Rockbar files response to recommended denial of liquor-license renewal

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The deadline for comments on the suggested denial of Rockbar's liquor-license renewal -- issued ten days ago by hearing office William Hobbs -- was 5 p.m. today.

In the meantime, Jesse Morreale, the owner of Rockbar, has been busy, with staff and supporters exercising a "three-tiered outreach campaign to residents living within the 5-block designated neighborhood area, regular patrons of Rockbar and residents of Denver with an interest in Rockbar's well-being." Between September 28 and October 4, Morreale reports, "these efforts produced over 280 signatures in support of renewing Rockbar's liquor license from residents and business owners of all ages and backgrounds" within the five-block neighborhood. In addition, 375 individuals signed a hard-copy petition in support of renewing Rockbar's liquor license, and another 1,044 individuals did the same on www.saverockbar.com.

See also: - Hearing officer recommends against renewal of Rockbar liquor license - City plans to extend deadline on First Avenue Hotel to October 31 - Jesse Morreale and the First Avenue Hotel have another date with the city

All of that information was included in attachments to this response that Morreale's attorneys filed late this afternoon:


The Licensee, Hotel and Restaurant, LLC d/b/a Rock Bar ("Licensee"), by and through its attorneys, Dill Dill Carr Stonbraker & Hutchings, P.C., by Adam P. Stapen, Esq. and Jon Stonbraker, Esq., respectfully submits its Objections to Recommended Decision and, as grounds, states:

The Recommended Decision Misconstrues The Law and Violates Well Established Concepts of Fundamental Fairness

1. A cornerstone of American Jurisprudence is that "administrative agencies are obligated, as are the courts, to be fundamentally fair to the individual in the resolution of a legal dispute involving governmental action that threatens to deprive an individual of a significant property interest." Venard v. Department of Corrections, 72 P.3d 446, 449 (Colo. App. 2003) (citation omitted). A liquor license is a property interest. See 1Mr. Lucky's Inc. v. Dolan, 591 P.2d 1021 (Colo. 1979). Thus, when as here, an administrative proceeding is quasi-judicial, the hearing officer and the Director "should be treated as the equivalent of [a] judge." Venard, at 449 (citation omitted). The necessity of having an impartial and unbiased judge is further confirmed when the City of Denver ("City"), in addition to making the final determination, also bears the burden of proof. Similar to a judge, if the hearing officer or Director misconstrues the law, his decision will be set aside as an abuse of discretion. See Stamm v. City and County of Denver, 856 P.2d 54 (Colo. App. 1993).

2. To provide due process, it is the standard and custom practice of the Department of Excise and Licenses ("Department") for the Director to set forth the specific charges and allegations giving rise to an order for hearing, including a renewal hearing. See, e.g., Order to Show Cause Why Renewal of Hotel and Restaurant License Should Not Be Denied, dated March 13, 2008, which was issued to the Roslyn Grill, a copy of which is attached hereto and incorporated herein for all purposes as Exhibit A.

3. Here, by way of background, the Director ultimately issued a Third Amended Order for Hearing ("Third Amended Order") which governed the renewal hearing. See Exhibit B. The Director used the term "specifically" when setting forth the allegations giving rise to the charges of "good cause." The term "specifically" is defined as "restricted to a particular individual, situation, relation, or effect; free from ambiguity; accurate." See Merriam-Webster Online Dictionary, www.merriam-webster.com/dictionary/specifically.

4. On August 8, 2012, in order to limit the issues at hearing, the Licensee filed a Motion for Clarification of Issues at Hearing and a separate Notice of Withdrawal of Permit Application for Modification of Premises, to formally withdraw the permit application for the temporary outdoor patio. In the Motion for Clarification of Issues at Hearing, the Licensee moved:

4. In the second paragraph of the Amended Order, the Director stated that the renewal hearing will be limited to the following:

Specifically, the Department has information that Licensee operated an outdoor patio in violation of its temporary modification permit issued in September 2011, and in violation of its February 2011 Stipulation regarding the suspension of its hotel and restaurant liquor license for the unlawful sale of an alcoholic beverage to an underage person.

5. For due process reasons and to avoid unnecessary costs and expenses, including expenses associated with the preparation for non-relevant issues or matters (such as needs and desires), and the costs associated with service of subpoenas and attendance of witnesses, the Licensee respectfully requests an Order to limit the scope of the Hearing to those issues set forth in paragraph 2 of the Amended Order.

5. In response, on August 22, 2012, the Director issued a Second Amended Order for Hearing that kept, in its entirety, the specific allegations as noted above, but deleted the third paragraph of the Amended Order relative to a needs and desires hearing for the modification of premises. On August 23, 2012, the Director then issued the Third Amended Order, in which the Director added authority for the hearing officer to consider, as the hearing officer deemed appropriate, letters or other relevant evidence from persons who were unable to attend the hearing. See Exhibit B.

