A long-simmering dispute between a Kalispell-based liquor store and Montana’s Department of Revenue may finally get its day in court, despite the death of the store’s owner and a lawsuit bounced among six judges in the past three years, including a trip to federal court in Missoula.
It’s a complicated situation dating back about two decades, even before Donna Glantz and her B.Y.O.B. liquor store made front-page news in 2011 by selling cream- and liquor-filled candies. Beginning in 1998, Donna Glantz held an “Agency Franchise Agreement” with the Montana Department of Revenue, which allowed her to buy liquor from the state and sell it to individuals and other businesses.
For the first 13 years, it appears that Glantz and DOR had a good working relationship. But by May 2009, the DOR notified her that it was going to terminate their agreement. Former Liquor Control Division Administrator Shauna Helfert testified in a 2012 bankruptcy hearing that the store was “toxic,” and during a deposition in August 2017, Mickey Carlson, a state liquor store specialist, said they considered Glantz and the store to be “bad actors.”
“Things were going quite well until there was a regime change,” Jim Glantz, Donna's husband, said in a phone interview from his home in Kalispell. “They have no business doing what they did. I call it domestic terrorism. Those are harsh words, but it ended up killing Donna.”
As the state was trying to revoke her liquor franchise agreement, Donna Glantz was trying to sell the business. Her family said she had four offers, including two that made it to the buy/sell agreement stage, but claims the DOR chased away potential buyers by making derogatory statements about Donna Glantz and B.Y.O.B.
By July 2013, the once-thriving business, with a $150,000 payroll and eight employees, was forced into Chapter 11 bankruptcy and sold for $1.2 million, which is almost one-third of an earlier offer. Donna Glantz died in May 2011.
“It was one of the most valuable liquor licenses in the state of Montana, with an original asking price of $3.3 million,” said Attorney Lee Henning, who is representing her estate. “She had a $2.5 million signed buy/sell offer, another for $2.8 million that never got signed because of DOR and a final offer that DOR insisted on being rejected. That was for $2.3 million and the buyers were getting their own financing.”
Mary Ann Dunwell, a spokesperson for DOR, said the state had legitimate concerns, and provided paperwork that outlined the alleged violations by Donna Glantz and B.Y.O.B. The state of Montana has general oversight of agency liquor store operations, including approving who operates a liquor store and ensuring they’re in compliance with state laws involving the sale of liquor in Montana. Montana has about 95 state agency liquor stores.
“Under state statute, the department not only had a right to penalize them, but an obligation to under the law,” Dunwell said. “We review applications for licenses and the transfer of applications because this is a matter of public trust. You hold a state license, so we are pretty careful when there’s a change of hands.”
The violations included Donna Glantz allowing her son’s business, All Beverage Corp., to use her property without collecting rent, as was required by her lease agreement with the state. She also worked for her son’s business for free, which created a “prohibited financial interest” in her son’s business, which was a bar in Polson. In addition, B.Y.O.B. delivered liquor to All Beverage Corp., but didn’t charge “on a cash basis” for the delivered liquor, which meant the delivery was for less than the state’s posted price.
B.Y.O.B. also allegedly sold liquor to the East Shore Smoke House in Polson on credit, and failed to report in a timely manner to the Department of Revenue the sales to licensees for the months of June 2009 and July 2009.
After a DOR hearings examiner in January 2011 granted the Department of Revenue’s request to terminate the agreement, B.Y.O.B. filed a lawsuit in Flathead County Court and in March 2011 was granted a stay of execution of the termination, with a few conditions. One condition prohibited Jim Glantz to be on the B.Y.O.B. premises or be involved in any operational activity related to the business. The judge didn’t give any reason for that prohibition.
Jim Glantz said he has no idea why that clause was inserted, and the state declined to comment on pending litigation.
Another condition would have allowed the sale of the business. Flathead County District Court Judge Ted Lympus said a “three-way deal” would bring in a new operator, who would buy out the Glantzes for a fair price, thus allowing them to pay the DOR what it was owed.
