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HomeMy WebLinkAbout04/30/1985 CITY 4F SHA j KOPEE INCORPORATED 1870 129 EAST FIRST AVENUE, SHAKOPEE, MINNESOTA 55379-1376 (612) 445-3650 �," 4t Wr April 39 , 1985 The Honorable City Council City of Shakopee Shakopee , MN 55379 Mayor Eldon Reinke has notified me , John K. Anderson, City Administrator of Shakopee , that a Special Meeting of the City Council will be held at 7 : 00 p.m. on Tuesday, April 30 , 1985 , in the Council Chambers of the City Hall for the purpose of considering the revocation of liquor licenses not in compliance with state and local laws , and for any other business which may come before the Council. If you are unable to attend at this time , please let me know. Sincerely, 4K ��, John K. Anderson / City Administrator JF:A/j ms ✓✓ cc: KSMM Shakopee Valley News Shakopee Cable TV The Heart of PI-Ogress Valley MEMO TO: John K. Anderson, City Administrator FROM: Judith S. Cox, City Clerk RE: Liquor Liability Insurance DATE: April 30 , 1985 Introduction: The Gibraltar Casualty Insurance firm has cancelled their liquor liability insurance policies with all business within the State of Minn- esota effective April 30 , 1985 . No written notice has been given to the City of Shakopee, but since an agent of the Company has verbally advised the City of the cancellation the City has been put on notice, according to the City Attorney. Background: Six liquor licenses within the City of Shakopee are covered by the Gibralter firm. All six have obtained coverage with another firm and have filed with the City both an insurance binder and a certificate of insurance. An interpretation of MSA 340. 12 by the City Attorney requires an insurance policy to be on file with the City and the Certificate of insurance and/a insurance binder does not meet that requirement. If the six licensees are not in compliance with state law, the USA 340 . 12 law provides that this shall be grounds for immediate revocation o.f the license. Since this has become an immediate issue I have made some phone calls and have learned the following: 1) Eleven of eleven c3mmunities polled do not require the insurance policy filed, just the certificate of insurance. Wayzata, Burnsville, Eden Prairie, Plymouth, White Bear Lake, So. St. Paul, Savage,Chanhassen, Bloomington, Minneapolis and Chaska. Reasons given for not requiring the insurance policy were 1)this the way we've always done it, or 2 ) this is acceptable to the State. 2 ) Stan Pescar, League of Minnesota Cities concurs that the state language does require the filing of the insuranceop licy with the municipality. However , the League is aware that few cities do require the filing of the insurance policy with the city. 3 ) John Muer, office of Liquor Control Commission interprets the law to mean A filing of an insurance policy by way of a certificate of insurance has received verbal confirmation from the office of the Attorney General. 4 ) Bill Kyle, Analyst, Department of Commerce, has relayed to me that according to Minnesota insurance law abinder and a policy are the same and are binding; courts have upheld binders (written or verbal ) . Page 2 Every policy must conform with State Law even if a policy doesn ' t so state. 5 ) Alan Gilbert, office of Attorney General, has never heard the question put the way the City of Shakopee is putting it. He said that the City Attorney must interpret the state law. He said one may wish to interpret the state law in a workablc-< reasonable way; and, as a practable matter, one may need to accept other than a policy. Must be flexible in the problem of getting a policy. He also suggested that the binder and/or certificate of insurance state that the policy is in conformance with the statutory dram shop law. As of this afternoon the City has been advised by an agent of the Company, Gibralter Casualty, that a 10 day written notice of cancellation will be coming May 1st. This news buys some time in making a decision on whether or not to accept a certificate of insurance. However, such a decision does have to be made prior to May 10th, since the insurnce policies in question will not be on file within 10 days , according to the insurance agents. Alternatives: 1) Order revocation of liquor licenses when an effective liquor liability insurance policy is not on file with the Ciy. 2 ) Direct staff to obtain an opinion of the state law from the Attorney General for the May 7th Council meeting. 3 ) Take no action 4 ) Other Recommendation: Alternative 2 . Since it is not likely that a written opinion from the Attorney General will be received by the May 7th Council meeting, Council may have to make a decision on May 7th based upon information sYl�red this evening at the special session of the Council. dbs Insurance Binders are Insurance COMMERCE CONTACT Policies Official Publication l.