Carlin, Edwards, Brown &Howe, PLLC
Attorneys & Counselors at Law
 
MICHIGAN HOSPITALITY LAW NEWSLETTER
Spring 2009
In This Issue
Escrow License Expiring?
Catering Permit
Liquor License Renewal
Serving Outdoors
Transaction Tip
Preserve Your Rights if Your Escrowed License Expires on April 30, 2009
 
As discussed in our January newsletter, if you placed your liquor license in escrow prior to April 30, 2004, it will expire on April 30, 2009.  An amendment to Rule R436.1107 (2) of the Michigan Liquor Control Commission Administrative Rules is pending before the Michigan State Office of Administrative Hearings and Rules (SOAHR), which would allow a licensee to renew an escrowed license beyond the five year limitation upon a showing of "good cause".  There is no guarantee that this Amendment will pass, and we have received no indication as to when SOAHR will issue an order regarding this amendment.  If your escrowed license is set to expire on April 30th, there are certain steps that you must take prior to April 30th to preserve your rights.  Call us to discuss your scenario, and we will do what we can to preserve your rights to your escrowed license 
beyond April 30th.  If the proposed amendment is not adopted however, there will be no way to preserver your license beyond April 30th.

Catering Permit Proposed in Michigan Senate 

On February 4, 2009, Michigan Senators John Pappageorge (R - 13th), Randy  Richardville (R - 17th), Judson Gilbert (R - 25th) and Alan Sanborn (R - 11th)  introduced Senate Bill 186 to amend the Michigan Liquor Control Code to allow for on-premise licensees to perform the following catering functions in connection with private off-site events:
 
(i)  Sell and deliver beer, wine and spirits to the host of a private off-site event, including a non-profit corporation that has obtained a "special license" from the Michigan Liquor Control Commission for a charity event; and 
 

(ii)  Serve beer, wine and spirits for no consideration (i.e. fee, cover charge, ticket purchase) to the guests of an off-site private event on behalf of the host.
 
On-premise licensees would be permitted to perform these catering services at an unlimited number of locations and/or events during the same time period.  However, there are two restrictions on the catering services permitted under this Bill:
 
(i)  The on-premise licensee must in fact serve the alcoholic beverages that it sells to the host of the private off-site event, and  

(ii)  The host of the private off-site event may not charge the guests any type of fee to attend the event. 
 
The first restriction essentially prevents an on-premise licensee from performing a sole retail function similar to an SDM (beer & wine) and SDD (beer, wine & spirits) off-premise licensee.  The second restriction controls the type of event that an on-premise licensee can cater.  For example, these catering services would be permitted at a wedding, graduation party, or bar-mitzvah; and would even be permitted at a private charitable function so long as 100% of the guests' charitable donations (either voluntary or as a prerequisite to admission) are distributed to the designated charity, and not used by the host to cover the event costs.  Catering Services of this nature would not be permitted at a private off-site party or festival in which the guests pay the host, organizer or promoter a fee to attend.
 
There would be a separate catering permit application procedure with a $70.00 application fee, and the permit would cost $300 annually under this Bill.  A similar version of this Bill (2005-06 Senate Bill 50) was vetoed by Governor Granholm in 2006.  No formal action has been taken on the Bill this year.  We will keep you abreast of any legislative updates related to this Bill in future newsletters and on our website www.cebhlaw.com
.

Congratulations to our Clients on Their Recent Openings 

 
January - March
 2009
 
Rob's Place
(Oxford) 
 
Bookies Bar & Grille
(Detroit)
 
Willson's Pub n' Grill
(Commerce Twp.)
 
Huntmore Golf Club
(Brighton)
 
2 Booli
(Farmington Hills)
 
Rite Aid Pharmacy
(Woodhaven)
 
Lansing West Hotel & Conference Center
(Lansing)
 
Tailgate Lounge
(Onekama)
� Carlin, Edwards, Brown & Howe, PLLC 2008. 
 All rights reserved.
 This Newsletter provides general information and does not constitute legal advice in any way. 

Join Our Mailing List
Thanks for the Positive Feedback
on our Quarterly Newsletter!
 
We would like to thank all of our Clients and Colleagues who shared their positive feedback with us regarding the first edition of our quarterly newsletter.  If there is anything that we can do to improve this publication, please email us your thoughts at [email protected].
 
