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Gluten-free: yes; liquor-free: maybe not

For a city restaurant to obtain a controversial liquor license, its owner will have to appear before the Board of Liquor License Commissioners for Baltimore City at least one more time.

Richard D’Souza, left, and Paul Goldberg, co-owners of Meet 27 in Remington, are headed back to the Board of Liquor License Commissioners for Baltimore City after a Court of Special Appeals victory that paves the way for their gluten-free restaurant to obtain a liquor license.

Last week, the Court of Special Appeals ruled that the case of Richard D’Souza and Paul Goldberg, co-owners of Meet 27 in Remington, should go back to the liquor board to rule on two points; first, whether D’Souza meets the definition of a taxpayer under alcoholic beverage laws (a requirement to hold a liquor license); and second, whether a 2012 law negating the requirement that liquor license holders must be registered voters applies to D’Souza.

The ruling was a victory in one way for the restaurant, in that the court held the liquor license is eligible to be transferred. That had been in question since the previous license holder’s restaurant went out of business in May 2008.

“We are glad that finally this thing is coming to an end,” Goldberg said. “We are pleased with the court’s decision, obviously, and we are anxious to see it finalized before the liquor board.”

The surrounding community has been fighting the license transfer, fearing the restaurant’s late operating hours — it is open until 2 a.m. — would disturb the neighborhood.

They argued that the original liquor license was ineligible for transfer after the earlier restaurant, Two Sisters, failed to renew it or transfer it on time. Also, they said, D’Souza was not authorized to apply for a license because he did not pay taxes in Baltimore and was not registered to vote — both requirements under state law at the time.

The Court of Special Appeals wavered on the voter registration and taxpayer elements. It said it was unclear how the definition of taxpayer under alcoholic beverage laws applied to D’Souza. The court also wants the liquor board to consider a 2012 law eliminating the voter registration requirement for certain license holders in Baltimore.

The court declined to determine whether the taxpayer and voter registration requirements are unconstitutional, as D’Souza and Goldberg claimed in their appeal.

“It’s like we are the good guy in school,” said D’Souza, who said he has since registered to vote. “The girl looks around and plays around and then eventually she goes to the good guy.”

J. Carroll Holzer, a solo attorney in Towson who represents several neighbors, did not return calls for comment.

“I was pleased, obviously, but it was a very thorough decision and I thought the court did a really good job of sorting through all the issues,” said D’Souza’s attorney, Peter Prevas of Prevas & Prevas in Baltimore.

The liquor board will invite the litigants back for a hearing within six weeks, said Stephan Fogleman, board chairman.

“It feels like the case is closed, but it’s still ongoing,” Fogleman said.

The history

Two Sisters received a liquor license in 2007, but closed in May 2008. After being contacted by the liquor board, the restaurant in 2009 requested to transfer the license to Mid Atlantic Capital Holding, another restaurant that wanted to operate in the space at 127 W. 27th St. At the same time, the restaurant requested a renewal application so a current license could be transferred.

In October 2009, D’Souza and Goldberg filed an application for a liquor license on behalf of Gluten Free LLC as well as an application to transfer the liquor license from Two Sisters.

D’Souza had been running the bakery next door to Two Sisters and Goldberg owns the building.

The issue went before the liquor board for the first time in May 2010, with community associations arguing the license was already invalid and could not be transferred because Two Sisters had not completed a transfer within 180 days of closing.

The liquor board held a second hearing in June 2010 during which neighbors brought up the issue of D’Souza’s taxpayer and voter status, saying he did not pay property taxes in his name and was not listed on city voter registration lists.

D’Souza said he thought he was automatically registered to vote when he became a citizen in 2009 and paid property taxes and federal taxes on the bakery business and a warehouse in Baltimore.

The liquor board denied the license transfer after the second hearing. Soon afterward, D’Souza sent a letter asking the board to reconsider its decision.

In the board’s third hearing in August 2010, it decided to validate the license transfer in light of an agreement between D’Souza and the Charles Village Civic Association and the Greater Remington Improvement Association for the restaurant to stop selling liquor at 10:30 p.m. on weeknights and 12:30 a.m. on weekends.

