Elhanise, Inc. v. Ohio Liquor Control Comm. ( 2014 )

[Cite as Elhanise, Inc. v. Ohio Liquor Control Comm., 2014-Ohio-2243.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
Elhanise, Inc., :
Appellant-Appellant, :
No. 13AP-937
v. : (C.P.C. No. 12CVF-13471)
Ohio Liquor Control Commission, : (REGULAR CALENDAR)
Appellee-Appellee. :
D E C I S I O N
Rendered on May 27, 2014
The Gearhiser Law Firm, and Kurt O. Gearhiser, for
appellant.
Michael DeWine, Attorney General, and Paul Kulwinski, for
appellee.
APPEAL from the Franklin County Court of Common Pleas
KLATT, J.
{¶ 1} Appellant-appellant, Elhanise, Inc. ("Elhanise"), appeals a judgment of the
Franklin County Court of Common Pleas affirming an order of appellee-appellee, the Ohio
Liquor Control Commission ("Commission"). For the following reasons, we affirm that
judgment.
{¶ 2} Elhanise operates the Mt. Airy Food Mart, a convenience store located in
Cincinnati. The Division of Liquor Control ("Division") issued Elhanise a liquor permit in
2004. From January 2009 to March 2010, the Investigative Unit of the Ohio Department
of Public Safety investigated Elhanise for the suspected illegal trafficking of EBT cards and
No. 13AP-937 2
receiving stolen property.1 As a result of that investigation, Nazih Shteiwi, the sole
shareholder and officer of Elhanise, was indicted for three counts of illegal use of
supplemental nutritional assistance program benefits or WIC program benefits in
violation of R.C. 2913.46(B). Ayman Abu-Naffa, an Elhanise employee, was indicted for
five counts of receiving stolen property in violation of R.C. 2913.51(A) and six counts of
illegal use of supplemental nutritional assistance program benefits or WIC program
benefits in violation of R.C. 2913.46(B).
{¶ 3} The indictment resulted in the conviction of both Shteiwi and Abu-Naffa.
Abu-Naffa pleaded guilty to one count of illegal use of supplemental nutritional assistance
program benefits or WIC program benefits, a felony of the fifth degree. Shteiwi pleaded
guilty to three counts of attempted illegal use of supplemental nutritional assistance
program benefits or WIC program benefits, misdemeanors of the first degree.
{¶ 4} On April 6, 2012, the Commission notified Elhanise that it would hold a
hearing to determine whether to suspend or revoke Elhanise's liquor permit for Shteiwi's
violation of Ohio Adm.Code 4301:1-1-52(B)(6) and Abu-Naffa's violation of Ohio
Adm.Code 4301:1-1-52(B)(7). Ohio Adm.Code 4301:1-1-52(B)(6) forbids a permit holder,
his agent, or employee to knowingly or willfully allow in or upon the permit premises the
purchase or use EBT cards in a manner not specifically authorized by R.C. Chapter 5101 or
Ohio Adm.Code Chapter 5101:4-1. Ohio Adm.Code 4301:1-1-52(B)(7) forbids a permit
holder, his agent, or employee from using the permit premises to receive the property of
another, knowing or having reasonable cause to believe, that such property has been
obtained through the commission of a theft offense.
{¶ 5} At the May 9, 2012 hearing, Elhanise denied the alleged violations, but
stipulated to the facts underlying the violations. In an order mailed May 24, 2012, the
Commission found that Elhanise had violated Ohio Adm.Code 4301:1-1-52(B)(6) and
(B)(7). The Commission offered Elhanise the option of paying a forfeiture in the amount
of $12,000 or suffering the revocation of its liquor permit. Elhanise paid the $12,000
forfeiture.
1 "EBT" stands for electronic benefit transfer. Ohio Adm.Code 5101:4-1-03(B)(2). EBT cards allow
recipients of food assistance benefits to access those benefits to pay for eligible foods at licensed food
stores. Ohio Adm.Code 5101:4-1-04(D).
No. 13AP-937 3
{¶ 6} At the same time Elhanise was dealing with the proceedings to suspend or
revoke its liquor permit, it also had to contend with a challenge to the renewal of that
permit. On April 18, 2012, the Cincinnati City Council passed a resolution objecting to
Elhanise's annual application for renewal of its liquor permit. Upon receipt of the
council's objection, the Division held a hearing to determine whether to deny the renewal.
