01-003764 Moishes Steakhouse &Amp; Seafood, Inc., D/B/A Piccolo Mondo Continental Cuisine vs. Department Of Business And Professional Regulation, Division Of Alcoholic Beverages And Tobacco, Status: Closed Recommended Order on Friday, March 1, 2002.

Summary: Lien presented to agency within 90 days of transaction being released from escrow should be recorded within terms of statute.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MOISHES STEAKHOUSE & SEAFOOD, )

INC., d/b/a PICCOLO MONDO )

CONTINENTAL CUISINE, )

)

Petitioner, )

)

vs. ) Case No. 01 - 3764

)

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC BEVERAGES )

AND TOBACCO, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case

on December 14, 2001, in Miami, Florida, before J. D. Parrish, a

designat ed Administrative Law Judge of the Division of

Administrative Hearings.

APPEARANCES

For Petitioner: Louis J. Terminello, Esquire

Terminello & Terminello, P.A.

2700 Southwest 37th Avenue

Miami, Florida 33 133 - 2728

For Respondent: Sherrie J. Barnes, Esquire

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Flori da 32399 - 2202

STATEMENT OF THE ISSUE

Whether the Petitioner, Moishes Steakhouse & Seafood, Inc.,

timely submitted an application to record a lien for license

number 23 - 02731 4COP.

PRELIMINARY STATEMENT

On October 11, 1999, the Respondent, Department of Business

and Professional Regulation, Division of Alcoholic Beverages and

Tobacco (Department), issued a letter to the Petitioner that

acknowledged receipt of a request to record a lien against an

alcoholic beverage license. The request was denied; that is,

the Department declined to record the lien. The basis for the

denial was the Department's interpretation of Section 561.65,

Florida Statutes. It is the Department's position that such

section requires a lien to be submitted for recording within 90

da ys of its creation and that Petitioner had failed to timely

submit the instant lien.

On October 28, 1999, the Petitioner filed a request for a

formal hearing in order to challenge the Department's decision.

For reasons not established by this record, the Petitioner

submitted a second request for hearing that was dated

September 20, 2001, and the matter was forwarded to the Division

of Administrative Hearings for formal proceedings on

September 25, 2001.

At the hearing, the Petitioner presented testimony from Sy

Chadroff, an attorney with 46 years of specialized experience

related to the spirituous beverage laws. Additionally, the

Petitioner filed the deposition testimony of Daysi Tejera. Four

Exhibits were received in evidence by stipulation of the

par ties: a copy of the security agreement and note recorded in

the public records of Dade County, Florida, by and between

Armar, Inc., Arnaldo Bou, and Martha Pinango, as debtors, and

Petitioner; a copy of the UCC - 1 Financing Statement recorded

with the Flor ida Secretary of State on September 10, 1999,

between the debtors and Petitioner, as the secured party; a copy

of the escrow agreement dated March 3, 1999, between the debtors

and the Petitioner; and a copy of the October 11, 1999, letter

from the Departme nt denying the Petitioner's request to record

the security interest. All of the foregoing exhibits were filed

with the Division of Administrative Hearings with a stipulation

of counsel on or about November 29, 2001.

The transcript of the proceeding was fi led with the

Division of Administrative Hearings on January 14, 2002. The

parties submitted Proposed Recommended Orders that have been

considered in the preparation of this order.

FINDINGS OF FACT

1. On or about March 3, 1999, Armar Inc., Arnaldo Bou ,

individually, and Martha Pinango, individually, as debtors, and

the Petitioner, by Eugenio D'Arpino, as president of the

company, the secured party, executed a security agreement

(chattel mortgage) related to beverage license 23 - 02731, series

4COP. Suc h security agreement recognized a priority lien for

the Petitioner, Moishes Steakhouse & Seafood, Inc., and included

a promissory note executed by the debtors.

2. The promissory note, dated March 3, 1999 (presumably

executed on or about that date), prov ided:

THIS NOTE IS NOTE ASSIGNABLE AND NON -

ASSUMABLE WITHOUT THE EXPRESS WRITTEN

APPROVAL OF THE SECURED PARTY. THIS NOTE IS

SECURED BY A SECURITY AGREEMENT (CHATTEL

MORTGAGE) AND UCC - 1 WHICH SHALL CREATE A

PRIORITY LIEN (1ST PLACE LIEN) ON STATE OF

FLORI DA ALCOHOLIC BEVERAGE LICENSE NO: 23 -

01686, series 4 COP quota.

3. The security agreement and promissory note were not

provided to the Department within 90 days of March 3, 1999.

Apparently, the fact that the note and security agreement make

reference t o different alcoholic beverage license numbers is not

an issue. Neither party has raised that issue.

4. The Petitioner forwarded the note and security

agreement to the Department for recordation on or about

September 21, 1999. At that time the Departmen t received an

application to record a lien for license no. 23 - 02731, series

4COP.

5. On October 11, 1999, the Department sent Petitioner a

letter declining the application because it was not made within

90 days after the creation of the lien. The Depar tment

requested a newly executed security agreement so that the dates

would show the request for recording within 90 days of the

application.

6. It is the Department's position that the lien

application should have been submitted within 90 days of its

cre ation in order to comply with the mandatory guidelines of the

statute. For purposes of this case, the Department argued that

the "creation of the lien" was on or about March 3, 1999, or, at

the latest, March 15, 1999 (a date noted in the escrow

agreement) .

7. The Petitioner timely sought an administrative review

of the Department's decision.

