Thai Ginger Restaurant, Inc., Relators v. City of Saint Paul, City Council ( 2015 )


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  •                            This opinion will be unpublished and
    may not be cited except as provided by
    Minn. Stat. § 480A.08, subd. 3 (2014).
    STATE OF MINNESOTA
    IN COURT OF APPEALS
    A15-0288
    Thai Ginger Restaurant, Inc., et al.,
    Relators,
    vs.
    City of Saint Paul, City Council,
    Respondent.
    Filed December 21, 2015
    Affirmed
    Harten, Judge
    St. Paul City Council
    File No. RES PH 14-349
    Shuly Her, Der Yang, Village Lawyer, LLC, St. Paul, Minnesota (for relators)
    Samuel J. Clark, St. Paul City Attorney, Virginia D. Palmer, Assistant City Attorney, St.
    Paul, Minnesota (for respondent)
    Considered and decided by Johnson, Presiding Judge; Larkin, Judge; and Harten,
    Judge.
    UNPUBLISHED OPINION
    HARTEN, Judge
    Relators, a restaurant and its owner, argue that respondent city acted on unlawful
    procedure when it revoked relators’ liquor license and that the revocation was not based on
    
    Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
    Minn. Const. art. VI, § 10.
    substantial evidence and was unreasonable, arbitrary, and capricious.           Because we
    conclude that the city did not exceed its authority or act on unlawful procedure and that the
    revocation was a reasonable exercise of the city’s discretion, we affirm.
    FACTS
    In April 2014, relators Thai Ginger Restaurant, Inc. and its president, Kyrina
    Sengmavong, purchased liquor at retail while on the no-sale list, a violation of state law
    that resulted in a $1,500 fine, which they paid.
    In October 2014, the license inspector for the Department of Safety and Inspections
    (DIS) notified relators that their insurer had reported cancellation of their liquor liability
    insurance since December 2013 and ordered them to stop serving liquor until they
    submitted a certificate showing no lapse in coverage. The certificate relators submitted
    showed coverage only after 31 October 2014, indicating a ten-month gap in coverage
    during which relators served liquor.
    The city’s legislative code includes a matrix of penalties for various violations. The
    penalty for a second appearance on a failure to comply with statutory requirements for
    liability insurance is revocation. St. Paul Legislative Code, § 409.26(b). On a first
    appearance, a licensee may elect to pay the recommended fine rather than appear, and that
    payment “shall be considered an ‘appearance’ for the purpose of determining presumptive
    penalties for subsequent violations.” Id. Relators paid the recommended fine for their first
    violation; thus, this was their second appearance.
    On 14 November 2014, relators received a notice of their violation. It recommended
    that their license be revoked based on “the egregiousness of [their] conduct, and the public
    2
    safety risk it posed” and gave them the option of contesting the recommendation at a
    hearing. After relators requested a hearing, a notice of the hearing date, 17 December 2014,
    was mailed to them.
    On that date, city council members and relator’s husband, David Souvanphong,
    appeared. Souvanphong explained that relator Sengmavong was in the hospital following
    a C-section, that she handled the restaurant finances, that he was not familiar with the
    restaurant’s paperwork, that neither he nor Sengmavong knew the insurance had lapsed,
    and that he did not know if Sengmavong had seen the cancellation notice sent out by the
    insurer.
    A council member then said to Souvanphong, “[Y]ou’re trying to answer questions
    for things that . . . you typically aren’t responsible for, so . . . it might make sense to do [a]
    layover [of the hearing] . . . .” The council president then said, “Does that work for
    every[one] . . . [a] motion to lay the matter over until January 7th?” The clerk then read
    out the names of the council members present and said, “Six in favor. None opposed. The
    resolution is laid over to January 7th.” Souvanphong was present throughout these
    proceedings.
    On 7 January, the hearing reconvened. Neither Sengmavong nor Souvanphong was
    present. The city council voted to revoke relators’ liquor license.
    Relators challenge the revocation, arguing that the revocation was made upon
    unlawful procedure and was an upward deviation unsupported by substantial evidence.1
    1
    Relators argued in their brief that the city also exceeded its authority by revoking the
    license, but conceded at oral argument that the city did have authority for the revocation.
    3
    DECISION
    Standard of Review
    “On appeal from a municipality’s revocation of a liquor license, review is limited
    to determining whether the city council exercised reasonable discretion, or whether it acted
    capriciously, arbitrarily, or oppressively.” Bourbon Bar & Cafe Corp. v. City of St. Paul,
    
