IRON BAR, LLC VS. TOWN OF MORRISTOWN (NEW JERSEY DIVISION OF ALCOHOLIC BEVERAGE CONTROL) ( 2019 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5685-17T3
IRON BAR, LLC,
Petitioner-Respondent,
v.
TOWN OF MORRISTOWN,
Respondent-Appellant.
____________________________
Argued June 4, 2019 – Decided July 19, 2019
Before Judges Messano, Fasciale and Gooden Brown.
On appeal from the New Jersey Division of Alcoholic
Beverage Control, Agency Docket No. 50.
Denis Francis Driscoll argued the cause for appellant
(Inglesino Webster Wyciskala & Taylor LLC,
attorneys; Denis Francis Driscoll, Elnardo Julian
Webster, and Owen T. Weaver, of counsel and on the
briefs).
Ryder T. Ulon argued the cause for respondent
(Schenck Price Smith & King, LLP, attorneys; Ryder
T. Ulon and Thomas Joseph Cotton, on the brief).
Gurbir S. Grewal, Attorney General, attorney for
respondent Division of Alcoholic Beverage Control
(Sheena M. Rinkle, Deputy Attorney General, on the
statement in lieu of brief).
PER CURIAM
"[T]he sale of alcoholic beverages has always been subject to
extraordinary regulation." Lyons Farms Tavern v. Mun. Bd. of Alcoholic
Beverage Control of Newark, 68 N.J. 44, 49 (1975). Under the statutory scheme
that regulates the licensing of establishments dispensing alcoholic beverages,
"[a] municipality has 'the original power to pass on an application for a . . .
license or the transfer thereof,' but that power is 'broadly subject to appeal to the
Director.'" Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199
N.J. 1, 10-11 (2009) (quoting Blanck v. Mayor & Borough Council of Magnolia,
38 N.J. 484, 492 (1962)). "[T]he Director's review is de novo as to all necessary
factual and legal determinations." Id. at 11 (citing Borough of Fanwood v.
Rocco, 33 N.J. 404, 414 (1960)).
N.J.S.A. 33:1-32 provides:
Subject to rules and regulations, each issuing
authority by resolution, first approved by the
commissioner, may impose any condition or conditions
to the issuance of any license deemed necessary and
proper to accomplish the objects of this chapter and
secure compliance with the provisions hereof, and all
such licenses shall become effective only upon
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compliance with the conditions so stated and shall be
revocable for subsequent violation thereof.
[(Emphasis added).]
As used in the statute, the term "issuance" applies to not only the original grant
of a license but also to its transfer and renewal. Lyons Farms Tavern, 68 N.J. at
51-52. The municipality need not obtain the Director's approval before passing
the resolution placing special conditions on a license, but the statute "requir[es]
the Director's approval before any regulations adopted by a municipality become
effective." Gober v. Twp. Comm. of Pemberton, 185 N.J. Super. 323, 333 (Law
Div. 1982).
Iron Bar, LLC (Iron Bar) has operated a bar-restaurant at 5 South Street
in Morristown — The Iron Bar — since 2012, and another bar-restaurant —
Revolution — at adjacent premises, 7-9 South Street, since 2016. The Iron Bar
borders a redevelopment area that has seen significant residential development
in recent years. There are six other licensees on the same South Street block,
with a total approved capacity exceeding 2000. The municipal ordinance
permits alcoholic beverage licensees to sell liquor until 2 a.m.; needless to say,
the exodus from these bars and restaurants creates unique problems.
The Town of Morristown (the Town) approved Iron Bar's application for
a "place-to-place transfer" of a license, first, in 2012, when Iron Bar proposed
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operating a Mexican restaurant at 9 South Street. The Town conditioned the
approval on the prohibition of alcohol sales after 11 p.m. Iron Bar never opened
the restaurant.
In 2014, Iron Bar again sought approval of a license transfer, proposing
this time a "jazz themed restaurant," called "Iron Bistro," in storefronts at 7 and
9 South Street (the expansion area). Despite opposition from some members of
the public, the Town approved the request. It imposed a similar condition on
the license, i.e., no sales of alcohol in the expansion area after 11 p.m., Sunday
through Thursday, and after 11:30 p.m. on Friday and Saturday.
Iron Bar appealed the limit on sale hours to the Division of Alcoholic
Beverage Control (ABC). It did so again when the Town approved its renewal
application for the 2015-16 license term with the same conditions. Although the
ABC Director stayed the special condition pending each appeal, the Office of
Administrative Law (OAL) did not hear either appeal before the respective
license terms expired.