6. Accordingly, in reliance on the specific allegations giving rise to a charge of "good cause" as contained in Third Amended Order, the Licensee justifiably prepared and limited its defense of "good cause" to whether it "operated an outdoor patio in violation of its temporary modification permit issued in September 2011, and in violation of its February 2011 Stipulation regarding the suspension of its hotel and restaurant liquor license for the unlawful sale of an alcoholic beverage to an underage person."

7. In addition to the unambiguous language in the Third Amended Order, the Licensee justifiably relied on the Director's statements published to Penny Parker which confirmed the specific allegations giving rise to a charge of "good cause." On August 24, 2012, Penny Parker interviewed the Director and Jesse Morreale, a principal of the Licensee, regarding the Third Amended Order:

Jesse Morreale, owner of the beleaguered El Diablo restaurant at First and Broadway that was temporarily shut down by Denver, is crossways with the city again.

This time the Department of Excise and Licenses is investigating the RockBar, Morreale's '70s joint at 3015 E. Colfax Ave., for allegedly operating an outdoor patio "in violation of its temporary modification permit issued in September 2011, and in violation of its February 2011 Stipulation regarding the suspension of its hotel and restaurant liquor license for the unlawful sale of alcohol beverage to an underage person," according to the Third Amended Order for Hearing.

The hearing on the renewal of RockBar's dance cabaret license is set for September 19 at the Department of Excise and Licenses, Dept. 206, 201 W. Colfax.

Morreale, who's already embroiled in fierce fight with the city over its allegations that his historic First Avenue Hotel building is unsafe (which forced El Diablo, the restaurant in the building, to close for two weeks), questions the coincidental timing of his latest dust-up with a City agency.

Tom Downey, director of Denver's Department of Excise and Licenses, burst out laughing when I told him of Morreale's assertion that he was not notified prior to the Third Amended Order for Hearing that he was in violation of his liquor license.

Downey said that Rockbar had a temporary modification of its liquor license, which expired on Feb. 5, 2012 - a date that was chosen by Morreale - and that RockBar continued to serve liquor on the patio past that date.

"We didn't send out the police and arrest them for serving on the patio without a license," Downey said. "We let them know that through our inspectors and others that they were in violation."

Also in the messy mix is an alleged violation filed by the American With Disabilities over accessibility to the RockBar patio, Downey said. The timing of Morreale's RockBar problems with the city and his troubles at First and Broadway are unrelated, Downey said.

"I have received no requests or nods and winks from anyone in the city," he said. "The complaints we received about all of this was from the neighborhood associations. We did not initiate this renewal hearing by request from anyone in the city. This is happening because the neighborhood association is quite upset by the actions of the RockBar."

For Morreale's part, he says he is mystified by excise and licenses' order for a hearing.

"The only times we ever used the patio was when the patio was licensed," he insisted. "We have no violations, we have no accused violations. There is some very questionable and suspect timing happening with all this stuff. We've (received) no real justification or explanation, it doesn't make any sense."

And they say, stayed tuned.

See Penny Parker's On The Town: Morreale gets crossways with the City again, published on August 24, 2012, attached hereto and incorporated herein for all purposes as Exhibit C (emphasis added).

8. Finally, the Licensee also justifiably relied on the discovery that was produced by the Department. As the Director is aware, the alleged neighborhood complaints giving rise to the specific allegations contained in the Third Amended Order were limited to the alleged sale and service of alcohol on the outdoor patio, and the continued existence of the steel fence.

9. That said, at the renewal hearing on September 12, 2012, the City did not offer a single document, police citation, municipal citation, investigative report, incident report, witness statement, affidavit, letter or photograph, nor did the City offer a single witness to testify, in support of a finding that the Licensee "operated an outdoor patio in violation of its temporary modification permit issued in September 2011, and in violation of its February 2011 Stipulation regarding the suspension of its hotel and restaurant liquor license for the unlawful sale of an alcoholic beverage to an underage person." The record is devoid of any evidence whatsoever to support a single allegation contained in the Third Amended Order in furtherance of the charge of "good cause."

10. Instead of acting as an impartial judge at the quasi-judicial hearing and making the only logical conclusion: that the City failed to meet its burden of proof,1 the hearing officer, notwithstanding the objections of the Licensee, erred by misconstruing the law and allowing the City to conduct a "trial by ambush." The Licensee learned, for the first time at hearing, that it was required to defend against evidence of alleged disorderly conduct and matters pertaining to food sales. In addition to the reasons articulated above, the law does not condone the hearing officer's acquiescence to the City's trial by ambush.