In an order mailed September 7, 2012, the Division denied Elhanise's renewal on three
grounds: (1) the place for which the permit was sought was so located with respect to the
neighborhood that substantial inference with public decency, sobriety, peace, or order
would result from the renewal of the permit and operation by the applicant (R.C.
4303.292(A)(2)(c)); (2) the applicant had shown a disregard for the laws, regulations, or
local ordinances of the state (R.C. 4303.292(A)(1)(b)); and (3) a shareholder owning 5
percent or more of the applicant's capital stock was convicted of a crime related to the
fitness to operate a liquor establishment (R.C. 4303.292(A)(1)(a)).
{¶ 7} Elhanise appealed the Division's non-renewal order to the Commission.
The Commission conducted a hearing on the appeal. In an order mailed October 17, 2012,
the Commission affirmed the Division's order.
{¶ 8} Elhanise then appealed the Commission's order to the trial court. The trial
court found that the first ground for non-renewal, i.e., substantial inference with public
decency, sobriety, peace, or good order, was not supported by probative or substantial
evidence. Nevertheless, on the strength of the other two grounds for non-renewal, the
trial court affirmed the Commission's order.
{¶ 9} Elhanise now appeals the trial court's judgment to this court, and it assigns
the following error:
The court below erred when it affirmed the order of the
Liquor Control Commission because the hearing before the
Liquor Control Commission violated the legal doctrine of res
judicata. Therefore[,] the order of the Liquor Control
Commission was not in accordance with law.
{¶ 10} Elhanise has appealed a legal issue. When reviewing the trial court's
judgment as to whether an agency's decision is in accordance with law, an appellate
court's review is plenary. Spitznagel v. State Bd. of Edn., 126 Ohio St.3d 174, 2010-Ohio-
2715, ¶ 14.
No. 13AP-937 4
{¶ 11} Before addressing the merits of Elhanise's assignment of error, we must
clarify the two types of matters at issue here. First, a permit holder may be sanctioned
through the suspension or revocation of its liquor permit for the violation of any
restriction of R.C. Chapter 4301, 4303, or any lawful rule of the Commission, or for other
sufficient cause. R.C. 4301.25(A). The Commission hears and determines such a matter
in the first instance. Id. A permit holder adversely affected by an order of the
Commission revoking or suspending the liquor permit may appeal that order pursuant to
R.C. 119.12. R.C. 4301.28(C).
{¶ 12} Second, the municipality, township, or county in which a permit premises is
located may object to the annual renewal of a liquor permit. R.C. 4303.271(B). Upon
receipt of an objection, the Division holds a hearing and determines whether to deny the
renewal. Id. If the Division denies the renewal, the permit holder may appeal to the
Commission for a hearing. R.C. 4301.28(A)(1); 4303.271(A). If the Commission affirms
the Division's order, the permit holder may appeal to the Franklin County Court of
Common Pleas. R.C. 119.12; 4301.28(B).
{¶ 13} By its sole assignment of error, Elhanise argues that the doctrine of res
judicata barred the Commission from hearing the renewal appeal because it had already
heard and decided the matter of whether to revoke Elhanise's liquor permit. In Ohio, the
doctrine of res judicata encompasses both issue preclusion, also known as collateral
estoppel, and claim preclusion. State ex rel. Nickoli v. Erie MetroParks, 124 Ohio St.3d
449, 2010-Ohio-606, ¶ 21. Elhanise asserts that both issue prelusion and claim
preclusion prevented the Commission from hearing the renewal matter. We disagree.
{¶ 14} Both issue preclusion and claim preclusion may apply to quasi-judicial
administrative proceedings. State ex rel. Schachter v. Ohio Public Emps. Retirement Bd.,
121 Ohio St.3d 526, 2009-Ohio-1704, ¶ 29. For the purposes of res judicata, an
administrative proceeding is quasi-judicial if the parties have had an ample opportunity to
litigate the issues involved in the proceeding. Id. Here, both parties concede, and we
agree, that both revocation and renewal proceedings before the Commission qualify as
quasi-judicial proceedings. Consequently, orders resulting from those proceedings may
have a preclusive effect on subsequent matters.