In June 2016, when Iron Bar applied to renew its license, the Town again
imposed the same limits for alcohol sales in the expansion area. Iron Bar
appealed to the ABC, and the matter was transferred to the OAL as a contested
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case. The parties submitted a joint stipulation of facts, and, after two days of
additional testimony, the administrative law judge (ALJ) closed the record.
When the ALJ was appointed as a judge of the Tax Court, however, a
second ALJ was assigned to the case. After both sides agreed to close the record
without further submissions, he rendered an initial decision. The ALJ "found
no nexus between the perceived problems of noise or misbehavior and the
operation of Revolution[,]" and "there was insufficient evidence of substantially
widespread community opposition to the transfer (expansion) sought in this
matter." Because the Town "failed to demonstrate . . . the operation of
Revolution has caused or is linked to any real conditions that threaten the health,
safety, welfare, and morals of the community," the ALJ concluded that the Town
could not "meet the 'necessary and proper' standard . . . in N.J.S.A. 33-1-32."
The ALJ determined "the imposition of the time restriction, including the
inexplicable selection of the closing times, demonstrates that it is arbitrary and
capricious."
The Director adopted the ALJ's initial decision in his final agency
decision. He noted that license-issuing authorities usually impose special
conditions "where there is a pattern of violations of either ABC statutes,
regulations or ordinances, or of the zoning or fire code[,]" but here, "based on
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the stipulation of facts . . . there were no violations of any State or municipal
ordinances by [Iron Bar]." Recognizing special conditions may be justified by
"a pattern of similar special conditions on other licenses that address a similar
problem[,]" the Director found here, the Town's clerk "expressly stated that no
other licensee has a special condition that limits hours." Additionally, there was
no "widespread public sentiment that the licensee [was] causing a problem that
need[ed] to be addressed[,]" because although "at most, [fourteen] people
expressed concern[] . . . the Chief of Police, a Council woman and . . . other
residents . . . found no problem and did not know the reason for the condition."
Finally, the Director noted that Iron Bar agreed to limit its occupancy for
the entire premises, and the Town conceded The Iron Bar rarely exceeded the
limit. Therefore, the Director found that "even if the limited[-]hours
restriction[s] were in place, the patrons of Revolution would simply move to
[The] Iron Bar . . . and all would leave at 2[] a.m., adding no additional people
onto the street." The Director concluded "the special condition limiting
Revolution's hours [was] arbitrary and unreasonable." The Director's order
declared the special condition limiting the hours "void," and he vacated the stay
and special conditions limiting occupancy to 1043 persons. This appeal
followed.
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The Town argues the Director's decision was arbitrary, capricious and
unreasonable because it "divested the Town Council of its principal jurisdiction
and primary authority" over licensees, and there was sufficient credible evidence
in the record supporting imposition of the special condition that limited sales.
The Town also argues Iron Bar "materially misrepresented the nature of the
expanded premises." The Town contends the Director's decision to stay and
ultimately void the special condition on Iron Bar's license "violated the
Administrative Procedure Act" (APA), N.J.S.A. 52:14B-1 to -24. Lastly, the
Town contends evidentiary rulings, and OAL's failure to render an initial
decision within forty-five days of closing the record, see N.J.S.A. 52:14B-10(c),
denied the Town a fair hearing and violated its due process rights.
We have considered these arguments in light of the record and applicable
legal standards. We affirm.
Our review of the Director's decision "is limited in scope." Circus
Liquors, 199 N.J. at 9 (citing In re Herrmann, 192 N.J. 19, 27 (2007); In re
Carter, 191 N.J. 474, 482 (2007)).
[W]hile the local issuing authority is vested with
discretion in the exercise of any statutory jurisdiction
committed to it, nevertheless when the Division
determines on appeal that that discretion has been
exercised improperly or mistakenly and the court is
reviewing the Division's determination, the inquiry
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becomes one as to whether it can be said that the
Director's action was a manifestly mistaken exercise of
his own sound discretion.
[Bd. of Comm'rs of Belmar v. Div. of Alcoholic
Beverage Control, 50 N.J. Super. 423, 426 (App. Div.
1958) (citing Hickey v. Div. of Alcoholic Beverage
Control, 31 N.J. Super. 114 (App. Div. 1954); Rajah
Liquors v. Div. of Alcoholic Beverage Control, 33 N.J.
