Beleaguered Radisson Hotel to Halt Liquor Sales 6 Weeks

The Radisson Hotel, facing pending disciplinary action for alleged violations of state liquor laws, on Friday will stop serving alcohol for about six weeks, according to the federal regulators who now operate the Mission Valley property.

The hotel’s bar will not reopen today and liquor service in the hotel’s restaurant, guest rooms and banquet facilities will be halted Friday, according to Jack Rubin, vice president of the Palmieri Co., a Los Angeles-based management firm that represents the federal regulators who now own the hotel.

Rubin said, however, that he is attempting to make arrangements with outside caterers so that alcohol beverage service will not be disrupted for the hotel’s scheduled banquets, weddings and other affairs.

The 13-story, 264-room Radisson will otherwise operate normally, Rubin said.

The Federal Savings & Loan Insurance Corp. (FSLIC) took over the hotel at a May 1 foreclosure sale because it was owed more than $30 million in defaulted construction loans. The loans were originally made by failed San Marino Savings & Loan, which was seized by FSLIC in 1984.

Rubin on Wednesday said FSLIC has entered into escrow to buy a new liquor license, a process he estimated will take about six weeks.

Concurrently, a previous food and beverage concessions agreement with C. Hugh Friedman--the bankruptcy trustee in charge of San Diego Diversified Properties, the hotel’s developers--has been terminated, said Rubin.

State Files ‘Accusation’

Meanwhile, the state has filed an “accusation” against the two corporations that hold title to the hotel’s liquor license. The action was sparked because several drug-related arrests for cocaine and marijuana at the Radisson earlier this year weren’t reported to the state Alcohol Beverage Control Board.

Because the accusation has not yet been “registered,” however, no official action--such as revocation of the liquor license--is expected to be taken until later this week or next, according to sources close to the hotel.

The matter of who controls the license has long been a source of heated debate among regulators, the ABC, trustee Friedman, and Carroll Davis, principal of bankrupt San Diego Diversified Properties, which developed the hotel.

The liquor license is actually in the name of two Davis-controlled firms--American Real Estate Associates and Bingo Palace, neither of which is in bankruptcy.

Together, the two firms own San Diego Diversified Properties, which, until Davis was barred from the hotel 11 months ago, operated the Radisson.

Since August, trustee Friedman has operated the hotel, and he was in charge of the facility when the violations allegedly occurred.

Davis, who says he is not responsible for the violations, has refused to sign a disciplinary stipulation that could eventually lead to state sanctions against him.

The rub is that only Davis can actually agree to the state’s action because he controls the companies named on the liquor license.

That presents a Catch-22, according to Friedman’s bankruptcy attorney, Ross Pyle. “Friedman can’t consent on (the licensee’s) behalf, (but) the episodes happened while Friedman was operating as trustee.”

Friedman has operated the hotel’s beverage business with a temporary liquor license because Davis had steadfastedly refused to voluntarily transfer the license.

Attempting to Sell License

Friedman was attempting to sell the license to FSLIC for $55,000, above fair market value, and on Wednesday said a deal had been virtually completed.

FSLIC representatives, however, apparently backed out of the deal to avoid getting caught in the middle of the ongoing battle between Davis and Friedman over who should shoulder responsibility for the violations.

“There now appears to be problems with the transfer of the license,” said Rubin, adding that be terminated Friedman’s contract “to make sure the operation of the hotel continues as smooth as it can.”

Davis and Friedman, who have differed vehemently in the past, on Wednesday each criticized FSLIC’s actions.

Halting liquor service damages the “operations and value of the hotel, and any kind of future financing,” Davis said. The developer, who described the action as “unnecessary and precipitous,” maintains that he still is attempting to regain control of the hotel by securing funds that would meet FSLIC’s $26-million minimum asking price.

Friedman called FSLIC’s action “unfortunate.”

“Davis has refused to consent to the terms of the disposition” of the state action, Friedman said. “I think it’s most unfortunate.”