Aspen stands by DeGraff liquor license rejection

Rick Carroll
The Aspen Times
Aspen, CO Colorado
Aspen Times fileThe issuing of a liquor license for the restaurant Junk Aspen is at the center of a lawsuit involving the city and restaurateur Scott DeGraff.

ASPEN – Aspen’s liquor board and City Council acted within their authority last year when they rejected Aspen restaurateur Scott DeGraff’s liquor-license application because he “lacked good moral character” and a showed “lack of willingness to take ownership” in a previous civil case in Illinois.

That’s according to a 22-page brief filed this week by the city of Aspen in Pitkin County District Court, where DeGraff is suing the Aspen City Council and Aspen Liquor Licensing Authority.

DeGraff claims the city’s basis for rejecting his liquor license – the fact that he’d been a defendant in a string of civil lawsuits – unfairly sullied his reputation. He also contends the two bodies exceeded their authority when they denied his application for a liquor license for his start-up Aspen restaurant, Junk Aspen, on South Mill Street.

DeGraff aims to restore his reputation in the event he applies for future liquor licenses, and claims that because he has no criminal history he was wrongfully deemed a person of “bad moral character” by the two city bodies. A victory over the city would help repair his image, his attorney has said. He filed the suit in September, but has not specified an amount in monetary damages.

District Judge Gail Nichols is presiding over the case. She’s instructed both sides to offer written arguments, and she’ll determine whether oral arguments will also be necessary before a ruling is made.

On Monday, city special counsel Jim True filed a response claiming DeGraff’s complaint lacks any teeth, chiefly because Junk Aspen ultimately received a liquor license n September, when 99 percent of the ownership interests of Mill Street Aspen LLC, the corporate entity that owns the restaurant, were transferred from DeGraff’s name to his wife, Liza DeGraff.

“Very simply, Plaintiff Mill Street Aspen now has a liquor license,” True’s brief says. “What the Plaintiffs are requesting here is basically that the ‘reputation’ of Plaintiff DeGraff be restored.”

Yet DeGraff has failed to demonstrate that he’s suffered any injuries or damages, now that the liquor license has been issued, True argued.

Were the court to allow DeGraff’s lawsuit to continue, the Liquor Licensing Authority and City Council still acted properly when they denied his liquor-license application, True maintained.

In a Feb. 4 filing, DeGraff’s attorney, Adam Stapen of Denver, contended that that the Colorado Liquor Code did not condone the City Council’s decision, and that “DeGraff does not have a record of felonies or offenses involving moral turpitude. There is no competent evidence in the record to justify the City Council’s decision.”

This week’s brief from the city, however, says “there is simply no legitimate argument that the City’s evaluation of the good moral character of an applicant is limited to criminal conviction.”

Also noted by the city is an Illinois state court judgment against DeGraff in 2004. That’s when DeGraff and other defendants were ordered to pay $1 million in a business dispute; but more important, DeGraff filed a false affidavit with the Illinois court. The city contends that action “did constitute a crime in Illinois and would be a crime in Colorado.”

The city, during last summer’s liquor license hearings, also “heard evidence that Mr. DeGraff was involved in ongoing litigation seeking damages from him or his company in amounts totaling $4,000,000,” True wrote.

True concluded that “the record shows no substantive evidence of rehabilitation of Mr. DeGraff. The millions of dollars of existing lawsuits and the lack of willingness to take ownership of the violations before the court [in the Illinois case] belie a determination of rehabilitation. Again, the determination by the City Council that Plaintiff Scott DeGraff lacked good moral character and has not in any way been rehabilitated is supported by the evidence in the record.”

While DeGraff’s restaurant ownership and management experience dates back 20 years, it wasn’t until last June – when he filed a liquor license application with the city – that his civil-lawsuit record came into play. On Aug. 4, the City Council denied his application based on its determination that he was a person of “bad moral character.” The council’s denial came after the liquor authority rejected the application on July 20, based on the lawsuits trailing DeGraff.

Stapen has contended the city’s logic for rejecting of DeGraff’s liquor-license applications is unprecedented.

“At no time has any state or local liquor licensing authority initiated an action to determine, or made a finding, that Scott DeGraff has bad moral character to prevent him from owning or operating a liquor license,” he wrote in February.


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