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Approving adverse action against the Liquor-Outdoor Service Area (Sidewalk), Liquor On Sale - Sunday, and Liquor On Sale - 100 Seats or less licenses held by Kalsada LLC d/b/a Kalsada (License ID # 20220000012) for the premises located at 1668 Selby Avenue (Licensee's attorney will speak on behalf of the licensee and licensee may wish to address the City Council.)
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WHEREAS, the Liquor-Outdoor Service Area (Sidewalk), Liquor On Sale - Sunday, and Liquor On Sale - 100 Seats or less licenses held by Kalsada LLC d/b/a Kalsada for the premises located at 1668 Selby Avenue in Saint Paul under License ID #: 20220000012 were the subject of a Notice of Violation (Notice) sent March 1, 2024 after the Department of Safety and Inspections had performed the following investigation:
On November 27, 2023, the Department of Safety and Inspections (the “Department”) learned from a news article that Pauly’s opened November 15, 2023, and that Pauly’s was serving alcohol.
The Department began an investigation which revealed that no license applications were submitted by Pauly’s to facilitate a change of ownership from Kalsada to Pauly’s.
On December 1, 2023, the Department contacted Kalsada and Pauly’s to investigate and requested the management agreement and a certificate of liquor liability insurance (COI).
On December 6, 2023, the Department contacted Pauly’s to determine why no applications had been submitted; Pauly’s owner, Mr. Kasel, submitted an application that same day, and
WHEREAS, the Notice stated that the licensee had failed to submit the required management agreement and the required new on-sale liquor license application to the Department of Safety and Inspections (DSI) under Saint Paul Legislative Code (SPLC) 409.10; and
WHEREAS, SPLC Code 409.10 states:
A license issued under this chapter is a privilege accorded to the licensee to engage in all the lawful activities permitted thereunder and is neither property nor a property right. Such license may not be leased, assigned, pledged, mortgaged or liened. An agreement providing for management of the licensed business or premises (or any part thereof) must be reduced to writing, executed by the parties thereto and filed within ten (10) days after its execution in the department of safety and inspections, together with the new license application. The management agreement is not effective until it has been approved in writing by the department of safety and inspections and will remain in effect only while the new license application is pending. Failure to reduce a management agreement to writing, and failure to file the same with the director as required above, each constitute separate grounds for adverse action. The licensee notwithstanding a management agreement remains fully responsible for the licensed business and/or premises, as well as the conduct of all employees, managers and agents in accordance with sections 310.14 and 409.12 of the Code and
WHEREAS, the Notice also stated that the presumptive penalty for this violation under SPLC is $500; and
WHEREAS, the Notice laid out the following basis for the Department’s belief that neither the management agreement nor new on-sale liquor license application had been submitted:
On October 12, 2023, Kalsada LLC and Pauly’s of St. Paul LLC executed a management agreement (attached). Under the management agreement,
- Kalsada appointed Pauly’s as its manager of the business operations until the City granted or denied Pauly’s liquor license application.
- Pauly’s indicated they had applied for the on-sale liquor license; and
WHEREAS the notice also stated that the Department was recommending adverse action and the imposition of the presumptive matrix penalty of a 10-day suspension for a failure to maintain liquor liability coverage; and
WHEREAS, Minnesota Statute 340A.409 and Saint Paul Legislative Code § 409.065 require that the licensee hold current liquor liability insurance without a lapse in coverage in order to continue operating the business; and
WHEREAS, the notice laid out the following basis for the recommendation of a 10-day suspension:
The Department’s investigation showed that on October 13, 2023, Kalsada (owned by John Occhiato) canceled the liquor liability insurance for the Licensed Premises. License holder indicated “We ended our insurance on October 13. After this time it was only the insurance held by Pauly’s.”
On October 22, 2023, October 29, 2023, and November 5, 2023, Pauly’s was open for soft opening events where alcohol was sold to patrons.
On November 9, 2023, Pauly’s acquired its own liquor liability insurance for its grand opening on November 15, 2023.
From October 13, 2023, to November 1, 2023, Pauly’s did not have insurance, and Pauly’s, under Kalsada’s liquor license, sold alcohol to patrons on three different occasions; and
WHEREAS, the Notice also stated that the Department was recommending the presumptive matrix penalty of a 10-day suspension which is laid out under SPLC section 409.065 (b)(12); and
WHEREAS, the Notice stated that while the Department could recommend two different penalties for the separate violations, the Department was only recommending the presumptive penalty of a 10-day suspension; and
WHEREAS, the Department is recommending that the License get 1 day credit for the one day that the Licensee was closed through a cease and desist order due to the lack of required Liquor Liability Insurance and documents; and
WHERAS, the Notice gave the Licensee several options including the option to admit to the facts related to the violation(s) and request a hearing before the Saint Paul City Council in order to contest the penalty; and
WHEREAS, on March 5, 2024, the Licensee responded to the Notice with a letter in which he admitted the violation(s) and asked for a hearing before Saint Paul City Council to contest the penalty; and
WHEREAS, on March 13, 2024, the Licensee appeared before the Saint Paul City Council and presented argument for a shorter penalty; so therefore, be it
RESOLVED, the Liquor-Outdoor Service Area (Sidewalk), Liquor On Sale - Sunday, and Liquor On Sale - 100 Seats or less licenses held by Kalsada LLC d/b/a Kalsada for the premises located at 1668 Selby Avenue in Saint Paul under License ID #: 20220000012 are hereby suspended for a period of nine (9) five (5) days, to be served on March 18, 19, 20, 25, and 26, 2024, due to a lapse in liquor liability coverage. Said suspension to begin on March 18, 2024, and end on March 26, 2024.; and
BE IT FURTHER RESOLVED, that a $1,000 fine is imposed for failure to submit the required management agreement to DSI.