Super. 598 (App. Div. 1955)).]
"Without a 'clear showing' that it is arbitrary, capricious, or unreasonable, or
that it lacks fair support in the record, an administrative agency's final quasi -
judicial decision should be sustained, regardless of whether a reviewing court
would have reached a different conclusion in the first instance." Circus Liquors,
199 N.J. at 9-10 (quoting Herrmann, 192 N.J. at 27-28). In making this
determination, we review:
(1) whether the agency's action violates express or
implied legislative policies, that is, did the agency
follow the law; (2) whether the record contains
substantial evidence to support the findings on which
the agency based its action; and (3) whether in applying
the legislative policies to the facts, the agency clearly
erred in reaching a conclusion that could not reasonably
have been made on a showing of the relevant factors.
[Id. at 10 (quoting Mazza v. Bd. of Trs., Police &
Firemen's Ret. Sys., 143 N.J. 22, 25 (1995)).]
While we generally defer to an "agency's interpretation of a statute" it is
charged with enforcing, Thompson v. Board of Trustees, Teachers' Pension &
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Annuity Fund, 449 N.J. Super. 478, 483 (App. Div. 2017), aff'd o.b., 233 N.J.
232 (2018), we accord "substantial deference" to the Director's decision. Circus
Liquors, 199 N.J. at 10.
In enforcing the State's alcohol regulations, the
"Director has powers of supervision and control which
set him apart from any other formal appellate tribunal."
Because of the "sui generis nature and significance" of
the State's liquor regulations, "it is a subject by itself,
to the treatment of which all the analogies of the law,
appropriate to other administrative agencies, cannot be
indiscriminately applied."
[Ibid. (quoting Blanck, 38 N.J. at 490-91).]
"Still, we are not 'bound by an agency's interpretation of a statute or its
determination of a strictly legal issue, particularly when that interpretation is
inaccurate or contrary to legislative objectives.'" S.L.W. v. N.J. Div. of Pensions
& Benefits, ___ N.J. ___, ___ (2019) (slip op. at 10) (quoting Mount v. Bd. of
Trs., Police & Firemen's Ret. Sys., 233 N.J. 402, 418-19 (2018)).
The Town argues that the Director divested the municipality of its primary
power to regulate licenses, and first the ALJ and then the Director failed to
consider credible evidence demonstrating public sentiment against the
concentration of bars in the area and public support for the special condition.
Certainly, public sentiment is a valid consideration for the Director when it
relates to "dangers to the public health, safety, morals and general welfare
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commonly recognized as incidents of the sale and consumption of alcohol."
Lyons Farms Tavern, Inc. v. Mun. Bd. of Alcoholic Beverage Control of
Newark, 55 N.J. 292, 307 (1970). In Lyons Farms Tavern, the public sentiment
against renewal was considered "substantial" when "neighbors, local residents,
three neighborhood and civic associations with sizable memberships, two
Rabbis serving local and community interests, and by representatives of the
nearby Beth Israel Hospital[,]" objected. Id. at 297.
Before the ALJ, however, while several residents and a councilmember
testified about the problems caused by the crowds, i.e., public urination and
vomiting near the premises, it was undisputed that Iron Bar had not violated any
ABC regulations, municipal ordinances, or fire codes. The municipal clerk
testified that the Town had not imposed a special condition on any other
licensee. The Chief of Police testified that the large crowds on the sidewalks
and streets near the premises were mostly attributable to The Iron Bar and not
Revolution; he could not explain why the special condition was initially imposed
or why the Town chose the specific times for the special condition to go into
effect. Another councilmember testified that she did not support the special
condition, and that she voted in favor of it only to assure approval of the
application. In short, there was more than sufficient credible evidence in the
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record for the Director to conclude there was not widespread public s entiment
in favor of the special condition and that Iron Bar had no history of violations,
i.e., there was no nexus between the special condition and the alleged problems .
In Belmar, the Director voided special conditions the municipality
repeatedly placed on a hotel's license, severely restricting the location within the
establishment where liquor could be sold. 50 N.J. Super. at 425. The Director
found there had been "no trouble" at the licensed premises during the prior two
years, and it was "unfair" that none of the other eight hotels in town was
subjected to "these obviously crippling conditions." Id. at 426. In affirming the
Director's decision, we said, "This is the kind of decision which was intended
by the Legislature to be committed to his expert judgment and it should not be
overruled by the court in these circumstances." Ibid. The same is true in this
case.
