98-005046 Division Of Alcoholic Beverages And Tobacco vs. Kindred, Inc., D/B/A Raceway Cafe Status: Closed Recommended Order on Wednesday, June 2, 1999.

Summary: Temporary special restaurant licensee did not have enough seating and place settings from July 2nd through July 13th, 1998. "Routine" penalty is $1,000 and revocation.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF BUSINESS AND )

PROFESSIONAL REGULATION, )

DIVISION OF ALCOHOLIC )

BEVERAGES AND TOBACCO, )

)

Petitioner, )

) Case Nos. 98-5046

vs. ) 98-5518

)

KINDRED, INC., d/b/a )

RACEWAY CAFE, )

)

Respondent. )

______________________________)

RECOMMENDED ORDER

On March 16, 1999, a formal administrative hearing was held

in this case in St. Petersburg, Florida, before J. Lawrence

Johnston, Administrative Law Judge, Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Miriam S. Wilkinson

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-1007

For Respondent: Joseph N. Perlman, Esquire

Belcher Place

1101 Belcher Road, South

Largo, Florida 33771

STATEMENT OF THE ISSUES

The issues in these cases are whether the Respondent,

Kindred, Inc., d/b/a Raceway Café, should be disciplined for: in

Case No. 98-5046 (DBPR Administrative Action Case No. CL-62-

980016), alleged failure to maintain a bona fide restaurant as

required of special restaurant (SRX) licensees by Section

561.20(2)(a)(4), Florida Statutes (1997), and Florida

Administrative Code Rule 61A-3.0141; and, in Case No. 98-5515

(DBPR Administrative Action Case No. CL-62-9800159), alleged

failure to produce records as required of SRX licensees by

Florida Administrative Code Rule 61A-3.014.

PRELIMINARY STATEMENT

The Respondent requested formal administrative proceedings

on DBPR Administrative Action Case No. CL-62-980016. The matter

was referred to the Division of Administrative Hearings (DOAH) on

November 1 2, 1998, given DOAH Case No. 98-5046, and set for final

hearing on March 16, 1999.

The Respondent also requested formal administrative

proceedings on DBPR Administrative Action Case No. CL-62-9800159.

The matter was referred to DOAH on December 17, 1998, given DOAH

Case No. 98-5518, and consolidated with DOAH Case No. 98-5046.

At final hearing, the Petitioner, the Department of Business

and Professional Regulation (DBPR), Division of Alcoholic

Beverages and Tobacco (DABT), called one witness and had

Petitioner's Exhibits 1 through 3 admitted in evidence. The

Respondent called two witnesses and had Respondent's Exhibits 1

through 7 admitted in evidence.

DABT requested a transcript of the final hearing, and the

parties were given ten days from the filing of the Transcript in

which to file proposed recommended orders. DABT filed the

Transcript on April 29, 1999, after filing its proposed

recommended order, and the highlighting and notations on the

Transcript are DABT's. The Respondent did not file a proposed

recommended order.

FINDINGS OF FACT

1. On or about June 26, 1998, the Respondent, Kindred,

Inc., applied for a series 4-COP (consumption on premises)

special restaurant alcoholic beverage (SRX) license and obtained

a temporary 4-COP SRX license (number 62-09319) for the Raceway

Café, located at 12670 Starkey Road, Largo, Pinellas County,

Florida. The Respondent opened for business on July 2, 1998.

2. On July 13, 1998, at approximately 1:30 p.m., DABT

Special Agent Paul Cohen entered licensed premises to inspect and

verify compliance with SRX license requirements. It was Cohen's

impression that the Raceway Café had adequate service area (over

2,500 square feet) but that there were not enough seating and

table settings to serve 150 diners at one time and that the

Raceway Café was not a bona fide restaurant. Cohen left and

returned at approximately 4:00 p.m. with an intern and a

camcorder to video the premises and inspect in detail-- i.e. ,

count tables, chairs, plates, and eating utensils.

3. The Respondent's sole owner, Marouane Elhajoui, was

present in the premises at the time of the detailed inspection.

The evidence was clear that Elhajoui knew the purpose of Cohen's

inspection and completely understood the SRX requirements. (He

had another SRX license for other premises.)

4. Cohen first videotaped the outside and inside of the

licensed premises. Cohen and the intern then counted tables and

chairs and found that the licensed premises contained seating for

a maximum of 122 people. Of these seats, approximately 80% were

bar stools, and there was not enough table space to serve full-

course meals at all 122 seats. Several of the bar stools were at

the bar counter, which was cluttered with video game machines,

and several cocktail tables were too small to accommodate full-

course meals for all four or five bar stools placed at those

tables.