John B. Carlin, Jr. ([email protected]) (248) 816-3210
Scott D. Edwards ([email protected]) (248) 816-3205
Michael J. Brown ([email protected]) (517) 321-4617
J. Patrick Howe ([email protected]) (248) 816-3175
One Week Left to Renew
Your Liquor License
 
There is only one week left to renew your 2008-2009 liquor license.  All licensees must have a 2009-2010 license posted in their licensed establishment by May 1, 2009.  Failure to post a new license by this date could result in a violation being issued by the MLCC, and your license could potentially be suspended or revoked.  Also, remember that a license must be signed by an authorized signer of the Licensee before it is posted.  Licenses can be renewed online at https://www2.dleg.state.mi.us/mlccr/.  If you need assistance in expediting the renewal and delivery of your liquor license, please contact Patrick Howe (248) 816-3175 in our Troy office, or Michael Brown (517) 321-4617 in our Lansing office, which is five minutes from the MLCC.
 
Apply Now to Serve Alcoholic Beverages Outdoors This Summer
 
Did you know that you may be able to serve alcoholic beverages outside of your licensed premises even if you do not have a patio?  Many licensees host temporary outdoor events for private parties, shows, summer holidays or local festivals or events.  Outdoor events are a great way to supplement your revenue during the summer months, and provide your clients with a unique experience at your establishment.  You must go through the proper procedures however to apply for and obtain formal approval of the temporary service of alcoholic beverages.  The application process typically takes about 45 days, and involves both the police department of your municipality, and the Michigan Liquor Control Commission.  There may be additional approvals required from your municipality and health department for using tents, stages, generators or temporary food service stations in connection with these events, so it is wise to start the application process well before your scheduled event.  Our firm obtains approvals for numerous outdoor events each summer, and we have developed reasonable fixed rates for handling these matters.  Give us a call today to get your outdoor event moving before it's too late!


Foreclosing on a Defaulting Restaurant? Beware of Successor Tax Liability of Defaulting Tenant 

Michigan law, in general, requires that a purchaser of business assets escrow sufficient funds from the closing to pay the state tax liabilities of the seller.  A buyer, in order to protect itself, should have a provision in the purchase agreement which requires that an escrow account be established from the closing and that the escrow funds only be released to seller upon the receipt of tax clearances.   

Landlords who take assets back from tenants, should also be aware of this law. The Michigan Tax Tribunal has ruled that a landlord who took back the assets of a defaulting tenant was liable as a successor for the tax liability of tenant, even though no money was received and the business was never operated by the landlord.  Thus, landlords should undertake an investigation of a tenant in connection with tax liens and liabilities before accepting the transfer of assets, including a tenant's liquor license, in connection with a surrender of the premises.

Michigan Hospitality Industry Upcoming Events
Michigan Licensed Beverage Association
Spring Conference & Lobby Day
May 4-5, 2009
Radisson Hotel - Lansing, Michigan
http://mlba.org/page.cfm/60


Michigan Restaurant Association
PAC Dinner & Roast of Mr. Syd Ross of   
Great Lakes Wine & Spirits
Wednesday, May 6, 2009
The Reserve, Birmingham Michigan
http://www.michiganrestaurant.com/cde.cfm?event=260449 
  
Michigan Restaurant Association Capitol Day
Tuesday, June 2, 2009
Lansing, Michigan
http://www.michiganrestaurant.org/displaycommon.cfm?an=1&subarticlenbr=444
 
Michigan Liquor Control Commission
Quarterly Meeting & Public Hearing
June 10, 2009 - 10:30 AM
MLCC District Office - Farmington Hills, Michigan
http://www.michigan.gov/documents/dleg/YRLY_SCH_2009_269788_7.pdf
 
Carlin, Edwards, Brown & Howe, PLLC Attorney J. Patrick Howe Awarded Master of Urban Planning Degree
 
We are proud to announce that J. Patrick Howe will receive his Master of Urban Planning Degree from Wayne State University this May.  Patrick concentrated his studies on economic development.  He recently completed his thesis paper, which analyzed the rationality of the Michigan on-premise liquor license quota system, and made various recommendations for regulatory reform to spur economic development throughout the State.  In addition to Patrick's hospitality and liquor license practice, Patrick leads the firm's land use planning and real estate development practice area.