Branch v. Virginia Department of Alcoholic Beverage Control , 21 Va. App. 242 ( 1995 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Elder and Annunziata
Argued at Richmond, Virginia
STEVE KENNETH BRANCH t/a IVORY'S RESTAURANT
OPINION BY
v. Record No. 0081-95-2 JUDGE LARRY G. ELDER
NOVEMBER 7, 1995
VIRGINIA DEPARTMENT OF
ALCOHOLIC BEVERAGE CONTROL
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Randall G. Johnson, Judge
J. Ridgely Porter, III, for appellant.
John Patrick Griffin, Assistant Attorney
General (James S. Gilmore, III, Attorney
General; Michael K. Jackson, Senior Assistant
Attorney General and Chief, on brief), for
appellee.
Steve Kenneth Branch appeals the trial court's affirmance of
the Alcoholic Beverage Control (ABC) Board's revocation of
Branch's two alcohol licenses. Branch contends (1) the ABC Board
lacked authority to revoke the licenses as a sanction for his
violations after he voluntarily surrendered the licenses; (2) the
ABC Board failed to conduct a de novo hearing after the trial
court vacated the revocations and remanded his case; (3)
insufficient evidence supported the charge that the operation of
his business resulted in breaches of peace and good order; and
(4) he substantially prevailed on appeal to the trial court and
was therefore entitled to an award of attorney's fees and costs.
Because the trial court committed no error, we affirm its
decision to uphold the ABC Board's revocations.
I.
FACTS
On July 26, 1993, the ABC Board gave Branch notice of
charges of violations of state alcohol beverage control laws,
which concerned his licenses for (1) mixed beverages 1 and (2)
wine and beer 2 at his establishment, Ivory's Restaurant.
On January 5 and 7, 1994, an ABC Board hearing officer
received testimony from Branch, Branch's employees and
bookkeeper, ABC agents, and local police officers. At the
hearing, Branch objected to the introduction of a television news
videotape, which depicted various incidents of violence occurring
near Ivory's. The hearing officer offered to make the video
available to Branch's counsel, but the record does not disclose
whether Branch's counsel availed himself of the opportunity. On
January 27, 1994, the hearing officer found Branch violated ABC
laws and recommended the revocation of both licenses.
On April 5, 1994, the case was heard before the full ABC
Board, and Branch presented testimony and additional evidence.
1
The charges included (1) Branch no longer conducted
business as a "restaurant;" (2) Branch failed to keep complete,
accurate, and separate records; (3) Branch attempted to defraud
the ABC Board by filing an inaccurate/fraudulent report; (4)
issuance of the license led to breaches of peace and good order;
and (5) Branch concealed the sale or consumption of alcoholic
beverages.
2
The charges included counts (1) - (4) of the mixed alcohol
beverage counts, plus a charge that Branch purchased beer or
beverages "except for cash."
2
Branch did not object to the hearing officer's handling of the
video or the other evidence relating to the peace and good order
charge. On April 6, 1994, the ABC Board revoked both licenses,
and Branch appealed to the Richmond Circuit Court.
On July 13, 1994, the Honorable Randall G. Johnson affirmed
the hearing officer's factual findings, but found that the
hearing officer improperly admitted the videotape. The trial
court stated that (1) the videotape was not so crucial to the ABC
Board's final decision that the entire process must be thrown
out; (2) only a remand could answer what the hearing officer or
the ABC Board would have found if the videotape had not been
admitted; and (3) the Board could "not base its decision and
orders on remand on any evidence related to the subject
videotape, unless the case is further remanded to the hearing
officer to allow Branch to present evidence in rebuttal to it."
The trial court therefore vacated the revocations and remanded
the case to the ABC Board. The trial court refused to award
Branch attorney's fees and costs, as he had not substantially
prevailed on appeal.
Branch filed a motion with the trial court requesting it to
amend or modify its July 13, 1994 order, which had not ordered a
de novo hearing on remand. The trial court refused to do so.
On remand, the ABC Board vacated the two April 6, 1994 final
orders of revocation and scheduled a hearing for the appeal. On
August 1, 1994, Branch objected to the ABC Board hearing his case
3
without affording him a de novo hearing before an officer.
Immediately prior to the final August 23, 1994 ABC Board hearing,
Branch voluntarily surrendered his licenses (which were to expire
on September 30, 1994) and claimed that the ABC Board could take
no further action against him. On September 6, 1994, the ABC
Board issued orders revoking Branch's licenses. On December 13,
1994, the trial court affirmed the ABC Board's revocations and
dismissed Branch's appeal.