5. Elhajoui told Cohen about a grand opening celebration

that had taken place on the premises on July 11 and 12, 1998.

Elhajoui explained that restaurant tables and chairs had been

removed from the premises and stored in an adjacent, empty

storefront to accommodate a live band and dance floor for the

grand opening. Elhajoui told Cohen that, if Cohen would wait,

Elhajoui could replace the tables and chairs and have adequate

seating in a matter of minutes. Cohen did not dispute Elhajoui's

claim or ask to see the stored tables and chairs. He declined

the request to wait a few minutes and Elhajoui's offer to replace

the tables and chairs.

6. Cohen testified to having no recollection of any

conversation with Elhajoui concerning a grand opening, the

removal of tables and chairs, or their storage in an empty

storefront next door. While raising a question as to Cohen's

truthfulness on this point, it could be that Cohen did not recall

the conversation because he did not attach great importance to

the circumstances explaining why there was inadequate seating at

the time of his inspection.

7. After Elhajoui told Cohen that there were more than 150

place-settings in the restaurant, Cohen and the intern were able

to count only approximately 75 forks, 96 spoons, and 75 plates.

8. Elhajoui testified that Cohen and the intern did not

count either baskets or wooden plates also used to serve meals

and did not count eating utensils in boxes in a cabinet under a

counter in the kitchen. But Cohen specifically asked Elhajoui to

show him all of the plates and eating utensils in the restaurant

so that his count would be accurate and fair to the Respondent,

and Cohen and the intern counted everything Elhajoui showed them.

When Cohen told Elhajoui that he did not have enough plates and

utensils, Elhajoui pointed to the "line" and asked if Cohen had

counted what was there; Cohen indicated that he had counted those

items. Elhajoui never specified any utensils in boxes in the

cabinet under the counter. If they were there at the time, it is

inexplicable that Elhajoui would not have made sure they were

counted. Instead, upon completion of the inspection, Elhajoui

read and signed without explanation or excuse an inspection

report indicating that there were inadequate plates and eating

utensils. It is found that Cohen's count was accurate.

9. It can be inferred based on the facts on July 13, 1998,

that the Raceway Café did not have capacity to serve 150 meals at

one time at any time between opening on July 2 and July 13, 1998.

No such inference can be drawn from the evidence after July 13,

1998.

10. Besides alleging inadequate seating and place settings,

Cohen also alleged that the Respondent was not operating a bona

fide restaurant. The question whether the Raceway Café is a bona

fide restaurant cannot be answered simply by counting tables and

chairs and place settings. This allegation raises the more

nebulous question of when can a bar be a restaurant, and when

does a restaurant become a bar?

11. Cohen based his allegation of "bad faith" on several

factors. Starting from the outside, there was a temporary sign

advertising drink specials but no food. (Elhajoui explained that

the sign was owned and controlled by the shopping center and was

advertising for the grand opening; he stated that it usually

displayed meal specials.) A sign on the building seemed to

describe the Raceway Café as a "Sports Lounge," but being (or

having) a "sports lounge" may not necessarily turn a restaurant

into a bar. There were neon beer signs in the windows, but they

also are not uncommon in bona fide restaurants. Inside the

building, there is a rather large bar, and Cohen perceived it to

be especially prominent on entering the premises; but there are

two other entrances that are not so close to the bar. Cohen was

not greeted by a host or hostess or, he thought, any instructions

regarding restaurant seating, which he considered normal in a

bona fide restaurant; but Cohen overlooked a theme-sign

incorporated in a parking meter which stood near one of the other

entrances and invited customers to seat themselves. Cohen also

overlooked a "chalkboard" used to advertise daily specials common

in restaurants. Cohen also noted that there were three dart

boards in the bar area, juke boxes, and more theme decorations (a

Harley Davidson motorcycle in a corner of the licensed premises,

and plans to hang a race car--or at least the side panel of a

race car body--from the ceiling), but none of those things in

themselves are incompatible with a bona fide restaurant.

Finally, Cohen only observed food consumption on one of his

visits. But his only extended visit was at 4:00 p.m. on July 13,

1998, and none of the other visits were during normal meal times.

Cohen made no mention of the full meal menu that has been used at

Raceway Café since its opening. In truth, Cohen's allegation of

"bad faith" probably was influenced by his finding of inadequate

numbers of tables and chairs and place settings.

12. Cohen returned to the licensed premises on July 14,

1998, to serve DBPR Administrative Action Case No. CL-62-980016.

He made no observations on July 14, 1998, that he could recall.

Elhajoui and his witness testified without contradiction that the

Respondent had enough seating and place settings to serve at

least 150 meals at one time on and after July 14, 1998. They

also testified without contradiction that the signage advertised

meal specials.