� of the. Minnesota Department of Commerce The Department of Commerce has - 500 Metro Square Building received complaints on behalf of home /i St. Paul,Minnesota 55101 purchasers which allege that lending in- stitutions have refused to accept fully- �� STATE OF MINNESOTA "-- RUDY PERPICII executed hinders as sufficient proof of Governor insurance coverage on secured real estate. MICHAEL A.HATCH Minnesota law,provides that a properly Commissioner of Commerce executed binder shall he deemed to in- The Department of Commerce is an elude all the terms of the standard fire official agency of the State of Minnesota insurance polic'v and all its designated from a licensed insurer which conform and is solely responsible for the publication endorsements (Minn.Stat. §65A.03).The to the lender's specifications as to loss of this newsletter.The newsletter carries Statutes permit a lender to refuse in- payee endorsement and other terms and authoritative information about the activ- ities of this agency with respect to regu- surance coverage only where the incur- conditions of coverage may be subject to latory and administrative functions. ance is placed with an unauthorized in- disciplinary action by the Department of However,this agency assumes no respon- surer; where the insurer max, be insol- Commerce. sibility for statements or expressions vent, or where the coverage may be Questions concerning the refusal to of opinions by contributors. inadequate. accept insurance binders as an inSur- Minnesota Department of Commerce Any lending institution which refuses ante policy should be directed to Rey (612) 296-4026 to accept written hinders of insurance harp at (612) 296-2488.## Proposed Changes in over the last vear. There was also a substantial increase in the number of Subdivided Land Rules licensed securities agents. According to figures compiled by the The Minnesota Subdivided Land Act would be exempted. Department, there were 504 common has served as a national model since its • Condominiums located in Minnesota, stock filings in fiscal year 1983,a 53%in- enactment in 1973.In the past ten years, which are required to be registered crease over 1982;524 debt and preferred however,there have been major develop- under Chapters 515 and 515A,would stock filings,a 761/10 increase over 1982; nients and changes in the Subdivided be exempted. and 1,408 limited partnerships filed,an land industry.Due to this evolution,the increase over the 1,306 filed in 1982. Commerce Department is proposing to • Land located in a municipality in Min- The number of securities agents, update the Subdivided Land Act. nesota would be exempted. which historically has hovered around Proposed changes include the • Offering statements prepared in coni- 6,000, has jumped to 10,600, up 39% following: pliance with another state's law, if in over 1982. • The name of the filing, now referred substantial compliance with Min- These trends reflect an overall in- to as the "Exemption from Registra- nesota Law, would be accepted. (Continued on page 7) tion;' WOUld be changed to filing by • Penalty provisions would be modified. "Notification:""The actual application DRAM Shop Anti-fraud provisions similar to those P would remain the sante. This filing now in the Securities Act would be Committee Forms would be available to the subdivider added. who wishes to offer 11 to 100 parcels A plan of operation has been estab- a►xl would be an on-going registration • Criminal penalties could be imposed lished for the Minnesota Dram Shop with only a report of sales or annual for serious or flagrant violations of the Market Assistance Program Committee, report required to be filed once a year. fraud provisions of the Act. and Commissioner Hatch has appointed The need to update the title opinion The proposed "streamline" amend- ten members to a governing board for each year would be eliminated. merits will further enhance the good the program. • Registrationsre)utation Minnesota enjoys for being In 1983 the Minnesota Legislature involving 101 or more 1 t parcels would be by "Qualification:' progressive in this field.Comments con- mandated that every vendor of intox- Again,the actual application Would re- corning the proposal should be directed icating liquor must carry dram shop main the same.. Audited financials to Lorraine Rowe at the Commerce liability insurance.In response to liquor must only he included with the Department.:z vendors who said they could not obtain such coverage at economically-feasible Qualification application, but would Securities Registration rates;the legislature mandated that the no longer he necessary with the,' lin• Increase Commerce Commissioner establish a nesota Public Offering Statement. Figures compiled`by the Minnesota committee to assist liquor licensees in ob- • Tinte'share and membership units Department of Commerce indicate a twining dram shop insurance.While the would be regulated on a fair and equi- SubStantial increase in state investment committee has no authority to assign a table basis using regulations proposed activity for the fiscal year ending June policy to an unwilling insurance carrier, by Various industry groups and states 30, 1983. the statute gives the Commissioner the as it guideline. A record number of common, debt authority, if necessary, to establish an • Agricultural land-over ten acres in size and preferred stocks were registered (Continued on page s) 2 PIFORMATIONAL State of Minnesota Dram Shop Law Dilemma which needs to be resolved before the July 1st license renewals ! FACTS : 11 MSA 340. 12 The operation of an "off sale" or "on sale" business without having on file at all times with the municipality the liability insurance policy herein referred to -- a liability insurance policy required by section 340. 11 , subd. 21 -- shall be grounds for immediate revocation of the license. (Liquor License) 21 MSA 340. 11 , subd. 21 Every person licensed to sell at retail intoxicating liquor or nonintoxicating malt liquor at on-sale of off-sale shall , after August 1 , 1983 demonstrate proof of financial responsibility with regard to liability imposed by section 340. 