Woodfield v. WEST RIVER IMPROVEMENT ASSOC. ( 2005 )

KRAUSER, J.

The Circuit Court for Anne Arundel County reversed the decision of the County Board of License Commissioners, granting a liquor license to appellants, William R. Woodfield, Jr. (“Woodfield”) and Superior Woodfields, LLC. (“Superior Woodfields”), for a new crab and seafood restaurant in Gales-ville, Maryland. It did so at the urging of appellees, a group composed of the West River Improvement Association, Inc. (“West River”), the West River Sailing Club, Inc., and nineteen individuals, all but one of whom were Galesville residents.¹

But the central figure in this dispute is neither an appellant nor an appellee, nor was he a party to or even a participant in any of the proceedings below. His name is Charles N. Bassford, and it was his connection to this liquor license and to other liquor licenses issued to two other County restaurants he reputedly owns, which led the circuit court to reverse the decision of the county liquor board and deny appellants a liquor license in the belief that to do otherwise would violate Art. 2B, Md. Ann.Code, § 9-301. That subsection prohibits the same person or entity from owning an interest in two or more liquor licenses in Anne Arundel County.

From the circuit court’s decision, appellants noted this appeal, presenting two issues for review. As stated in appellants’ brief, they are:

I. Whether the lower court erred by substituting its judgment for that of the liquor board, holding that there was no substantial evidence to support the liquor board’s finding that issuance of a license to Woodfields complied with the provisions of Article 2B, Md. Ann. Code § 10-202(a)(2).

II. Whether the lower court erred by failing to rule on the liquor board’s decision within 90 days as required by Art. 2B, Md. Ann.Code, § 16-101(e)(3).

For the reasons that follow, we shall affirm the judgment of the circuit court.

BACKGROUND

William R. Woodfield, Jr. applied to the County Board of License Commissioners (the “Board”), on behalf of Superior Woodfields, LLC,² for a Class B beer, wine, liquor, Sunday, and music liquor license.³ The license was for a new crab and seafood restaurant to be located in Galesville, Maryland. The application indicated that the land upon which the restaurant was to be located was owned by 3809 Crain Limited Partnership (“3809 Crain”), whose president was Charles N. Bassford.

On April 8, 2003, the Board held a public hearing on Woodfíeld’s application. At that hearing, Woodfield and others testified on behalf of the application. The other witnesses were a registered landscape architect, a real estate appraiser, a certified land planner and land use consultant, Woodfield’s first cousin, and “customer of all three (3) restaurants in Galesville.... ” Given the narrowness of the issues before us, however, their testimony is largely irrelevant and does not bear recounting. Woodfield’s, on the other hand, does.

Woodfield confirmed that the restaurant was to be located on land owned by 3809 Crain, that the land would be rented by Annapolis Produce & Restaurant Supply, Inc., (“Annapolis Produce”) from 3809 Crain, and that Annapolis Produce would operate the restaurant. The liquor license, however, was to be managed by Superior Woodfields, pursuant to an agreement with Annapolis Produce. He further stated that, although he currently worked for Annapolis Produce as the assistant manager of the seafood section, when the restaurant opened, he would participate in the management of the restaurant, concentrating on the seafood part of the operation.

After appellants finished presenting their case for the license, appellees testified as to the problems that the proposed restaurant with a liquor license would cause. They expressed concern about such things as increased boating and automobile traffic, light and noise pollution, and intoxicated restaurant patrons, and they questioned the public need for another restaurant with a liquor license in Galesville. But their testimony, like the testimony presented by appellees, is irrelevant to the issue before us: the interest Mr. Bassford purportedly had in this and other county liquor licenses.

Jim Rogers was one of a number of witnesses presented by appellees who addressed this question. He not only questioned Woodfield’s control over the liquor license at issue but claimed that the “real applicant here is Mr. Bassford.” In support of that claim, he introduced the articles of organization for Superior Woodfields, noting that they were prepared and witnessed by Alan Hyatt, who had previously represented 8809 Crain, Mr. Bassford’s company, in connection with the purchase of several pieces of property.

The introduction of the articles prompted the Board to make the following inquiry:

Board: Who is your lawyer, Mr. Woodfield?

Woodfield: My lawyer is sitting right beside me, Mr. Delavan.