13. Cohen returned to the licensed premises on September 2,

1998, to serve a notice to produce all records documenting gross

sales of alcoholic beverages and food and non-alcoholic beverages

(including source documents-- i.e. , guest checks) for July and

August 1998. Production was required to be made by September 12,

1998, at DABT offices in Clearwater, Florida. Cohen made no

observations on September 2, 1998, that he could recall.

14. Elhajoui testified that he attempted to deliver the

records on Monday, September 7, 1998, but that the DABT offices

were closed for Labor Day. The next day, he telephoned DABT to

advise that he had attempted to deliver the records and was told

that DABT would be mailing him something he understood to be

another administrative complaint. It is doubtful that such a

conversation took place since there still were four days in which

the Respondent could comply with the notice to produce.

15. The Respondent never produced the requested

documentation, and on September 30, 1998, returned to the

licensed premises, to serve DBPR Administrative Action Case No.

CL-62-9800159. Cohen made no observations on September 30, 1998,

that he could recall.

16. The Respondent produced documentation at final hearing

establishing that 51.63% of its gross sales in July 1998 and

51.28% of its gross sales in August 1998 were food and non-

alcoholic beverages.

17. Based on all the evidence presented, it is found that

DABT failed to prove that Raceway Café is not a bona fide

restaurant except to the extent that its meal service capacity

was inadequate from July 2 through July 13, 1998.

CONCLUSIONS OF LAW

18. Section 561.20(2)(a)(4), Florida Statutes (1997),

provides in pertinent part for the issuance of a special

alcoholic beverage license not subject to quota license

limitations for:

Any restaurant having 2,500 square feet of

service area and equipped to serve 150

persons full course meals at tables at one

time, and deriving at least 51 percent of its

gross revenue from the sale of food and

nonalcoholic beverages; however, no

restaurant granted a special license on or

after January 1, 1958, pursuant to general or

special law shall operate as a package store,

nor shall intoxicating beverages be sold

under such license after the hours of serving

food have elapsed.

19. Florida Administrative Code Rule 61A-3.141 provides in

pertinent part:

(1) Special restaurant licenses in excess

of the quota limitation set forth in

subsection 561.20(1), Florida Statutes, shall

be issued to otherwise qualified applicants

for establishments that are bona fide

restaurants engaged primarily in the service

of food and non-alcoholic beverages, if they

qualify as special restaurant licensees as

set forth in subsection (2) of this rule.

Special restaurant licensees must continually

comply with each and every requirement of

both subsections (2) and (3) of this rule as

a condition of holding a license. Qualifying

restaurants must meet the requirements of

this rule in addition to any other

requirements of the beverage law.

* * *

(2) Special restaurant licenses shall be

issued only to applicants for licenses in

restaurants meeting the criteria set forth

herein.

(a) Except in [certain counties

other than Pinellas], a qualifying

restaurant must have a service area

occupying 2,500 or more square feet

of floor space.

1. The required square footage

shall not include any space

contained in an uncovered or not

permanently covered area adjacent

to the premises because food

service is not available at all

times.

2. The required square footage

shall be contiguous and under the

management and control of a single

licensed restaurant establishment.

3. Kitchens, food service areas,

pantries, storage rooms, offices,

and toilets, used exclusively in

the operation of the restaurant

shall be included in the required

square footage. Measurements will

be taken from the outside of

qualifying structures or areas.

(b) Except in [certain counties

other than Pinellas], a qualifying

restaurant must have accommodations

for the service and seating of 150

or more patrons at tables at one

time.

1. The tables and seating must be

located within the floor space

provided for in paragraph (2)(a) of

this rule.

2. The tables must be of adequate

size to accommodate the service of

full course meals in accordance

with the number of chairs or other

seating facilities provided at the

table.

3. Seating at counters used to

serve food shall be included in the

minimum seating requirements.

(c) Except in those counties and

municipalities controlled by

general law or special act, as set

forth in paragraph (2)(b) of this

rule, a qualifying restaurant must

have all equipment for the service

of 150 full course meals on the

premises at one time.

* * *

(3) Qualifying restaurants receiving a

special restaurant license after April 18,

1972 must, in addition to continuing to

comply with the requirements set forth for

initial licensure, also maintain the required

percentage, as set forth in paragraph (a) or

(b) below, on a bi-monthly basis.

Additionally, qualifying restaurants must

meet at all times the following operating

requirements:

(a) At least 51 percent of total

gross revenues must come from

retail sale on the licensed

premises of food and non-alcoholic

beverages. Proceeds of catering

sales shall not be included in the

calculation of total gross

revenues. Catering sales include

food or non-alcoholic beverage

sales prepared by the licensee on

the licensed premises for service

by the licensee outside the

licensed premises.