In her August 2017 deposition, Mickey Carlson, the DOR liquor store specialist, testified under oath that former Department of Revenue Attorney Joe Silverman told her they couldn’t resolve the matter until the litigation about the amount owed to the state by the Glantzes was wrapped up.
When pressed, Carlson couldn’t find a statute that said as part of a settlement, the state can’t transfer the franchise agreement to a different operator, even if that would settle the litigation.
Carlson’s statement was made over the objections of Mikel Moore, an attorney for the state.
Henning said there’s no way to characterize the action other than the state wanted the sales to fall through, crippling the Glantzes’ financially.
“The judge granted a stay to allow for the sale to go through and that would moot everything,” Henning said. “Then the state didn’t cooperate and did everything it could to make the sale fall through.”
The problems continued after B.Y.O.B. filed for bankruptcy in December 2011. Once the dust settled over the bankruptcy in February 2013, the surplus estate was worth about $1.2 million. As a creditor, DOR initially said the estate owed a tax liability of $52,642, plus interest and penalties.
In the spring 2014, after the income taxes were filed, the estate had an estimated tax liability of about $13,000. Jim Glantz asked DOR to agree to hold back $150,000 so that the rest of the estate could be distributed.
Instead, the DOR decided to wait to disburse the money until a complete audit of the tax returns for 2007 through 2013, which wrapped up in December 2016.
“These actions essentially held up distribution of a million dollars for a maximum claim of no more than $150,000,” Rebecca Henning-Rutz, an attorney practicing with Lee Henning, wrote in a lawsuit. “Although partial disbursements were eventually made, MDOR has been continually and unreasonably difficult and recalcitrant in dealing with these matters as they concern the Estate and Jim Glantz.”
In January, the DOR sent Jim Glantz a check for $40,639, which was a partial payment to the estate.
He was floored when he deposited it on Feb. 22, 2017, and DOR refused to honor it. Then checks Glantz wrote against it bounced.
“I was never so embarrassed in my life,” Jim Glantz recalled. “After Donna died, I remarried and owed my in-laws some money. I was so pleased that I could pay them back, and wrote them a check so they could pay off their vehicle.
“I panicked. I was on dialysis when I found out and I was trapped. I was strapped to the chair and told the nurse to get me off so I could do something, but she couldn’t let me go. I have never gotten frantic, but I was frantic. I took a deep breath — I just had to again, just thinking about it. I was so angry, and I’m an easy-going guy.”
DOR wired the money back into his account by the end of the business day on Feb. 23, 2017.
The most recent lawsuit was filed in 2015 by the heirs of Donna Glantz, her real estate agent, Barbara Riley, and Gildo LLC and Beez-Neez, companies through which Terin and Nathan Gilden tried to buy B.Y.O.B. The suit claimed the DOR “began a pattern of either intentional and/or negligent interference with each prospective sale, conveying DOR’s negative and sour attitudes about B.Y.O.B. and the Glantzes.”
“I know there is a longstanding history of bad blood between the Department of Revenue and B.Y.O.B. and its principals,” Henning wrote in court documents. “However, the Department of Revenue’s position on this matter is grossly unreasonable and frankly ridiculous. … You have been overbearing and intrusive with my client and my firm since I began working on this matter.”
The Department of Revenue removed the case to federal court in April 2015, arguing that it is entitled to absolute quasi-judicial immunity and prosecutorial immunity based on a settlement agreement included in the bankruptcy. Judge Donald Molloy disagreed with the immunity, but he did dismiss the case with prejudice in federal court, meaning it can come back to his jurisdiction if changes are made to the complaint.
That brought it back to district court, where the plaintiffs and defendants have struggled to find a judge to hear the case. Judge Deborah Christopher, to whom it originally was assigned, recused herself. It then went to Judge James Manley, who also recused himself. Next up was Judge John Larson, whom the plaintiffs asked to be removed; it then was assigned to Judge Robert "Dusty" Deschamps, who the DOR asked to step aside.
On March 7, Judge Jon Oldenburg of Lewistown assumed the case, and a status conference is set for April 24.
“Then, finally, we’ll start moving forward,” Henning said.