11. It is axiomatic that the hearing officer, Director and City cannot apply different legal standards to similarly situated parties. In Worcester v. Town of Steamboat Springs, 501 P.2d 150 (Colo. App. 1972), the Court discussed how a liquor licensing authority's conflicting rulings were arbitrary and capricious. In overruling a denial of a liquor license, the Court held:

Consistency should not be the hobgoblin of the law. Not only should rulings be correct, but courts and boards should be consistent in their rulings. Different rules on a question should not be applied, one for the affirmative of the issue and another for the negative; such procedure is destructive of the fairness with which such hearings should be conducted. Id. at 152.

12. Thus, when glaring inconsistencies exist, the inconsistencies "demonstrate the predisposition of the [licensing authority] to deny this license and its conduct demonstrates arbitrariness and capriciousness." Anderson v. Spencer, 426 P.2d 970, 973 (Colo. 1967), see also, Booth v. Trustees of Town of Silver Plume, 474 P.2d 227, 229 (Colo. App. 1970).

13. Here, the Third Amended Order contained specific allegations giving rise to the charge of "good cause" relating only to the outdoor patio, and not to any other alleged violation. Similarly, in Exhibit A, that Order also contained specific allegations of "good cause" for non-renewal. A cursory review of the Third Amended Order and Exhibit A reveals substantial and glaring inconsistencies. If the Director intended for the City to prosecute a finding of "good cause" for matters other than those involving the outdoor patio, the Director would have treated the Licensee in a similar manner as the Director had treated the Roslyn Grill, and specifically set forth each additional allegation in the Third Amended Order. See Exhibit A. To find otherwise, the Director would have to condone the selective enforcement and application of the law to similarly situated parties, which is improper as a matter of law. See, e.g., Anderson, 426 P.2d at 973.

14. It is also alarming that the hearing officer may have had a predisposition to deny the renewal of the licenses, as the hearing officer made a finding that the he was not required to provide the Licensee with due process of law.2 See Recommended Decision, pp. 3-4. "[T]he test of whether the licensee's procedural due process rights have been violated is one of 'fundamental fairness.'" Chroma Corporation v. County of Adams, 543 P.2d 83, 85 (Colo. App. 1975). Fundamental fairness requires the Department to describe the allegations with "reasonable certainty" so that a licensee can prepare a defense. Id. at 86. Put simply, the same standard of fairness applies in the enforcement and application of law to similarly situated parties, such as the Licensee and the Roslyn Grill. See, e.g., Worcester, 501 P.2d at 152; Anderson, 426 P.2d at 973.

15. Had the allegations involving disorderly conduct and food sales been described with reasonable certainty, let alone articulated anywhere in the Third Amended Order, the Licensee would not have been ambushed. Without waiving any objection to the hearing officer's erroneous interpretation of the law and the City's failure to meet its burden of proof, the Licensee respectfully submits that it would have submitted the following evidence, among others:

A. Petitions containing at least 280 signatures of residents and business owners within the designated area, stating that there "is no disorderly conduct or excessive noise coming from, caused or permitted by the RockBar." Attached hereto and incorporated herein for all purposes as Exhibit D is a copy of petitions that were circulated during the weekend of September 29, 2012, over a two day period of time. If the Licensee had time to prepare a defense, many more signatures would have been obtained.

B. A significant number of residents and business owners within a five (5) block radius, who would have attended the renewal hearing and testified against any allegation of disorderly conduct or excessive noise coming from, caused or permitted by the RockBar.

C. Records containing a comparison of the Licensee's food sales versus other sales, which would have been submitted under seal for the Director's confidential review, and not for review by the public-at-large, as the records would contain trade secrets and other confidential and proprietary information.

D. Petitions containing at least 375 signatures from residents and business owners who do not reside within the designated area, but who have direct knowledge that that there is no disorderly conduct or excessive noise coming from, caused or permitted by the RockBar.

E. There are, at the time of filing this objection, 30 emails in support of the renewal, and 10 against, which were submitted by the public in response to the Director's Scheduling Order dated September 27, 2012.

F. Names and contact information from over 1,044 individuals who expressed their support of the renewal of the licenses at www.saverockbar.com.

G. Attached hereto and incorporated herein for all purposes as Exhibit E is a RockBar Community Outreach and Petition Drive Summary, which summarizes the efforts and actions of the Licensee from September 28, 2012 to October 4, 2012. 16. For the reasons set forth above, the hearing officer erroneously construed the law and the Recommended Decision must be set aside. The Director would abuse his discretion and act arbitrarily and capriciously if he did not renew the licenses.