Board: Did you ever have any huh, without going into the nature of the discussion, did you ever consult with Alan Hyatt concerning ...

Woodfield: I have never met Alan Hyatt at all.

Board: All ...

Woodfield: Unless I passed him in traffic, I have never met him.

Board: Did you ever pay him a retainer?

Woodfield: No sir.

Rogers further testified that, at a community meeting at which Bassford and Woodfield were present to discuss the proposed restaurant, “[w]e asked [Bassford] [what is your financial interest in the liquor license] Mr. Chairman and he did not want to answer.” The Board then asked:

Board: [Woodfield,] [w]hat’s Mr. Bassford’s involvement if any in this license.

Woodfield: Mr. Bassford owns the property, the owner of the business is the Annapolis Produce, I work for Annapolis Produce....

Board: Okay, so what’s Mr. Bassford’s financial interest in this license?

Woodfield: None.

Board: Mr. Woodfield is that your testimony under oath?

Woodfield: Yes. To the best of my knowledge none in that area____

After noting that Woodfield works for Annapolis Produce, Rogers stated, “I believe Mr. Bassford owns Annapolis Produce.” The Board then asked Woodfield’s counsel if he knew who owned Annapolis Produce. He responded:

I do not know who owns Annapolis Produce, I do believe that Mr. Bassford is a principal in that corporate entity, I have no idea what percentage small or large he may own. I think it is common knowledge although I have no personal knowledge, it is common knowledge that he is a principal in that corporate entity, if in fact it’s a corporation, and I don’t even know that.

When Rodgers attempted, however, to introduce a Dun & Bradstreet business report, confirming that Bassford was the president of Annapolis Produce, the Board rejected the report on relevancy grounds. And finally, Rogers testified that Bassford was the owner of two other County restaurants, Topside and Steamboat Landing, that had county liquor licenses.

Other witnesses presented by appellees agreed. Peter Bell, the vice-president of West River, testified that West River’s board of directors voted to oppose the liquor application because, among other reasons, “Mr. Nick Bassford while not the applicant owns [Superior] Woodfields and also owns two (2) of the other liquor license restaurants, he owns Topside and he owns Steamboat Landing as well.” Virginia Wood, a long term resident of Galesville, expressed similar sentiments. Bassford, she insisted, had bought the Steamboat Landing and the Topside Inn. A letter written by Jeanette Hartge, another member of the Galesville community, was also read, in which she stated that Mr. Bassford owned two of the three restaurants in Galesville. Finally, referring to the community meet-' ing Bassford attended, Laura Cox, another Galesville resident, stated:

[Bassford] spoke at that meeting in the first party person about this restaurant and how it would be run. He also spoke about the two (2) other restaurants, which have liquor licenses in Galesville as his. He talked about them failing and not doing well, he talked about restructuring the management teams there and changing the staff, he talked about the quality of service and the quality of food.

At the conclusion of the hearing, the Board granted Wood-field a class H liquor license.⁴ In doing so, the Board stated:

The Board is required under Article 2B, 10-102 to consider a variety of factors in the totality of the circumstances in granting a license, among those factors is whether of [sic] not the license is necessary to accommodate the public.... [W]hether the applicant is a fit and proper person and we so find that the applicant is huh, paragraph huh, criteria three (3) whether there has been any false representations in the application and not with standing the allegation of a silent partner huh, there hasn’t been any credible evidence that has been produce[d] in rising to the level that this applicant has made any false huh, huh, material statements or committed fraud in the application. The Board is also charged to consider whether the operation of the license huh, huh, if granted would unduly disturb the peace of the community huh, and as a catch all the other reasons that the Board feels in it’s [sic] discretion should be huh, considered in huh, the issuance of the license. The principal concerns here are the accommodation of the public and what if any negative impact this establishment would have on the community. The community huh, as testified overwhelmingly as to their concerns and they are valid concerns.... However this is a W2 zoning classification that permits a restaurant no matter what this Board does huh, as well as other uses that huh, in my personal opinion would be far worse than any restaurant if huh, it was allowed to operate. Huh, for this reason I’m going to make following ... motion regarding this license that I believe will address the issues raised by the community ... so [I] find in motion that this license is necessary to accommodate the public, the public not being defined as the village of Galesville but the broader community of Anne Arundel County. Therefore, I’m going to make a motion that the license be granted as an H license, not as a B license. The difference being that this ... H license has no off sales, off sales are prohibited at this establishment....