1. Qualifying restaurants must

maintain separate records of all

purchases and gross retail sales of

food and non-alcoholic beverages

and all purchases and gross retail

sales of alcoholic beverages.

2. The records required in

subparagraph (3)(a)1. of this rule

must be maintained on the premises,

or other designated place approved

in writing by the division for a

period of 3 years and shall be made

available within 14 days upon

demand by an officer of the

division. The division shall

approve written requests to

maintain the aforementioned records

off the premises when the place to

be designated is the business

office, open 8 hours per work day,

of a corporate officer, attorney,

or accountant; the place to be

designated is located in the State

of Florida; and the place to be

designated is precisely identified

by complete mailing address.

3. Since the burden is on the

holder of the special restaurant

license to demonstrate compliance

with the requirements for the

license, the records required to be

kept shall be legible, clear, and

in the English language.

4. The required percentage shall

be computed by adding all gross

sales of food, non-alcoholic

beverages, and alcoholic beverages

and thereafter dividing that sum

into the total of the gross sales

of food plus non-alcoholic

beverages.

* * *

(d) Full course meals must be

available at all times when the

restaurant is serving alcoholic

beverages except alcoholic beverage

service may continue until food

service is completed to the final

seating of restaurant patrons for

full course meals. A full course

meal as required by this rule must

include the following:

1. Salad or vegetable;

2. Entree;

3. Beverage; and

4. Bread.

* * *

(4) Establishments obtaining and operating

under a temporary initial license as provided

in section 561.181(2), Florida Statutes, or

under a temporary transfer license as

provided in section 561.331, Florida

Statutes, shall be investigated by the

division during said operation and prior to

issuance of a permanent license to insure

that the establishment is a bona fide

restaurant primarily engaged in food and non-

alcoholic beverage sales and service and that

the requirements of this rule have been met.

The failure of an establishment to operate as

a bona fide restaurant during said period of

time shall result in denial of the

application for a special restaurant license.

An application for a special restaurant

license from an establishment which has had a

prior application for a special restaurant

license denied during the previous 30-day

period will be accepted by the division. The

recent denial of the prior application will,

however, be deemed a disclosure on the face

of the subsequent application of a reason to

deny such subsequent application.

Accordingly, in such cases, no temporary

initial license will be issued for a period

of 30 days to allow the division inspectors

to ensure that the reason to deny has been

abated.

20. The evidence proved that the Respondent did not meet

the requirements of Florida Administrative Code Rule 61A-

3.141(2)(b) from July 2 through July 13, 1998. The evidence did

not prove that the rule was violated after July 13, 1998. But

Florida Administrative Code Rule 61A-3.141(1) requires

restaurants to "continually comply with each and every

requirement of both subsections (2) and (3) of this rule as a

condition of holding a license."

21. The evidence also proved that the Respondent did not

meet the requirements of Florida Administrative Code Rule 61A-

3.141(3)(a)2. The Respondent failed to respond to the notice to

produce within 14 days.

22. Florida Administrative Code Rule 61A-2.022 "sets forth

penalty guidelines which shall be imposed upon alcoholic beverage

licensees and permittees who are supervised by the division."

Section (1) of the rule. The table after section (11) of the

rule provides that the penalty "routinely imposed" for any

"failure to meet minimum qualifications of special license" is

"$1000 and revocation without prejudice to obtain any other type

license, but with prejudice to obtain the same type of special

license for 5 years." While this penalty may seem harsh, it is

designed to discourage and prevent circumvention of the quota

license limitations through abuse of the SRX license.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of

Law, it is

RECOMMENDED that the Department of Business and Professional

Regulation enter a final order imposing a $1,000 fine and

revoking the Respondent's temporary SRX license without prejudice

to obtain any other type license, but with prejudice to obtain

the same type of special license for 5 years.

DONE AND ENTERED this 2nd day of June, 1999, in Tallahassee,

Leon County, Florida.

___________________________________

J. LAWRENCE JOHNSTON

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 2nd day of June, 1999.

COPIES FURNISHED:

Miriam S. Wilkinson

Assistant General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-1007

Joseph N. Perlman, Esquire

Belcher Place

1101 Belcher Road, South

Largo, Florida 33771

Joseph Martelli, Director

Division of Alcoholic Beverages

and Tobacco

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-1007

William Woodyard, General Counsel

Department of Business and

Professional Regulation

1940 North Monroe Street

Tallahassee, Florida 32399-1007

NOTICE OF RIGHT 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.