The Hearing Officer Also Erroneously Interpreted the Colorado Liquor Code Regarding A Finding Of Disorderly Conduct

17. Without waiving all prior objections as set forth above, the provisions of the Colorado Liquor Code and related regulations governing "disorderly conduct" require that the conduct occur within the licensed premises. When construing the plain and unambiguous language of Regulation 47-900.A., a licensee is responsible for conduct "on the licensed premises." See also Morris-Schindler, LLC v. City & County of Denver, 251 P.3d 1076, 1083 (Colo. App. 2010) (supporting a finding of "good cause" because the licensee permitted "overly intoxicated patrons to remain within, and immediately outside, the establishment").

18. Here, the hearing officer misconstrued Regulation 47.900A. by improperly attributing to the Licensee a person's free will and voluntary conduct that allegedly occurred at locations clearly outside the licensed premises, on public streets and private property, including conduct allegedly occurring over a block away. See Recommended Decision, p. 15, ¶8. The hearing officer's findings are not supported by the proper application of the law. 3

19. Moreover, Regulation 47-900.A. contains the word "permit." The word "permit" requires actual or constructive knowledge by the Licensee, not strict liability. See Morris-Schindler, LLC, 251 P.3d at 1082-1083. In the Recommended Decision, the hearing officer improperly attributed crimes, police calls and non-related instances of alleged disorderly conduct occurring outside the licensed premises to the Licensee. See Recommended Decision, p. 15, ¶¶ 9-11. As the hearing officer correctly found, however, Detective Kenneth Gurule, the only police officer to testify at the hearing, testified during cross-examination that he had no reason to believe that the incidents were caused by the operation of the Licensee. See Recommended Decision, p. 8, ¶ 7. To attribute these off-premises actions to the Licensee, the Director would not only have to condone a strict liability standard, but the Director would have to ignore the undisputed evidence in the record. See, e.g., National Convenience Stores v. City of Englewood, 556 P.2d 476, 478 (Colo. 1976) ("From our review of the record we conclude that Englewood in disregarding the applicant=s evidence acted arbitrarily and capriciously and its denial of the application [for a liquor license] cannot stand").

20. When the Director objectively reviews the record in conjunction with a proper application of the law, the hearing officer's finding that "good cause" exists related to the public health, welfare, or safety of the immediate area, including disorderly conduct, cannot stand. The Licensee is entitled to the renewal of its licenses.

There Is No Competent Evidence To Support A Food Violation

21. Again, without waiving all prior objections, there is no competent evidence to support a food violation. A representative of the Licensee testified that the Licensee maintains an operative kitchen and serves meals during the hours the operation. See Recommended Decision, p. 9, ¶ 1. While the City's witnesses may not enjoy the food items on the menu, and may desire a broader selection, there is nothing in the Colorado Liquor Code or related regulations governing the type of cuisine that a licensee is required to serve. Instead, a "meal" is defined as "a quantity of food of such nature as is ordinarily consumed by an individual at regular intervals for the purpose of sustenance." C.R.S. § 12-47-103(20). Accordingly, the City's witnesses' use of the term "full food menu," and the hearing officer's reliance thereon, has no relevance in determining "good cause."

22. Moreover, the hearing officer's finding that the Licensee conceded that annual sales of food may sometimes be less than 25%, is not supported by competent evidence. See Recommended Decision, p. 16, ¶ 17. Pursuant to C.R.S. § 12-47-411(1)(a), the requirement of 25% food sales is determined "over any period of time of at least one year." There is no evidence in the record to support the hearing officer's definition of "annual" or which one year period of time applied.

23. Likewise, the hearing officer's reliance on the report of Denver's Department of Environmental Health concerning a restaurant inspection on the licensed premises on June 20, 2012, has no merit, as the report clearly indicates on its face that the Licensee was not open during the time of inspection. See Recommended Decision, p. 16, ¶ 17.

24. For the reasons set forth above, when objectively reviewing the record in conjunction with a just and proper interpretation of the Colorado Liquor Code, "good cause" does not exist and the Licensee is entitled to renewal of its liquor license. Finally, because the hearing officer's findings to deny the cabaret license were also based on the erroneous conclusions relative to the liquor license, the Licensee is also entitled to the renewal of it cabaret license.4


25. The Director is cloaked with the authority to make the final decision. In the Licensee's six years of operation, there has not been a single noise complaint, public nuisance or disorderly conduct citation issued to the Licensee by the City. Nor has there been a complaint of disorderly conduct from the registered neighborhood organizations or any of the residents therein.5 This is an issue of fundamental fairness. Is the City prepared to hold all business owners to the same selective standards and trial by ambush as condoned by the hearing officer? It is respectfully submitted that the City has not, and cannot, justify the erroneous conclusions in the Recommended Decision.

Late this afternoon, Tom Downey, director of the Denver Department of Excise and Licenses, said he's been studying the comments already submitted and would be working this weekend, with an eye to issuing a final order early next week.

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