I.

Appellants contend that the circuit court erred in holding, in appellants’ words, “that there was no substantial evidence to support the liquor board’s finding that issuance of a license to Woodfields complied with the provisions of Art. 2B, Md. Ann.Code, § 10 — 202(a)(2).” But that is not what the circuit court held. On the contrary, it declared: “The Court finds that there was sufficient evidence from which a reasonable trier of fact could conclude that there is a public need and desire for the license.”

It was not the Board’s finding that appellants had complied with § 10-202(a)(2) that caused the circuit court to reverse the Board’s decision, but the Board’s finding that appellants were not in violation of § 9-301. That conclusion, according to the court, could not have been reasonably drawn from the evidence presented.

Section 9-301 provides:

[A] person, franchisor, franchisee, chain store operation, partnership, firm or corporation, except by way of renewal, may not have any interest in more than one license, whether held or controlled by direct or indirect ownership, by franchise operation, by chain store operation, by stock ownership, interlocking directors or interlocking .stock ownership, or in any other manner directly or indirectly. It is the intention of this subsection to prohibit any such persons, franchisor, franchisee, chain store operation, firm, partnership, or corporation from having any interest, directly or indirectly, in more than one license.

Md.Code (1957, 2001 RepLVol.), Art. 2B § 9-301(3)(i).

In reversing the decision of the Board, the circuit court declared that, “by any reasonable interpretation of the evidence presented, a trier of fact would conclude that Mr. Bassford has a direct interest in this applicant as well as two other liquor license holders in Anne Arundel County, which would violate § 9-301.” The court further pointed out:

Mr. Bassford has an ownership interest in both the landlord and the tenant entities. The tenant (Annapolis Produce) will own and operate the restaurant. There was no evidence that there is a separation between the sale of food and liquor at the restaurant, or that Bassford would somehow only have an interest in the food sales but not the liquor sales. Similarly, there is no evidence that all the proceeds from the liquor sales would go only to Mr. Wood-field and/or Superior Woods. Without such evidence, logic dictates that the owner of a restaurant that sells liquor has a direct or indirect interest in the liquor sales. Mr. Wood-field testified he was mainly going to be in charge of the seafood operation, and did not state that he was the restauranteur. One of the expert witnesses testified that crabs and beer go together and that the sales of each affects the other. Ttranscript citation omitted]. There is no way a reasonable fact finder could have come to any conclusion other than Mr. Bassford has an interest in the sale of liquor, regardless of how the application was crafted.

We agree that the Board erroneously ignored mounting and uncontroverted testimony that Bassford had an interest in the license at issue and two other liquor licenses in Anne Arundel County. Woodfield’s counsel, for example, confirmed that Bassford was a “principal” in Annapolis Produce, the corporate entity that was to run the restaurant and rent the property from 3809 Crain. But that description actually understates his role in that entity.

According to a Dun & Bradstreet report, which appellees were prevented from introducing into evidence by the board, Bassford was in fact the president of Annapolis Produce. As Annapolis Produce was renting from 3809 Crain, another entity of which Bassford was president, Bassford occupied the enviable position of being on both sides of the transaction. Moreover, Woodfield worked for Annapolis Produce, and thus, for Bassford. Given, as the circuit court observed, that “there [was] no evidence that there [was] a separation between the sale of food and liquor at the restaurant” and that the “restaurant that sells the liquor has a direct or indirect interest in the liquor sales,” the circuit court correctly concluded that “[t]here is no way that a reasonable fact finder could have come to any conclusion other than Mr. Bassford has an interest in the sale of liquor, regardless of how the application was crafted.” That conclusion was further bolstered by testimony that Mr. Bassford remained conspicuously silent when asked at a town meeting what financial interest he had in the Woodfield liquor license.

Other witnesses offered uncontradicted testimony that Bassford owned two other county restaurants with liquor licenses: Topside and Steamboat Landing. Jim Rogers, a Galesville resident, testified to that fact, as did Peter Bell, the vice-president of West River, as well as Virginia Wood, a long term resident of Galesville. Adding to the cumulative weight of this testimony, Galesville resident, Laura Cox, testified that Bassford stated, at a community meeting, that he was going to “restructur[e] the management teams and chang[e] the staffs” of those two restaurants to make them more profitable.