II.
REVOCATION SUBSEQUENT TO VOLUNTARY SURRENDER
In his brief to the Court, Branch argued that once he
voluntarily surrendered his two licenses prior to the ABC Board
hearing, the ABC Board lacked the right to revoke the licenses on
September 6, 1994, thereby affecting what was already a final
termination. Branch relied on Code § 4.1-203(D), which states in
pertinent part:
The privileges conferred by any license granted by the
Board . . . shall continue [for a designated period of
time, which in this case was September 30, 1994],
except that the license may be sooner terminated for
any cause for which the Board would be entitled to
refuse to grant a license, by operation of law,
voluntary surrender[,] or order of the Board.
(Emphasis added). However, at oral argument, Branch conceded
that the voluntary surrender of an alcohol license does not bar
further revocation and sanction proceedings and conceded that
such proceedings may affect a licensee's chances of being granted
4
an alcohol license in the future. See 48 C.J.S. Intoxicating
Liquors § 171 at 613 (1981 & Supp. 1995). Because of this
concession we need not exhaustively address this issue. We
merely note that the ABC Board began its proceedings before
Branch attempted to surrender his licenses. Nothing in the
statute forbids the ABC Board from continuing an enforcement
action simply because a licensee unilaterally seeks to preclude
an adverse finding by surrender of the license after proceedings
commenced. We hold the ABC Board retained authority to revoke
Branch's licenses after he voluntarily surrendered them.
III.
LACK OF DE NOVO HEARING ON REMAND
We uphold the trial court's ruling that Branch had no
absolute right to a de novo hearing before a hearing officer on
remand.
The basic law under which the legislature empowered the ABC
Board to act contains no requirement that the case be remanded to
the hearing officer. The law authorizes the Board to promulgate
reasonable regulations necessary to carry out the provisions of
the basic law. Code § 4.1-111(A). The Code also provides that
"[t]he Board's power to regulate shall be broadly construed."
Code § 4.1-111(F).
The Regulations of the Virginia Department of Alcoholic
Beverage Control, which include the Rules of Practice Before
Hearing Officers and the ABC Board, also guide our determination.
5
Part II of the Rules, concerning hearings before the ABC Board,
includes VR125-01-1 § 2.6 (Evidence), which grants the ABC Board
certain powers. Section 2.6(B) states:
Should the Board determine at an appeal hearing, either
upon motion or otherwise, that it is necessary or
desirable that additional evidence be taken, the board
may:
1. Direct that a hearing officer fix a time and
place for the taking of such evidence . . .
and
2. Upon unanimous agreement of the board
members, permit the introduction of after-
discovered or new evidence at [an] appeal
hearing.
(Emphasis added). This section provides an explicit exception to
the general rule that all evidence should be introduced at a
hearing before a hearing officer. VR125-01-1 § 2.6(A). Because
the ABC Board may permit new evidence to be admitted after the
hearing officer receives evidence and makes a recommendation, it
follows that the ABC Board had the authority to exclude the
videotape from its consideration on remand.
VR125-01-1 § 1.7 (Decisions) also supports the conclusion
that the ABC Board was under no duty to instruct the hearing
officer to make new findings of fact on remand, without the use
of the videotape. VR125-01-1 § 1.7 states:
A. Initial decisions.--The decision of the hearing
officer shall be deemed the initial decision,
shall be a part of the record and shall include:
1. A statement of the hearing officer's findings
of fact and conclusions, as well as the
6
reasons or bases therefor, upon all the
material issues of fact, law or discretion
presented on the record; and
2. The appropriate rule, order, sanction, relief
or denial thereof as to each such issue.
(Emphasis added).
Additionally, in rendering its decision, the ABC Board "may
adopt, modify or reject the initial decision." § 1.7(F). The
ABC Board also has the authority at its hearing to "examine a
witness upon any question relevant to the matters in issue."
§ 2.6(C). These powers implicitly give the ABC Board the
authority to conduct a de novo review after the initial decision
has been rendered and are sufficiently broad to allow the ABC
Board to reconsider the case on remand from the circuit court
without the necessity to remand for another proceeding before the
hearing officer.
