Oznemoc employees; 5) Advisors operates the business and pays Oznemoc a set fee for that privilege; 6) Oznemoc retains its status as the employer of record for all persons hired by Advisors to staff the day to day operations of the business; and 7) Oznemoc accepts full financial responsibility for wages, taxes and employee benefits.

On the other hand, the Agreement also contains provisions suggesting Oznemoc’s subservience. In that regard, the Agreement provides that: 1) Advisors is granted complete discretion in the day-to-day management and operation of the business; 2) Advisors is granted the authority to hire and fire employees; 3) Advisors is granted the authority to enter into contracts necessary to the operation of the business and to pay business obligations; 4) Oznemoc may not terminate the Agreement for 15 years except in limited circumstances where Advisors engages in gross negligence or willful or wanton misconduct likely to cause a revocation of the license; 5) Advisors has the right to share in the revenue and profits; 6) Oznemoc cannot assign the Agreement without Advisors’ consent; and 7) Advisors guarantees to Oznemoc payment of $8,000 per week for a period of six months, for a total amount of $208,000 as a “minimum return on investment.”

After finalizing this Agreement with Advisors, Oznemoc filed its petitions with the Board on October 16, 2000. The petitions sought approval of: (1) a transfer of 10% of Oznemoc stock to Deyesso; (2) the Agreement between Oznemoc and Advisors for the management of the business; and (3) a change in the designated manager from Horowitz to Hurd. The required public notice of the petitions generated intense opposition from Chinatown and the surrounding communities. The Board held the first of two hearings on Oznemoc’s petitions on November 8, 2000 when it received testimony that Oznemoc had failed to meet with the community or to explain its plans. The Board then deferred a decision until November 30, 2000 to allow Oznemoc to meet with the community and to facilitate further public comment on the petitions. On November 30, 2000, the Board voted to hold a second hearing which was held on December 7, 2000. At this hearing, individuals representing the Chinatown community,2 Chinatown residents,3 elected officials4 and public safety officials5 testified before the Board. The public comments were unanimous in opposition to the petitions. In general, those persons opposing the petitions expressed concern that the particular type of adult entertainment, nude dancing, offered at the club would adversely affect the quality of life for those living and working in and near the Chinatown neighborhood. In addition, several witnesses questioned Deyesso’s character and fitness to participate in the ownership and management of the club.

In the legal arguments to the Board, counsel for Task Force argued that the transactions between Oznemoc, Deyesso and Advisors amounted to a license transfer to Deyesso and that the transfer was not in the public interest because of its impact on the Chinatown neighborhood. Counsel for Oznemoc countered that 1) the Agreement represented nothing more than a transfer of management responsibilities; 2) Deyesso possessed the requisite qualifications to hold an interest in the license; and 3) Hurd was qualified for the appointment as manager of record. A week later, on December 13, 2000, the Board voted to reject Oznemoc’s petitions on the grounds urged by the Task Force.

On December 14, 2000, Oznemoc exercised its right of appeal to the Commission. The issues submitted to the Commission were as follows: 1) whether or not the Agreement between Oznemoc and Advisors constitutes a transfer of the license to Advisors; 2) whether Deyesso is of sufficiently good character to hold an interest in a liquor license as required by G.L.c. 138, §12; 3) whether Steven Hurd possesses the requisite good character to be the licensed manager for the license; and 4) whether the licensee can do business under the name of Centerfolds.6 The Commission held an appeal hearing on March 13,2001. At that hearing, the Commission heard testimony from Hurd only and it adopted the transcript of the Board hearing as part of the appeal record.

On April 13, 2001, the Commission issued its decision (“Decision”) reversing the Board’s denial of Oznemoc’s petitions. The Commission determined that while the Agreement transfers a beneficial interest in the license to Advisors and Deyesso, it does not constitute an outright transfer of the license to Advi-sors and that even if a transfer occurred, the transactions met the statutory public good requirement. As to Deyesso’s ownership of a 10% interest in Oznemoc, [779]

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Bluebook (online)
16 Mass. L. Rptr. 777, Counsel Stack Legal Research, https://law.counselstack.com/opinion/licensing-board-v-alcoholic-beverages-control-commission-masssuperct-2003.