Though the testimony presented by appellees on this point was largely hearsay and Unsupported by any documentation, we also note that it went unanswered by appellants, the very parties who presumably had at their fingertips the information and documentation that would have swiftly resolved this issue. Their silence, on this point, was deafening and damning.

Even this Court was unable to breach the wall of silence surrounding this question. At oral argument, counsel for appellants was asked what interest Bassford had in these two restaurants, and she responded, to no one’s surprise, that she did not know.

Before concluding our discussion of this issue, we note that both sides rely on Kilroy v. Bd. of License Comm’rs, 260 Md. 92, 271 A.2d 531 (1970) to bolster their respective positions. The Kilroys and the Cloppers were holders of 7-Eleven Stores franchises at different locations in Prince George’s County. Id. at 93, 271 A.2d 531. They received their franchises from the Southland Corporation. Id. at 94, 271 A.2d 531. When both franchisees applied separately for a liquor license, the Board of License Commissioners for Prince George’s County denied their applications on the grounds that one of South-land’s other franchisees already had a county liquor license and that to grant a license to another franchisee would violate Code, Art. 2B s 53(5). Id. at 94, 271 A.2d 531. That section prohibits any person or business, in Prince George’s County, from having an interest in more than one liquor license.⁵ Id. at 94-95, 271 A.2d 531.

The cases were then consolidated for appeal. Id. at 93, 271 A.2d 531. When the circuit court affirmed the decision of the board, the two franchisees noted an appeal. Id. Affirming that decision, the Court of Appeals first observed that, although “it has been held that a landlord [does not have an] interest in the liquor business conducted” on his premises, that holding applies to cases “where the landlord’s only interest is in the collection of rent.” Id. at 95-96, 271 A.2d 531 (citations omitted). But the Court cautioned that a situation in which “a franchisor has the right to control or regulate the manner in which a franchisee operates cannot be equated with the traditional relationship of landlord and tenant....” Id. at 96, 271 A.2d 531. Citing the “Store Agreements]” between Southland and the appellant franchisees, the Court concluded that Southland did have such a right of control over them.

After reviewing the “more unusual aspects of the ‘Store Agreement,’ ” the Court returned to two aspects of that agreement which it viewed as dispositive, stating:

We need grasp only two of the threads of this intricate fabric to dispose of the issue. It cannot be doubted that the agreements contemplated that Southland would have had a security interest in the Kilroys’ entire inventory, including their stock of liquor, and that receipts from the sale of any alcoholic beverages sold by the Kilroys would have come under Southland’s control by 3 p.m. of the banking day next following the day of sale. To conclude under such circumstances that [the franchisor] would not have had the direct or indirect interest in the [franchisees’] license which the statute proscribes would fly in the face of an unequivocal statement of legislative intent.

Id. at 96-97, 271 A.2d 531.

We agree with appellees that Bassford’s “arrangements gave him even greater control of the licensee and the sale of liquor at Woodfields Restaurant than the agreement between Southland and the Kilroys gave to Southland.” As noted, Bassford, as owner of Annapolis Produce, was the employer of Woodfield, the licensee, and ran the restaurant. In his capacity as president of Annapolis Produce, he had, we assume, the power to determine the amount of alcohol the restaurant purchased, the type of alcohol it purchased, and the sale price of that alcohol. And Woodfield, as his employee, had little room to complain. Nor was any evidence presented, as the circuit court observed, that there would be a separation between the sale of food and liquor at the restaurant, or that Bassford would only have an interest in the food sales but not the liquor sales or that the proceeds from the liquor sales would go only to Superior Woodfields.

Moreover, five witnesses testified that Bassford owned two other liquor serving restaurants in Anne Arundel County: the Steamboat Landing and the Topside Inn. And there was even evidence that Bassford had publicly stated as much at a community meeting. As this evidence was unchallenged by appellees at the Board hearing, we conclude the only reasonable inference that could be drawn from this testimony was that Bassford had an interest in the liquor license sought by appellees as well as two other county liquor licenses.