The trial court's July 13, 1994 order, which specifically
dealt with the remand issue, distinguished this case from
Virginia Bd. of Medicine v. Fetta, 244 Va. 276, 421 S.E.2d 410
(1992), a case on which Branch relies. In Fetta, the Supreme
Court held that the Virginia Board of Medicine violated statutory
provisions relating to the conduct of its proceedings. The Court
affirmed the trial court's ruling that because the violation
could have had an impact on the medical board's ultimate
decision, the proceeding could not be fairly reheard on remand
and had to be dismissed. Fetta, 244 Va. at 283, 421 S.E.2d at
7
414. In this case, the trial court wrote:
Here, the only error found in the agency's proceedings
concerns a videotape. There is nothing about that
tape, or the hearing officer's or Board's consideration
of it, which is per se so crucial or central to the
Board's final decision that the entire process must be
thrown out [as in Fetta] because of the hearing
officer's action.
The trial court wrote that it could not determine what the
hearing officer or the ABC Board would have found had the
videotape not been admitted into evidence and that only a remand
would answer this question. In fashioning its remand
instructions, the trial court wrote:
Accordingly, the final decisions and orders of the
ABC Board revoking the licenses of Mr. Branch will be
vacated, and the case will be remanded to the Board for
such further consideration and proceedings as the Board
deems appropriate. The Board is specifically
instructed, however, that it may not base its decisions
and orders on remand on any evidence related to the
subject videotape, unless the case is further remanded
to the hearing officer to allow Branch to present
evidence in rebuttal to it.
(Emphasis added). We hold that the trial court did not abuse its
discretion in fashioning these remand instructions. As the
3
Supreme Court stated in Fetta, Code § 9-6.14:19 explicitly
grants trial courts "the discretion to specify exactly what shall
3
This section states:
Where a regulation or case decision is found by the court to
be not in accordance with law under § 9-6.14:17, the court
shall suspend or set it aside and remand the matter to the
agency for such further proceedings, if any, as the court
may permit or direct in accordance with the law.
8
be done on remand." Fetta, 244 Va. at 280, 421 S.E.2d at 412.
Here, there is no evidence that the ABC Board based any of its
decision on remand on any evidence related to the videotape. It
was therefore unnecessary for the ABC Board to remand the case
for a de novo hearing before a hearing officer. On remand, the
ABC Board has the authority pursuant to its regulations to
reconsider its decision.
IV.
SUFFICIENCY OF EVIDENCE ON PEACE AND GOOD ORDER CHARGE
Third, we hold that sufficient evidence supports the finding
that Ivory's was so located that violations of law relating to
peace and good behavior resulted from the issuance of Branch's
ABC licenses. 4
We are guided in this determination by familiar standards of
appellate review of agency decisions.
Under Code § 9-6.14:17, the scope of review is
limited to whether there was "substantial evidence in
the agency record" to support the decision. The phrase
"substantial evidence" refers to "such relevant
evidence as a reasonable mind might accept as adequate
to support a conclusion." The court may reject the
agency's finding of fact "only if, considering the
record as a whole, a reasonable mind would necessarily
come to a different conclusion." This standard is
4
Branch was specifically charged with violating three
separate statutes: (1) Code § 4.1-222(A)(2)(b)(former § 4-31),
which states that the ABC Board can refuse to grant a license if
it has reasonable cause to believe that the establishment "[i]s
so located that granting a license and operation thereunder . . .
would result in violations of this title, Board regulations, or
violation[s] of the laws of the Commonwealth or local ordinances
relating to peace and good order"; (2) Code § 4.1-225(4)(former
§ 4-37), which states that the ABC Board may suspend or revoke a
license, or impose penalties, where "[a]ny cause exists for which
the Board would have been entitled to refuse to grant such
license had the facts been known"; and (3) Code § 4.1-203(D)
(former § 4-34), discussed supra, Section II.
9
designed "to give great stability and finality to the
fact-finding process of the administrative agency."
In addition, we review the facts in the light most
favorable to sustaining the Board's action and "take
due account of the presumption of official regularity,
the experience and specialized competence of the
agency, and the purposes of the basic law under which
the agency has acted."
Atkinson v. VABC, 1 Va. App. 172, 176, 336 S.E.2d 527, 529-30
(1985)(citations omitted).
Regarding the peace and good order charge, the ABC Board had
to determine:
first, that violations of the ABC Act or other laws of
the Commonwealth relating to peace and good behavior
[took] place at the establishment in question; second,
that there [was] some nexus between these violations
and the location of the establishment. The location,
in and of itself, must [have been] a relevant factor in
the causation of the violations in order to prove that
the establishment "[was] so located that violations of
the ABC Act or the laws of the Commonwealth relating to
peace and good order [had] resulted from issuance of
the license and operation thereunder."
Id. at 177, 336 S.E.2d at 530; see Muse v. VABC, 9 Va. App. 74,
79-80, 384 S.E.2d 110, 113 (1989).