8. It is the Petitioner's position that the lien did not

"break escrow" until August of 1999, and that, as a matter of

law, that is the point in time from which the 90 day period

should run. From the Petitioner's perspective, the "creation of

the lien" as used by the statute dates from when the transaction

broke escrow.

9. All parties agree that the statute does not

specifically address escrow transactions.

CONCLU SIONS OF LAW

10. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings. Section 120.57, Florida Statutes.

11. In this case the Petitioner bears the burden of proof

to establish it is ent itled to have the lien recorded by the

Department. As is more fully explained below, it has met that

burden.

12. Chapter 561, Florida Statutes, addresses the myriad of

issues that relate to alcoholic beverage licensees. For

example, under Section 561.32 , Florida Statutes, a person

holding a lien against an alcoholic beverage license is deemed

to be interested indirectly in the license. Therefore, any

person holding such interest must be disclosed to the

Department. The section specifically recognizes, however, that

the lien interest is enforceable in a judicial proceeding. In

Florida, secured transactions are governed by the Uniform

Commercial Code (UCC) which is adopted by statute. Thus, the

"perfection" of the lien interest pursuant to the UCC, is

s eparate from the disclosure and recording requirements of the

beverage laws. Arguably, a lien is not "created" until fully

executed and in effect. Documents held in escrow have no legal

effect until released for the purposes expressed by their terms.

13. Section 561.65(4), Florida Statutes, provides:

(4) In order to perfect a lien or

security interest in a spirituous alcoholic

beverage license which may be enforceable

against the license, the party which holds

the lien or security interest, within 9 0

days of the date of creation of the lien or

security interest, shall record the same

with the division on or with forms

authorized by the division, which forms

shall require the names of the parties and

the terms of the obligation. The division,

upon th e request of any person or entity,

shall conduct a lien search and shall

provide to the requester copies of all

recorded liens and security interests in the

division's records under the name searched,

all for the fee set forth in this

subsection. The fee for recording a lien or

security interest shall be $10; the fee for

recording an assignment of a recorded lien

or security interest shall be $10; the fee

for recording a satisfaction of a lien or

security interest shall be $10; and the fee

for a lien searc h shall be $20. The

division shall promulgate forms to be used

under this subsection. All liens and

security interests filed on or after July 1,

1995, shall expire 5 years after recordation

unless renewed by the lienholder within 6

months prior to its ex piration date. All

liens and security interests filed prior to

July 1, 1995, shall expire on July 1, 2000,

unless renewed by the lienholder within 6

months prior to that date. Renewals of

liens and security interests shall be

subject to a $10 renewal fee .

14. In this case, it has been represented that the

Petitioner presented the documents to the Department for

recording of its lien within 90 days of the date such records

were released from escrow. The record in this cause technically

does not establis h exactly when the documents were released from

escrow, but all parties have apparently presumed such release

was on or about August 19, 1999 (the date the security agreement

was recorded in the public records in and for Dade County,

Florida). Subsequent to that time, but within 90 days, the

Petitioner submitted the entire application for recording to the

Department. Therefore, the Petitioner has complied with the

statutory guidelines to file its application within 90 days of

the creation of the security interest.

15. As a matter of law, the transaction described in this

record did not establish or "create" a security interest until

the documents were released from escrow. Until the conditions

of the escrow occurred, the escrow agent would not have been

authorized to release the documents. Thus, the security

interest did not exist until the transaction closed.

16. Although all documents necessary to complete the

transaction were fully executed on March 3, 1999, the

transaction technically did not clos e as long as the terms of

the escrow were unfulfilled. If the parties allowed the license

to transfer (unsecured), that is a legal issue unrelated to the

time the lien interest was created. If the debtors and

Petitioner violated regulations related to al coholic beverages,

such violations are not related to when the secured interest was

created.

17. Had the conditions of the escrow never been satisfied,

remedies for a default of the escrow agreement have not been

disclosed. Moreover, why the parties exte nded the time for the

conditions of escrow to be completed is not known. All of the

unknowns in this case may point to policy questions regarding

the closing of transactions dealing with alcoholic beverage

licenses and/or the procedures governing the escr ow of documents

but thus far neither the Legislature (by statute) nor the

Department (by rule) has addressed the matter. Nevertheless,

for purposes of this case, it is established that the Petitioner

presented the application for recording its secured int erest no

later than 90 days from the date such documents were released

from escrow (and thus the lien was created) such that it is

entitled to have the lien recorded by the Department.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that the Department of Business and

Professional Regulation, Division of Alcoholic Beverages and

Tobacco, enter a final order approving the Petitioner's

application to record a lien on the subject alcoholic beverage

license.

DO NE AND ENTERED this 1st day of March, 2002, in

Tallahassee, Leon County, Florida.

___________________________________

J. D. PARRISH

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of March, 2002.

COPIES FURNISHED :

Sherrie Barnes, Esquire

Assistant General Counse l

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399 - 2202

Major Jorge R. Herrera

Department of Business and

Professional Regulation

8685 Northwest 53rd Terrace

Augusta Building, Suite 100

Miami, Flo rida 33166

Louis J. Terminello, Esquire

Terminello & Terminello, P. A.

2700 Southwest 37th Avenue

Miami, Florida 33133 - 2728

Hardy L. Roberts, III, General Counsel

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe S treet

Tallahassee, Florida 32399 - 2202

Richard Turner, Director

Division of Alcoholic Beverages and

Tobacco

Department of Business and

Professional Regulation

Northwood Centre

1940 North Monroe Street

Tallahassee, Florida 32399 - 0792

NOTICE OF RIGH T TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.