Settlement Agreements Can Seriously Impact Your Business
If you are facing a liquor license protest, you need to be extremely careful when negotiating a Settlement Agreement with the ANC or citizen’s group. Seemingly innocuous or informative language could limit your ability to grow your business. Recently, the Board emphatically squashed a business’ expansion based on such language. This could have been avoided with a carefully worded agreement.
Let’s say you are opening a bar, restaurant, lounge or club. Your startup cash is quickly dwindling and you need to generate cash flow. However, a liquor license protest emerges that could prevent you from starting alcohol sales, potentially, for months. So you come to the bargaining table to make a deal that will allow you to open your doors ASAP .
Typically, the negotiation starts, with the ANC giving you their “standard” agreement. Alarm bells should be going off at this point. You should take the “standard agreement” and run, not walk to your lawyer’s office. If you don’t have a lawyer get one, fast.
Because once signed, you are stuck with Settlement Agreement, potentially, forever. The best way to avoid restrictive settlement agreement provisions, is to do so from the beginning.
A Case in Point for Careful Settlement Agreement Negotiation
Recently, the Board considered a case where a bar requested an expansion from 44 occupants to 89. In reviewing the Application, the Board considered the language of the Settlement Agreement. See In re: E&K, Inc. t/a Champions Kitchen, Board Order No 2018-688 (D.C.A.B.C.B. Nov. 7, 2018)
The SA simply stated: “the establishment has a capacity of 44 patrons.” A factual statement, reciting the information contained in the Certificate of Occupancy. The provision in question has no limiting language (I.e. “no more than” or “not to exceed”) It is merely a statement of facts as they presently exist.
Not so says the Board.
The Board denied the Application, finding that the factual statement of present occupancy, is actually an agreement to limit the establishment’s occupancy. To support their conclusion, the Board found that the statement of occupancy was not in the “recital” section of the Agreement, but, instead was among the terms and conditions. (In a contract, a “recital” is a statement, at the beginning, which typically would provide factual background to the agreement.) This is a precarious line for the Board to draw.
In previous posts, I’ve made the point that simply quoting the law in your SA could lead to increased fines and penalties. This most recent case underscores the point that Settlement Agreements, unless very carefully worded, can severely hurt your business.
If you have a pending application and/or are facing a protest, contact me, or use the scheduling tool on my website to book a free case evaluation. I’d be glad to walk you through the process and help you figure out the best way forward for your business.