“The CVCA is supportive based on the property owner and the liquor licensee having signed an agreement with the community,” said Sharon L. Guida, chair of the CVCA’s Land Use Committee.

Neighbors who did not agree with the CVCA then filed a petition for review in Baltimore City Circuit Court, which ruled that while the license was still active and subject to transfer, it could not be transferred to D’Souza because he did not meet voter registration requirements.

D’Souza and Goldberg filed an appeal in June 2011, contending the transfer was valid and the voter registration requirement was unconstitutional. The neighbors filed a cross-appeal in July 2011, challenging almost every action of the liquor board since the start of the dispute.

The restaurant

Meet 27, which is gluten free, opened in the midst of the ongoing argument two years ago. D’Souza and Goldberg also own the adjacent gluten-free bakery, Sweet 27.

Goldberg said the restaurant has been doing well, but when he and D’Souza crafted the original business plan, they had accounted for 30 percent of sales to come from alcohol.

“That 30 percent is significant,” Goldberg said. “It’s what turns you. … I haven’t collected rent for last two years. We couldn’t have survived if I didn’t own the building.”

Since opening, both he and D’Souza have not taken salaries.

“It’s been a hard struggle and a lot of long hours,” Goldberg said. “There’s been a lot of encouragement from the community. That, to a large extent, has kept us going.”

If the liquor board approves the license, the restaurant plans to offer a wide selection of gluten-free beer as well as traditional spirits, D’Souza said.

“It’s been two years of time and money and also a loss of income,” D’Souza said. “We are glad that it came through. It just was not right. We had to go through three different phases about it, so we are happy about it.”

The fine print

Under a 1933 state law, a liquor license applicant must be a registered voter, but courts over the years have found the requirement unconstitutional when dealing with non-citizens, according to the Court of Special Appeals opinion.

Legislation enacted in 2012, however, dictated that any business owner in Baltimore holding a liquor license granted on or before June 1, 2012, need not be registered to vote in the city. The liquor board approved D’Souza and Goldberg’s transfer in August 2010.

“The court said, ‘You know, there is a new state law that does away with that,’” Prevas said. “If that was true, hundreds of licensees could get knocked out because they are only green card holders.”

Since that law was passed after the case went before the circuit court in March 2011, it has not been applied to the situation or considered by both parties, the court of appeals wrote.

“Accordingly, we are unwilling to undertake a full analysis of the new law,” the court wrote. “ … Moreover, because we have already decided that a remand is necessary to determine D’Souza’s compliance with the taxpayer provisions, it is prudent to have the Board consider the voter registration on remand as well.”

The court declined to determine whether the voter registration or taxpayer requirements were unconstitutional because D’Souza brought up the argument for the first time before the Court of Special Appeals. The court also said since D’Souza is a U.S. citizen, he cannot bring up constitutional challenges on laws affecting non-citizens. Plus, the argument may be solved with the 2012 legislation, the court said.

“Now, I am just looking forward to serving the community we are serving,” D’Souza said. “It’s all about our food. We just want to sell our food. I can’t cry about the past. I’ve got to move forward.”

WHAT THE COURT HELD

Case:

YIM, LLC et al. v. M. Hasip Tuzeer et. al., No. 0984 , September Term 2011, Argued Oct. 11, 2012. Decided Feb. 28, 2013. Opinion by Zarnoch, J.

Issue:

Did the Board of Liquor License Commissioners for Baltimore err by concluding a liquor license was still active and therefore subject to transfer? Is the holder of the liquor license subject to taxpayer and voter registration requirements for liquor license holders?

Holding:

The Court of Special Appeals affirmed the liquor board’s ruling that the license was live and subject to transfer but remanded consideration of the voter registration and taxpayer requirements to the liquor board in light of new laws.

Counsel:

Herbert Burgunder III, solo attorney in Baltimore, and Peter Prevas of Prevas & Prevas in Baltimore, for appellant; J. Carroll Holzer, solo attorney in Towson, Alice G. Pinderhughes, solo attorney in Baltimore, for appellee and cross-appellant.

RecordFax # 13-0228-02 (57pages).