    466 N.W.2d 438
    , 440 (Minn. App. 1991).
    1.     Was the procedure unlawful?
    Relators argue that, because Sengmavong was unable to testify at the 17 December
    hearing and was not notified of the 7 January hearing, the procedure was unlawful. But
    her husband, Souvanphong, was present and testified at the 17 December hearing; he also
    heard the resolution to continue the hearing until 7 January when Sengmavong would be
    able to be present. When neither Sengmavong nor Souvanphong appeared on 7 January or
    notified the council that they would be absent, the matter proceeded in their absence. But
    Sengmavong was not deprived of the essentials of due process, i.e., adequate notice and a
    meaningful opportunity to be heard. See Staeheli v. City of St. Paul, 
    732 N.W.2d 298
    , 304
    (Minn. App. 2007). Souvanphong and other witnesses testified on Sengmavong’s behalf
    at the 17 December hearing, and Sengmavong could have testified herself if she had
    appeared on 7 January. The city’s procedure was not unlawful.
    2.     Was the revocation supported by substantial evidence and not unreasonable,
    arbitrary, or capricious?
    “Municipal authorities have broad discretion to determine the manner in which
    liquor licenses are issued, regulated, and revoked.” Bourbon Bar & Cafe, 
    466 N.W.2d at 440
    . A liquor license applicant must demonstrate proof of financial responsibility, which
    4
    includes “a certificate that there is in effect for the license period an insurance policy . . . .”
    Minn. Stat. § 340A.409, subd. 1(1) (2014). The municipal authority, “[o]n a finding that
    the license . . . holder ha[d] . . . failed to comply with an applicable statute . . . relating to
    . . . the operation of the licensed establishment . . . may [1] revoke the license . . . .” Minn.
    Stat. § 340A.415 (2014).
    The city has adopted a matrix of “[p]resumptive penalties for violations” of 12
    regulations, including “(12) Failure to comply with statutory . . . requirements for liability
    insurance.” St. Paul Legislative Code, § 409.26(b) (2014). The penalties increase in
    severity if the licensee has one or more prior “appearances” for previous violations. Id.
    The penalty for “(12) Failure to comply with statutory . . . requirements for liability
    insurance” is a ten-day suspension on the licensee’s first appearance and revocation on the
    licensee’s second appearance. Id. Having found that (1) relators had failed to comply with
    the statute requiring an insurance policy to be maintained and (2) this was relators’ second
    appearance, the city revoked relators’ license.
    Relators argue that “there was no evidence . . . to substantiate a deviation from the
    [c]ity’s own matrix of ten days’ suspension for a first time violation,” implying that this
    was their first appearance because they paid a fine rather than appearing for their first
    violation. But the code explicitly rejects this argument: “A licensee who would be making
    a first appearance . . . may elect to pay the fine . . . without an appearance . . . . Payment of
    the recommended fine . . . shall be considered an ‘appearance’ for the purpose of
    determining presumptive penalties for subsequent violations.” Id.
    5
    Relators also argue that, because their previous appearance was not for failure to
    maintain liability insurance but for a different violation, this was their first appearance in
    regard to that offense. Again, the code rejects this argument.
    (d)     Subsequent appearances. Upon a second, third, or
    fourth appearance . . . by a particular licensee, the council shall
    impose the presumptive penalty for the violation or violations
    giving rise to the subsequent appearance without regard to the
    particular violation or violations that were the subject of the
    first or prior appearance.
    (e)     Computation of time.
    (1)     Second appearance. A second violation within
    twelve (12) months shall be treated as a second appearance for
    the purpose of determining the presumptive penalty.
    Id. This was relators’ second appearance; the presumptive penalty for their offense was
    revocation.
    The city exercised reasonable discretion and did not act capriciously, arbitrarily, or
    oppressively when it imposed the presumptive penalty and revoked relators’ license. See
    Bourbon Bar & Cafe, 
    466 N.W.2d at 440
    .
    Affirmed.
    6
    

Document Info

Docket Number: A15-288

Filed Date: 12/21/2015

Precedential Status: Non-Precedential

Modified Date: 12/22/2015