II.

Appellants claim that the circuit court failed to render a timely decision within 90 days “after the record ha[d] been filed in the court by the local licensing board,” in accordance with Md.Code (1957, 2001 Repl.Vol.), Art. 2B § 16-101(e)(3). That subsection provides that, “[u]nless extended by the court for good cause, the local licensing board’s decision ... shall be affirmed, modified, or reversed by the court within 90 days after the record has been filed in the court by the local licensing board.” Appellants point out that, on July 25, 2003, the Board filed the record with the circuit court, that the hearing was not held until October 27, 2003, and the order, reversing the Board was not issued until November 14, 2003. Thus, the court’s decision was rendered more than 90 days after the record was filed.

The delay, moreover, was not “extended by the court for good cause,” appellants assert. They point out that “there was no evidence, other than bald allegations in [appellees’] pleadings, that the court had scheduling conflicts that would have precluded hearing and deciding this appeal within the statutory time period.” “It appears simply,” they opine, “that due to a ‘clerical error,’ five separate requests to consider the time issue were never brought to a judge for consideration.” The clerical error, they insist, did not amount to good cause because the error was a “deliberate and knowing inaction in the face of clear and repeated demands [for action].”

The last day of the 90 day period within which this case could be heard and a decision rendered was October 23, 2003. In September, appellees moved to extend the hearing date to October 27, 2003. To that motion, appellants filed an opposition.

Granting appellees’ motion on October 20, 2003, three days before the 90 day period expired, the court continued the hearing date to October 27, 2003, for “good cause,” stating that “because of the various scheduling conflicts before [it], that it was impracticable for [it] to set a hearing in this matter on October 23, 2003.” And for “further cause” it added that “the motion and opposition were not brought to a Judge in time for consideration, due to a clerical error.”

Section 16 — 101(e)(3) permits the circuit court, in the exercise of its discretion, to extend the 90 day period for good cause, and that is what the circuit court did. Both scheduling conflicts, see State v. Frazier, 298 Md. 422, 457, 470 A.2d 1269 (1984), and clerical errors, see McIntyre v. State, 17 Md.App. 526, 529, 302 A.2d 672 (1973), have long been recognized as grounds, in other contexts, for justifying the extension of a hearing or a trial date. We have no reason to rule otherwise here. Moreover, contrary to appellants” claim, there is no evidence that the failure to bring this matter to the attention of the court was “knowing and deliberate.” We therefore find no abuse of discretion here.

Before concluding this opinion, we feel compelled to address the dissent’s assertion that the 90 day determination provision in Article 2B § 16-101 is “a mandatory time limit for a circuit court to decide a liquor board judicial review action,” an issue, which was not briefed by appellants (nor, for that matter, was the dissent’s claim that the court erred in not extending the time for decision by written order raised by appellants).

The dissent’s contention that that provision is mandatory is simply incorrect. The language and statutory history of § 16-101 leave little room for doubt that the 90 day determination provision is directory, not mandatory.

The history of this statute was limned by the Court of Appeals in Scherr v. Braun, 211 Md. 553, 128 A.2d 388 (1957). According to the Court, prior to the enactment of the statute in 1943, trial court review of local licensing board decisions was limited to “only one or two jurisdictions.” Id, at 562, 128 A.2d 388. Most appeals from local licensing boards were heard by the State License Bureau. Id. “The then governing statute, Code 1939, Art. 2B, § 63, made it the duty of the Bureau to hear and determine all such appeals ‘within thirty days from the date of the receipt of the papers’ from the local board.” Id. When, however, “the Attorney General, in 27 Op.Attys.Gen. 59, construed this statute to mean that the Bureau had a duty to act but that ‘[t]here is no provision in Section 63 which compels or necessarily tends to the conclusion that failure to act within the 30-day period nullifies a decision when made[,]’ ” the “Legislature undertook to authorize appeals from the license boards to the courts and, in doing so, put in the new statute the very provision that the Attorney General’s opinion said would have made the earlier statute mandatory.” Id. “In other words,” the Court continued, “the Legislature attached a consequence to the failure to act within the thirty-day period.” Id. And that “consequence was that the license board was affirmed automatically by mandate of the statute if the court did not act in due time.” Id. Thus 1943 Md. Laws, Chap. 714 was born, which is the predecessor of § 16-101. That statute states, in part:

The failure of the court to determine an appeal within a period of 30 days after the record has been filed in court by the local board as above provided, shall constitute an automatic affirmance of the local board’s decision, unless the time has been extended by the court for good cause shown.

