SIST files suit against city over liquor license

Leader Reporter/August 5, 2005
By Tim Ryan

The Samanta Roy Institute of Science and Technology (SIST) and one of its subsidiaries have filed a civil suit in federal court against the city of Shawano and its legal counsel.

The suit maintains that the city violated equal protection laws and interfered with property rights and business operations at the Best Western, which was purchased earlier this year by Midwest Hotels and Motels of Shawano, LLC.

The suit also maintains that the city was motivated by racial discrimination against R.C. Samanta Roy, who is of East Indian descent.

“The intent and effect of all of the acts of the Defendants are discriminatory and were motivated by the racially and ethnically distinct background of Dr. Roy, President of the Board of Directors for SIST,” the suit states.

The lawsuit stems from the city’s handling of a liquor license application submitted by Midwest Hotels for the Best Western Village Haus and Villager Family Restaurant, 201 N. Airport Road.

City attorney Timothy Schmid is named as a defendant along with the city of Shawano.

City officials would not comment on the lawsuit.

Most of the allegations in the suit center around a May 24 meeting of the Shawano Common Council, at which Midwest Hotels’ request for licenses at the Best Western was on the agenda.

The council conditionally granted liquor and soda licenses but, under municipal ordinances, those licenses could not be issued until $85,243 in delinquent property taxes, plus 4 percent interest, owed to the city were paid by SIST and its subsidiaries.

The amount did not include properties on which SIST or its subsidiaries have been making installment payments.

The suit states that the city required this, “even though such taxes were not due until July 31, 2005.”

According to state statutes, the first installation on property taxes must be made by Jan. 31 or the entire amount becomes delinquent.

Further complicating the issuance of the Best Western licenses at that meeting was confusion over when Midwest Hotels would take over the business or if it already had.

The city required Midwest Hotels to provide a closing statement, as well as a land contract, warranty deed or title to the property before those licenses could be issued.

“No other liquor license holder was required to submit similar documents before issuance of a liquor license,” the lawsuit maintains. “This is a violation of equal protection.”

Apparently seeking to head off any complaints against the city, Schmid said at the May 24 meeting that there was precedent for licenses being withheld.

“I just want to mention that this is not the first time we’ve done this,” Schmid said during that meeting. “There have been other occasions – five or six, I think – where licenses could not be issued due to the lack of real estate taxes. We’re trying to be consistent and trying to apply the law fairly. The city has done this same thing in the past.”

City officials said at the time they wanted the land contract or some other documentation to verify the closing date.

Midwest Hotels claims in the lawsuit that the closing date was changed to meet the city’s schedule.

“In order to comply with the City’s liquor licensing requirements, the closing date of the sale was extended (sic) from April 15, 2005 to May 25, 2005,” the suit states.

The suit also maintains that Midwest Hotels was not informed prior to the May 24 meeting that taxes had to be paid.

However, the suit also quotes the city’s ordinance and language that states that a liquor license shall not be granted to any person “Delinquent in payment of any taxes, assessments or other claims owed to the city.”

The previous license was issued to American Security, Inc. Frank Feivor, president of American Securities, Inc., submitted a letter to the city stating that he was relinquishing all of the licenses as of May 24.

All such licenses issued by the city expire on June 30 of each year and have to be renewed.

Two sets of applications were made for alcohol beverage licenses; one that covered the remainder of May and June, 2005, and the other to run from July 1, 2005 to June 30, 2006.

Midwest Hotels paid for the licenses – including a prorated charge for the first set from May 24 through June 30.

In the lawsuit, SIST and Midwest Hotels maintain that they should have been allowed to operate under licenses for the establishment purchased by Feivor. The suit states that Feivor also purchased licenses from July 1, 2005, through June 30, 2006 and that Midwest Hotels reimbursed him as part of the property sale.

“As a result, the Plaintiff is entitled to reimbursement from the city,” the suit states.

“Plaintiff has paid for the liquor license twice by reimbursing the seller of the establishment and paying the city directly; other sellers of such establishments have been treated differently,” the suit alleges.

The suit maintains that a Class B liquor license is transferable from a seller of a licensed establishment to the new owner without cost.

However, elsewhere in that same statute, it states that, “No person may allow another to use his or her Class ‘A’ or Class ‘B’ license or permit to sell alcohol beverages.”

The suit maintains that the city’s ordinance covering liquor licenses is unconstitutional and violates due process guaranteed by the U.S. Constitution and required by Wisconsin Statutes.

“The City of Shawano ordinance (No.) 7 unreasonably treats liquor licensees, including the Plaintiff, differently than other city license or permit holders,” the suit alleges.

The suit also alleges that, “Defendants treated the Plaintiff differently from other liquor license holders in the City of Shawano.”

The suit maintains that the city’s ordinance exceeds the powers granted by state statutes.

According to the lawsuit, the city’s actions deprived the Best Western of revenue and interfered with business relationships, contracts and affairs.

“As a result of the Defendant’s actions, Plaintiffs have suffered and will continue to suffer the injuries and damages previously alleged,” the suit states.

The suit is asking for $75,000 in damages, “plus damages in such further sums as may be sustained and as are ascertained before final judgment herein.” The suit also asks for attorney fees and other costs.

SIST and Midwest Hotels are also asking that the city’s ordinance covering liquor licenses be declared unconstitutional.

SIST also filed suit earlier this year against the Shawano Leader and reporter Tim Ryan, seeking $500 million and claiming that the newspaper’s stories about SIST were defamatory and discriminatory.