Posted by: Patricia Salkin | November 4, 2012

GA Supreme Court finds Alcohol License not Abandoned for Failure to Sell Alcohol

Daniel Corporation (hereinafter “Daniel”) initiated this action seeking a writ mandamus to compel Atlanta City Officials to recognized the automatic forfeiture of two alcohol licenses issued to SPI Club.  The trial court denied Daniel’s writ, and Daniel appealed.  The Supreme Court of Georgia affirmed.

The Atlanta Code of Ordinance provides that where an alcohol license is issued to a proprietor, the site for which the license is issued must be “open for business” within nine months, or the license is automatically forfeited.  Daniel petitioned for a writ of mandamus compelling Atlanta Officials to recognize the forfeiture of two of SPI Club’s licenses.  The trial court denied the petition, finding no forfeiture, as the sites were used on a few occasions during the nine month period following issuance.  Specifically, one site was used for two events where a third party staffed the events and served, but did not sell, alcohol.  For one of the events, a venue rental fee was charged.  The other location also housed one event within the nine month period.  At this event, the same third party staffed the event, paid a venue rental fee, and served non-alcoholic drinks.  Daniel claims these acts did not constitute “open for business,” as there was no ordinary and continuous operation and there was no use of the alcohol licenses.

In determining whether the licenses where forfeited, the court undertook a textual analysis to clarify the meaning of “open for business.”  To guide its decision, the court cited the usual rules of statutory construction, including that the words and provisions be given their clear meaning, the ordinance is read as a whole and in relation to the rest of the Code, and that forfeitures are generally disfavored.

The Supreme Court of Georgia rejected Daniel’s assertion that “open for business” required continuous operation.  Rather, the court found that the term “open for business” refers to “a discrete and singular point in time, the point at which an establishment commences or starts to do business.”  This understanding was buttressed by the existence of a separate provision in the Code of Ordinances, which required forfeiture of a license where there is non-use following the opening of a business.  This provision illustrated that continuality was not required by the “open for business” requirement, but rather is addressed elsewhere.

The court then addressed and rejected Daniel’s claim that the “open for business” provision requires the license to be used within nine months of issuance.  The Code of Ordinances provides that the licensee must, within nine months, “open for business the establishment referred to in the license.”  The court found that the clear meaning of this language imposes a requirement that establishment itself open within nine months, not that the license actually be utilized in that time period.  This result was supported by the fact that establishments may offer different types of services, not all of which requiring the utilization of an alcohol license.  The court further stated that if the local legislature had intended that the license itself be utilized within nine months, it could have explicitly stated so.

Daniel Corp. v. Reed, 732 S.E.2d 61 (Ga., 10/1/2012).

The opinion can be accessed here.

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