We conclude from a complete review of the record that
"[s]ubstantial evidence was presented . . . which gave the ABC
Board reasonable cause to believe that circumstances had
developed, which, if known, would have entitled the ABC Board to
refuse to grant [Branch's] license at the outset." Id. at 80,
384 S.E.2d at 113. The record establishes that violations of the
law occurred at Ivory's and that Ivory's location, in and of
10
itself, contributed to disturbances of the peace and other
violations of the law.
Substantial evidence from the record reveals the following
facts: ABC agent G.R. Gullo testified that weapons were removed
from people who were refused entry to Ivory's because they were
intoxicated; and a man pulled a gun on a woman who sat in Ivory's
outside "glass booth." Sergeant Tim Morley of the Richmond
Police Department testified as to multiple violent incidents
related directly to Ivory's location, including (1) the beating
of a nineteen year old after an argument inside Ivory's; (2) the
shooting of five persons "stemming from a crowd situation outside
the club"; (3) the shooting of a person "in the head
approximately 75 feet from the front door of the club after
leaving"; (4) the striking of a police officer in the chest as he
tried to maintain order while Ivory's was closing for the night;
(5) the arrest of a person outside Ivory's for a fight that
originated inside the club; (6) a woman "struck by a bottle and
fists by 12 unknown suspects after refusing to dance with one of
them"; and (7) a man "struck in the head with a bottle inside the
club." Sergeant Morley also testified that Ivory's spawned the
most violent problems the police encountered in the adjacent
neighborhood. Lieutenant David Welch of the Virginia
Commonwealth Police Department testified that there were problems
with crowd control at Ivory's; that there were multiple instances
of fighting at Ivory's; and that gunshots were fired at Ivory's.
11
Finally, Randall Plummer, formerly in charge of Ivory's
security, testified he was assaulted at least three times and was
shot at while working at the club.
Based on these facts and circumstances, we hold that the
evidence supported the trial court's finding that a causal
relationship, or nexus, existed between Ivory's location and the
enumerated violations of the law.
V.
ATTORNEY'S FEES AND COSTS
Finally, based on our review of the proceedings in this
case, we hold that the trial court did not abuse its discretion
in finding that Branch could not recover from ABC reasonable
attorney's fees and costs. See Ingram v. Ingram, 217 Va. 27, 29,
225 S.E.2d 362, 364 (1976)("An award of attorney's fees is a
matter submitted to the trial court's sound discretion and is
reviewable on appeal only for an abuse of discretion."). Code
§ 9-6.14:21(A) of the Virginia Administrative Process Act (VAPA)
states:
In any civil case brought under Article 4 . . . of
this chapter and § 9-6.14:4.1, in which any person
contests any agency action, as defined in § 9-6.14:4,
such person shall be entitled to recover from that
agency . . . reasonable costs and attorney fees if such
person substantially prevails on the merits of the case
and the agency is found to have acted unreasonably,
unless special circumstances would make an award
unjust.
(Emphasis added). See Commonwealth v. Lotz Realty Co., Inc., 237
12
Va. 1, 11, 376 S.E.2d 54, 59 (1989).
On Branch's first appeal, the trial court found that
"because it cannot be reasonably said that Branch has prevailed
on this appeal, no attorney's fees or costs will be awarded."
The trial court's only reason for vacating the ABC Board's
revocation order and remanding the case was that the hearing
officer inappropriately admitted the videotape into evidence.
The trial court's order specifically stated that "[t]here is
nothing about that tape, or the hearing officer's or Board's
consideration of it, which is per se so crucial or central to the
Board's final decision that the entire process must be thrown out
because of the hearing officers' action."
Assuming without deciding that Code § 9-6.14:21(A)
supplements the ABC attorney's fees provisions, 5 we hold that the
trial court was not clearly wrong in deciding that Branch did not
"substantially prevail on the merits of the case," see
Commonwealth v. May Bros. Inc., 11 Va. App. 115, 120, 396 S.E.2d
695, 698 (1990)(holding that party "substantially prevailed" on
the merits where all disputed issues were decided in its favor),
and that the agency did not act "unreasonably" at any point in
these proceedings.
5
For example, in Shuler v. VEC, 14 Va. App. 1013, 420
S.E.2d 257 (1992), this Court held that VAPA provisions providing
for the award of attorney's fees and costs do not apply to
judicial review of determinations of claims for unemployment
compensation.
13
Accordingly, we affirm the trial court's order upholding the
ABC Board's revocations.
Affirmed.
14