95 to the authority issuing the license as a condition of the issuance or renewal of his license; by filing a] certificate of insurance policy or pool b] bond of surety company w/minimum coverages c] certificate of state treasurer that the licensee has deposited with him $100,000 Amount of coverage in a and b above, per state law are : $50, 000/$100,000 bodily injury $10,000 property damage $50,000/$100,000 loss of means of support 3] MSA 340. 95 Every . . . person who is injured in person or property, or means of support, or incurs other pecuniary loss by any intoxicated person, or by the intoxication of any person, has a right of action, in his own name , against any person who, by illegally selling or bartering intoxicating liquors or non-intoxicating malt liquors, caused the intoxication of that person, for all damages sustained. UNDERSTANDINGS : 1] There is no limit on the amount of time after an accident has occured in- which a claim may be submitted. 21 There is no limit on the amount of damages one can claim, whether bodily injury, property damage or loss of means of support. Because of the above , coupled with an increase in law suits over the recent past years, there are currently only three insurance companies who will write insurance in the State of Minnesota. Of these three, one will only write the liquor liability if they also write all other insurances; and one is a surplus carrier. Because of the lack of competition in writing liquor liability insurance and the limited insurance companies now carrying all the risks, the premiums for such coverage is skyrocketing. SUMMARY: If some change in current state law are not made before the end of the 1985 legislature , liquor licenses will have to be revoked or not renewed by municipalities, if they comply with the state law. Because of the shortage of insurance companies writing liquor liability, policies may not be able to be written and delivered in a timely fashion for liquor license renewals; �'o"r', the premiums may be so high that the licensee may not be able to remain in business. If some caps could be placed on liability, more insurance companies could write the insurance bringing the costs down. If something isn' t done this legislative session, cities will be forced to refrain from renewing licenses when the policy is not in hand (per state law) or be in violation of state law. What Council- person would want the exposure of violating state law when it comes to dram shop insurance thus inviting their own liability for non- compliance with state law? RECOMMENDATION: Amend state law to require the filing of the original insurance policy within 30 or 60 or 90 days after effective date , temporarily until the current dram shop law is re-written taking into consideration the needs of all parties involved ie : injured-,!. parties, businesses, insurance companies, and cities licensing the sale of liquor. Judith S. Cox City Clerk City of Shakopee April 24, 1985 Stan Pescar, League of Mn. Cities has agreed to mention to the legislators who have bills dealing with the dram shop law, inviting them to consider an amendment to their bills which in fact will require the filing of evidence of financial responsibility as opposed to the filing of a liability insurance policy. 4/29/85 j JULIUs A. COLLER. II JULIUE h [OLLER ATTORATEY AT L.A�, IB S9•IB<p - 2 6 12•m S-12aa FEST FIq ST hvENUE - - SHAUOPEE. TTIN2gESOTA 55379 To: Judy Cox, City Clerk From: Julius A. Coller, II, City Attorney Date: April 25, 1985 Re: Liquor liability policy You ask: What happens if a liquor liability policy is cancelled and the bar owner has not obtained a replacement policy before the cancellation becomes effective. Answer: The vendors liquor license must be suspended or revoked, as harsh as this may seem, of course, we have to remember the purpose of the insurance is to protect the public in the first instance and the bar keeper in the second instance. The law is very clear. MSA 340.12 (in supplement) provides in part the operation of an off—sale or on—sale business without having on file at all times with the municipality a liability insurance policy herein referred to shall, be grounds for immediate revocation of the license." MSA 340.135 gives the licensing authority the right to revoke or suspend. The questionable word in the above quoted section of the law is the word "shall". The word "shall" in statutory provisions is mandatory in practically every instance-When used in the statutes the word is in the nature of a command, it not permissive or advisory or discretionary. People vs Williams 145 PAC 2nd 336; State vs Davis 56 Southeast 2nd 907; Marc 17. Stoner 83 PAC 218; Raush V. Desmond 43 176%7 2nd 457. It is elementary of course that failure to act on the part of the members of the Council and others in charge of enforcing the law renders them liable to be sued in the event there was no insurance and a dram shop law suit was instituted. They would also be guilty of nonperformance of their duties. This is a serious matter and one that should be given serious consideration by all of us. Gibraltar Casualty Company A Delaware Corporation Is cancelling about 125 insurance policies with expiration dates between now and December 31 , 1985. The following licensees within the City of Shakopee carry liquor liability coverage with the Gibraltar firm: 11 CRE Restaurant Co 21 Friendly Folks Club , Inc . 31 VFW Post 4046 41 Pullman Club, Inc . 51 XX Corp . & Wittles, Inc . 61 Clair' s Bar, Inc . 71 Riverside Liquors, Inc . Judith S. Cox City Clerk 4/29/85