We also reject the Town's assertion that Iron Bar "materially
misrepresented" the nature of its intended business as it approved both prior
applications because Iron Bar said it intended to operate restaurants in the
expansion area. First, at oral argument before us, the Town acknowledged there
was a hearing before the municipal council on Iron Bar's 2016-17 renewal. We
were not provided with a transcript of that hearing, but, we have no reason to
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assume the Town was denied the opportunity to fully investigate Iron Bar's
intention at the time of the hearing, or that it actually misrepresented its
intention. Secondly, it is disingenuous to assert that Iron Bar assented to the
special condition when it twice exercised its right to appeal the special
condition, but because of delays unexplained by this record, the issue was never
decided on the merits in the OAL.
The Town also argues that the Director failed to adopt regulations
regarding the issuance of licenses with special conditions, and the lack of
regulations violates the APA. 1 See Metromedia, Inc. v. Dir., Div. of Taxation,
97 N.J. 313, 329 (1984) ("An agency determination that is intended to be applied
as a general standard and with widespread coverage and continuing effect can
. . . be considered an administrative rule . . . ."). If "the . . . agency determination
constitute[s] a rule, . . . its adoption require[s] compliance with [the] statutory
rule-making procedures" of the APA. Id. at 334.
However, "an agency decision in a contested case is not an administrative
rule." G. & J.K. Enters., Inc. v. Div. of Alcoholic Beverage Control, 205 N.J.
Super. 77, 85 (App. Div. 1985); see also N.J.S.A. 52:14B-2 (the definition of
1
The Town's challenge to the Director's issuance of a stay pending final
decision is moot. Redd v. Bowman, 223 N.J. 87, 104 (2015).
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"'[a]dministrative rule' or 'rule' . . . does not include . . . agency decisions and
findings in contested cases"). "An administrative agency need not adopt rules
and standards precisely detailing every broad grant of conferred authority." G.
& J.K. Enters., 205 N.J. Super. at 85 (citing Mitchell v. Cavicchia, 29 N.J. Super.
11, 14 (App. Div. 1953)). We reject the Town's argument, without prejudice to
its ability to file an appropriate rulemaking petition under the express provisions
of the APA. See N.J.S.A. 52:14B-4(f).
Finally, we reject the Town's arguments that the OAL's delay in issuing
an initial decision and evidentiary rulings made by the ALJ during the hearing
denied it a fair hearing and due process. The arguments require scant comment
in a written opinion. R. 2:11-3(e)(1)(E).
The ALJ conducted a voir dire of the Town's proposed expert, a municipal
planner. She rejected admission of his expert report because he admitted having
no knowledge of ABC law or procedures. Nevertheless, she permitted him to
testify as an expert in planning and to identify video footage of the area showing
the crowds.
Iron Bar proffered the testimony of a former director of the Division. With
the Town's consent, the judge permitted him to testify about ABC procedures,
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and he opined about the scope and extent of municipal power under N.J.S.A.
33:1-32.
In an administrative proceeding, the judge may admit expert testimony if
it "will assist . . . to understand the evidence or determine a fact in issue."
N.J.A.C. 1:1-15.9(b). "A judge sitting on a bench trial is in the best position to
determine if expert testimony on a particular issue will assist that judge." N.J.
Div. of Youth & Family Servs. v. Z.P.R., 351 N.J. Super. 427, 439 (App. Div.
2002) (citing Wilkerson v. Pearson, 210 N.J. Super. 333 (Ch. Div. 1985)). We
see no mistaken exercise of the judge's discretion in limiting the testimony of
the planner. The Town's essential argument, which was supported by the
proffered expert witness, about the effect of numerous licensed premises in close
proximity to a rapidly developing residential area was not lost on the ALJ or the
Director.
While an expert may not address matters of law which are the
responsibility of the court to decide, see, e.g., Troxclair ex rel. Troxclair v.
Aventis Pasteur, Inc., 374 N.J. Super. 374, 384-85 (App. Div. 2005) (noting
court has no obligation to accept expert's statutory interpretation), permitting
the former ABC Director to testify was harmless error. R. 2:10-2. Neither the
ALJ's initial decision nor the Director's final decision even cited the testimony.
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Lastly, any delay between closing the record and rendering the initial
decision was harmless, particularly since the second ALJ offered the Town an
opportunity to supplement the record when he assumed control of the case, and
the Town declined.
Affirmed.
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