Embattled Corbin liquor store wins ruling over licenses

The owner of a south Corbin liquor store, that has yet to sell a single drop of alcohol, recently cleared an important legal hurdle that may pave the way to him finally receiving the state licenses he needs to open for business.

Ernie’s Spirits owner Kevin Durham has been locked in a legal battle with the Kentucky Department of Alcoholic Beverage Control (ABC) for months regarding the fate of his license to sell distilled spirits and beer.

A lengthy, three-day hearing on the issue took place during a two-month stretch in August and September. Durham finally received good news this week that the special hearing officer in the case is recommending that he receive the license he needs in order to open.

“It’s very good news … this is a great first ruling,” said Brent Caldwell, the Frankfort attorney who represented Durham at the hearings. “I think it’s very sound legally. She [the hearing officer] backs up all of her findings with factual testimony.”

Ernie’s Spirits, located behind Applebee’s just off Cumberland Falls Hwy., has never opened its doors to customers since construction on the building was completed in early March.

That’s because ABC officials decided to revoke the store’s package liquor license, and denied it a malt beverage (beer) license over allegations that Durham supplied a “false and fraudulent” lease when he first applied for the licenses for Ernie’s in May 2012.

Potential problems with Ernie’s application for a license were first brought out by Wesley Morgan, owner of Liquor World which has stores in Richmond and Manchester. Morgan also applied for a license to open a liquor store in Corbin, but was not selected.

Durham purchased the property where Ernie’s sits from RJV Properties in October using a limited liability holding company, called Matuse Properties LLC. He is the sole owner of Matuse.

Ernie’s leases the property from Matuse, an arrangement Durham explained during the hearing was contrived for “tax reasons.”

Durham said at the hearing when he testified that he invested $1.2 million in purchase of the property and construction of the store, and was paying $3,600 a month in interest and $800 monthly to insure the building. He and his attorney, Brent Caldwell, argued often that the delays were financially crushing.

The ABC contended that Durham had committed fraud because he swore when he applied for one of Corbin’s three liquor licenses that Matuse owned the property at the time the application was made in March 2012. It didn’t. In fact, the corporation didn’t even exist until months later.

In her ruling, special hearing officer Susan Durant wrote in her ruling that even though the leases supplied by Durham were false at the time they were submitted, they weren’t “material” misrepresentations that required punitive action since, in the end, all the documentation provided was accurate. She said a previous case the ABC was citing in asking for the denial of Ernie’s beer license and revocation of its distilled spirits license was “not useful” because it “was revised in 1998 so that the mandatory nature of the statute is now discretionary.”

“In regard to that statue as it now exists, it is to be observed that a license may be revoke or suspended. Because charges were brought simultaneously with the granting of the license, the license has been, for all practical purposes, suspended for seven months, in part because of Durham’s carelessness.”

Durant made a “recommended order” that the ABC grant Durham a beer license and reinstate his distilled spirits license so he can open for business.

The ABC’s three-member board asked that a special hearing officer be assigned to the case by Kentucky Attorney General Jack Conway. Her findings are only advisory, and the Department of Alcoholic Beverage Control has 15 days to file exceptions to her recommendation with the board. The board will make the final decision.

If the decision differs in any way from the hearing officer’s recommendation, Durham can appeal his case to Franklin Circuit Court.

“I feel very confident that if we had to go to court we would win,” Caldwell said, noting he had spoken to the ABC General Counsel Steve Humphress to ask if the ABC planned to file exceptions. No decision had yet been made.

“[Kevin] is hanging in there. He’s going to continue to fight. He has a huge investment … he’s willing to hang in there until he gets a final decision,” Caldwell said. “I’m very, very hopeful everything will ultimately come out in his favor. This is a great first step.”

Attempts to reach Durham himself for comment at press time were unsuccessful. He referred all questions to Caldwell.