This provision remained unchanged until 1991. Then it was amended to increase the period of time the circuit court had to “determine an appeal” and to remove the language stating that the failure by the circuit court to render a decision within thirty days would “constitute an automatic affirmance of the local board’s decision.” Amended, it stated:

Unless extended by the court for good cause, the local licensing board’s decision made under subsection (a) of this section shall be affirmed, modified or reversed by the court within 90 days after the record has been filed in the court by the local licensing board.

1991 Md. Laws, Chap. 560.

With the removal of the “automatic affirmance” language the 90 day provision became “directory.” What the addition of the automatic affirmance language created, its deletion extinguished.

Nor does the retention of the word “shall” in the determination provision affect our conclusion that it is directory, not mandatory. Our appellate courts have repeatedly declared that “shall” does not necessarily render a statutorily-specified action mandatory. That is especially true when, as here, the statute has no sanction for the court’s failure to comply with the relevant time provision. As the Court of Appeals has observed, “[statutory provisions fixing the time for performance of acts are held to be directory where there are no negative words restraining the doing of the act after the time specified and no penalty is imposed for delay.” Scherr, 211 Md. at 561, 128 A.2d 388. Indeed, almost a hundred years ago, that point was made by the Court of Appeals, in McCalls Ferry Power Co. v. Price, 108 Md. 96, 99, 69 A. 832 (1908), in which it held that Md. Const, art. 4, § 15, which states that the Court of Appeals “shall” file a written decision within three months of argument, was merely directory.

And, finally, we note that all of the cases relied upon by the dissent for the proposition that the 90 day determination provision is mandatory — Scherr, 211 Md. at 553, 128 A.2d 388; Pearce v. Board of Liquor License Commissioners, 228 Md. 515, 180 A.2d 651 (1962); Brown v. Baer, 291 Md 377, 435 A.2d 96 (1981); and Jabine v. Priola, 45 Md.App. 218, 412 A.2d 1277 (1980) — were decided before 1991 and thus predate the elimination of the “automatic affirmance” language from § 16-101. We therefore hold, given the statutory history of § 16-101 and the absence of any sanction for failing to meet its decisional deadline, the 90 day determination requirement is directory, not mandatory.

JUDGMENT OF THE CIRCUIT COURT FOR ANNE ARUNDEL COUNTY AFFIRMED. COSTS TO BE PAID BY APPELLANTS.

1 . The individual appellants are: Mary Tod Winchester, Albert Winchester, William Preston Hartge, Jeanette C. Hartge, Fred T. Arnold, Cecelia Petro, Laura E. Dixon, Laura K. Cox, John Cox, Virginia S. Wood, Jeffrey Smith, Pat Hantske, Robert Brandt, Susan Urich, Peter M. Bell, Carole Bosley, Janet Labella, Kathy Smith, and Charity Reedy Hines.

2 . In Maryland, a liquor license "may not be issued to a ... limited liability company, but only to individuals authorized to act for a ... limited liability company who shall assume all responsibilities as individuals, and be subject to all of the penalties, conditions and restrictions imposed upon licenses under the ... provisions of this article.” Md.Code (1957, 2001 Repl. Vol), Art. 2B § 9-101(a).

3 . A Class B beer, wine, and liquor license “authorizes its holder to keep for sale and sell all alcoholic beverages at retail ... for consumption on the premises or elsewhere....” Md.Code (1957, 2001 Repl.Vol.), Art. 2B § 6-201(a).

4 . "A Class H beer, wine, and liquor license authorizes the holder to keep for sale and sell beer, wine and liquor at retail at any restaurant for consumption on the premises.” Md.Code (1957, 2001 Repl.Vol.), Art 2B § 6-201 (c)(3)(i).

5 . The court noted that the Southland Corporation, the business that granted the Kilroys and the Cloppers their franchises, already had a franchisee in Prince George’s county with a liquor license. Kilroy, 260 Md. at 95, 271 A.2d 531.