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Happy Beats, Inc. v. Matos

Superior Court of Rhode Island

January 17, 2018

SABINA MATOS, individually and in her capacity as member of the Providence City Council; JUAN M. PICHARDO, in his capacity as Chair and Secretary of the Providence Board of Licenses; CHARLES NEWTON, in his capacity as Vice-Chair of the Providence Board of Licenses; DELIA RODRIGUEZ-MASJOAN, in her capacity as member of the Providence Board of Licenses; JOHANNA HARRIS, in her capacity as member of the Providence Board of Licenses; and LUIS PERALTA, in his capacity as member of the Providence Board of Licenses

         Providence County Superior Court

          For Plaintiff: Richard Warren Nicholson, Esq.; John B. Harwood, Esq.; David S. Francazio, Esq.

          For Defendant: Paul V. Sullivan, Esq.; Louis DeSimone, Jr., Esq.


          LICHT, J.

         Happy Beats, Inc. (Happy Beats), D2D Entertainment, LLC (D2D), and Gerard DiSanto II (Mr. DiSanto) (collectively Plaintiffs) have moved for a preliminary injunction to which the Providence Board of Licenses (the Board) and Providence City Councilwoman Sabina Matos (Matos) (jointly Defendants) have objected. Also, pursuant to Super. R. Civ. P. 12(b)(1), the Board filed a Motion to Dismiss Plaintiffs' Verified Complaint for lack of subject matter jurisdiction.



         In January 2014, Happy Beats opened "Club Therapy, " an after-hours music club at 62 Dike Street in Providence, Rhode Island. In August of 2016, Equity Beats, Inc., a corporation controlled by Mr. DiSanto, acquired the stock of Happy Beats. Contemporaneously, Mr. DiSanto also organized D2D, a management company which schedules nationally known disc jockeys and attracts a regional customer base. In October 2016, Happy Beats, under the new ownership, changed its operating name and the club name to Dusk 2 Dawn. Mr. DiSanto made substantial improvements to the Dike Street property, apparently investing over a million dollars on upgrading the building's soundproofing, lighting, and security.

         Happy Beats is the holder of a 1:00 a.m. to 4:00 a.m. after hours license and an entertainment license (the Happy Beats Entertainment License), both issued by the Board. However, Happy Beats does not have a liquor license for the premises and has never received approval from the Board to permit the sale of liquor at this location. In fact, the physical location of the premises does not qualify for the issuance of a liquor license under G. L. 1956 § 3-7-19(a), which prohibits the issuance of a liquor license within two hundred feet of a church.

         As a result of this restriction, the sale of liquor on the Plaintiffs' premises has been accomplished through the use of a caterer, M & M Food Service d/b/a Millonzi Fine Catering (Millonzi Catering). Millonzi Catering, not a party to the instant action, holds a state-issued Class P caterer's license (the Millonzi Class P License). A Class P caterer's license allows caterers to serve alcohol, subject to certain restrictions, such as limiting alcohol service at events to five hours and prohibiting service of shots or triple-strength drinks. Sec. 3-7-14.2(a)(5), (8). The statute relevant to a Class P caterer's license provides that:

"[a] caterer licensed by the department of health and the division of taxation shall be eligible to apply for a Class P license from the department of business regulation. The department of business regulation is authorized to issue all caterers' licenses. The license will be valid throughout this state as a state license and no further license will be required or tax imposed by any city or town upon this alcoholic beverage privilege." Sec. 3-7-14.2(a).

         On November 10, 2016, Happy Beats and Mr. DiSanto appeared before the Board for a discussion and review of the Happy Beats Entertainment License. At this hearing, it was suggested that Happy Beats was simply exploiting an "end around" to getting a proper liquor license. (Pls.' Ex. 3, Tr. 12:16-24.) After considerable debate, the Board determined that it could "condition the license so that the licensee operates responsibly." Id. at 44:16-17. In seeking to effectuate this objective, the Board imposed a condition on the Happy Beats Entertainment License whereby "liquor will be served only to 1:00 a.m." Id. at 63:20-24.

         Millonzi Catering subsequently filed an appeal of the Board's decision with the Director of the Department of Business Regulation (DBR). The DBR, per an order by Hearing Officer Catherine R. Warren dated November 18, 2016, stated that "the Board does not have the authority to limit a Class P license as that is within the purview of the [DBR]." M&M Food Service, LLC d/b/a Millonzi Fine Catering v. City of Providence, Board of Licenses, DBR Order No. 16LQ (Nov. 18, 2016). The order further stated that "any action against the Class P license is beyond the authority of the Board so any such action taken by the Board is stayed." Id. However, the order also noted that "[t]o the extent that the Board restricted the late night license to no service of alcohol after 1:00 a.m., the Department has no authority to hear such a claim and [Millonzi Catering] is not that licenseholder." Id. The DBR also declined to rule on the issue of how late a caterer can serve alcohol, finding that such a ruling was unnecessary to the instant appeal. Id.

         On January 13, 2017, Plaintiffs then filed the instant six-count Verified Complaint. Counts I and II are against Matos alone, alleging defamation and false light, respectively. Count III seeks a declaration that the actions of the Board were in excess of the Board's authority. Counts IV through VI are against all Defendants. Specifically, Count IV alleges due process violations, Count V alleges interference with expected business advantage, and Count VI alleges violations of the Open Meetings Act. Matos has two counterclaims-one under the SLAPP statute and one alleging abuse of process. Currently before the Court is Plaintiffs' Motion for Preliminary Injunction and Defendants' Motion to Dismiss the Verified Complaint for lack of subject matter jurisdiction.

         On May 18, 2017, this Court held a hearing on the Board's Motion to Dismiss Plaintiffs' Verified Complaint and reserved judgment. Subsequently, hearings on Plaintiffs' Motion for Preliminary Injunction were held before this Court on June 19, 2017, June 26, 2017, October 3, 2017 and October 10, 2017, with argument on November 7, 2017.

         The pertinent testimony can be summarized as follows.

         Providence Public Safety Commissioner Steven Pare (Commissioner Pare) testified at the hearing in this case that he met with Mr. DiSanto prior to the opening of Dusk 2 Dawn. The Commissioner testified that he specifically asked Mr. DiSanto how he planned to make any money without selling alcohol and that Mr. DiSanto made no mention of any plans to use Millonzi Catering to effectuate the sale of alcohol at Dusk 2 Dawn. Commissioner Pare testified that he believed there would be no sale of alcohol on the premises and that he was livid upon learning that alcohol was being sold at the Dike Street premises. Commissioner Pare also testified that there had been no incidents at Dusk 2 Dawn and that there were no public safety concerns involving the club since the change in ownership had taken place.

         Steven Baraducci (Mr. Baraducci), a former Providence Police officer, manages security at Dusk 2 Dawn. Mr. Baraducci testified regarding the improved security measures that Mr. DiSanto implemented in order to alleviate public safety concerns at Dusk 2 Dawn. These security efforts included more cameras, police details, more lighting in the area, valet parking, and a van patrolling the area. Captain Dean Isabella (Captain Isabella) of the Providence Police Department testified that he was familiar with Club Therapy and that liquor was frequently served there. However, Captain Isabella was uncertain of whether or not alcohol service at Club Therapy typically ceased at 1:00 a.m. or 2:00 a.m. each night. Justin Dupont (Mr. Dupont), a disc jockey at both Dusk 2 Dawn and its predecessor Club Therapy, testified that he had seen alcohol service until 2:00 a.m. at both clubs. He also testified to having observed improved security measures at Dusk 2 Dawn after the change in ownership occurred.




         Standard of Review ...

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