No. 13AP-937 5
{¶ 15} Pursuant to the doctrine of issue preclusion, " 'a fact or a point that was
actually and directly at issue in a previous action, and was passed upon and determined
by a court of competent jurisdiction, may not be drawn into question in a subsequent
action between the same parties or their privies, whether the cause of action in the two
actions be identical or different.' " State ex rel. Davis v. Pub. Emps. Retirement Bd., 120
Ohio St.3d 386, 2008-Ohio-6254, ¶ 27, quoting Ft. Frye Teachers Assn., OEA/NEA v.
State Emp. Relations Bd., 81 Ohio St.3d 392, 395 (1998). Essentially, issue preclusion
prevents the re-litigation of facts and issues that the parties or their privies fully litigated
in a previous case. Glidden Co. v. Lumbermans Mut. Cas. Co., 112 Ohio St.3d 470, 2006-
Ohio-6553, ¶ 44.
{¶ 16} Because the doctrine of issue preclusion applies to facts and issues, not
entire matters, it would not prevent the Commission from hearing the renewal matter. At
best, Elhanise could only employ issue preclusion to preclude the Commission from re-
deciding facts and issues it had previously determined in the revocation matter. Issue
preclusion, therefore, does not support Elhanise's argument.
{¶ 17} We thus turn to the doctrine of claim preclusion. " 'Claim preclusion
prevents subsequent actions, by the same parties or their privies, based upon any claim
arising out of a transaction that was the subject matter of a previous action.' " Nickoli, 124
Ohio St.3d 449, 2010-Ohio-606, at ¶ 21, quoting Ft. Frye Teachers Assn. at 395. Under
claim preclusion, a previous judgment is conclusive as to all claims that were or might
have been litigated in the first action. Schachter, 121 Ohio St.3d 526, 2009-Ohio-1704, at
¶ 27. Thus, a plaintiff must present every ground for relief in the first action or be forever
barred from asserting it. Brown v. Dayton, 89 Ohio St.3d 245, 248 (2000).
{¶ 18} Arguably, the doctrine of claim preclusion could preclude the Commission
from hearing a renewal matter involving the same permit holder and arising out of the
same set of facts as a previously heard revocation matter. We are puzzled why Elhanise
seeks this result. Claim preclusion, applied to this situation, would only serve to prevent
the Commission from hearing Elhanise's appeal of the Division's non-renewal order.
Elhanise, therefore, would lose its liquor permit pursuant to the Division order and
deprive itself of an avenue to appeal that order. While we question the wisdom of
Elhanise's appeal, we will, nevertheless, consider whether claim preclusion applies here.
No. 13AP-937 6
{¶ 19} "The main legal thread which runs throughout the determination of the
applicability of res judicata * * * is the necessity of a fair opportunity to fully litigate and
to be 'heard' in the due process sense." Goodson v. McDonough Power Equip., Inc., 2
Ohio St.3d 193, 200-01 (1983); accord Meyer v. Chieffo, 193 Ohio App.3d 51, 2011-Ohio-
1670, ¶ 13 (10th Dist.) ("Claim preclusion * * * 'provides that a valid, final judgment
rendered on the merits after a fair and full opportunity to litigate all claims bars all
subsequent actions between the same parties or their privies arising out of the transaction
or occurrence that gave rise to the prior action.' "). (Emphasis added.) Thus, for claim
preclusion to apply here, justice requires that it be possible for the Commission to
entertain both revocation and renewal matters in the same proceeding. If those matters
cannot be joined, but claim preclusion operates as a bar to a hearing of a renewal matter,
then the parties will be denied a fair and full opportunity to be heard on both matters. In
such a situation, adjudication of a revocation matter would preclude the permit holder
from fully litigating a renewal matter, as the permit holder could not exercise its statutory
right to appeal the Division's non-renewal order to the Commission.
{¶ 20} After reviewing the applicable statutes and administrative rules, we
conclude that no law permits the Commission to consolidate revocation and renewal
matters. Consequently, we conclude that fairness and justice does not support the
application of claim preclusion in these circumstances. See Johns 3301 Toledo Café, Inc.
v. Liquor Control Comm., 10th Dist. No. 07AP-632, 2008-Ohio-394, ¶ 38 (refusing to
apply claim preclusion to preclude a second revocation hearing based on the same
incident).
{¶ 21} For the foregoing reasons, we overrule Elhanise's assignment of error, and
we affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
DORRIAN and O'GRADY, JJ., concur.