Supermarket Express, L.L.C., t/a Lagoon v. Commonwealth of Virginia ( 2005 )

COURT OF APPEALS OF VIRGINIA
Present: Judges Benton, Frank and Senior Judge Overton
Argued at Chesapeake, Virginia
SUPERMARKET EXPRESS, L.L.C.,
t/a LAGOON
MEMORANDUM OPINION* BY
v. Record No. 1389-04-1 JUDGE NELSON T. OVERTON
MARCH 22, 2005
COMMONWEALTH OF VIRGINIA,
DEPARTMENT OF ALCOHOLIC BEVERAGE
CONTROL AND VIRGINIA ALCOHOLIC BEVERAGE
CONTROL BOARD
FROM THE CIRCUIT COURT OF THE CITY OF VIRGINIA BEACH
H. Thomas Padrick, Jr., Judge
Kevin E. Martingayle (Stallings & Bischoff, P.C., on briefs), for
appellant.
Carla R. Collins, Assistant Attorney General (Jerry W. Kilgore,
Attorney General; Frances S. Ferguson, Deputy Attorney General, on
brief), for appellees.
Supermarket Express, L.L.C., t/a Lagoon (Lagoon) appeals the May 28, 2004 order of the
circuit court affirming the suspension of its wine and beer on and off premises and mixed
beverage restaurant licenses by the Virginia Alcoholic Beverage Control Board (ABC). On
appeal, Lagoon argues (1) Code § 4.1-225(1)(h) and the Virginia Beach noise ordinance are
unconstitutionally vague, subject to selective enforcement, and without articulable standards,
(2) it was improper for an associate city attorney to present ABC’s case to the hearing officer,
(3) the court erred in affirming ABC’s denial of its motions for remand to present additional
evidence and for the recusal of the Board members, (4) the court erred in affirming the hearing
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
officer’s allowance of the amendment of the charge immediately prior to the hearing, and (5) that
Rule 2A:3 acted to deny it equal protection and due process. We disagree and affirm the trial
court’s decision.
BACKGROUND
Lagoon is the holder of ABC licenses permitting wine and beer on and off the premises
and allowing the sale of mixed beverages. Pursuant to a report of license violation, a hearing
officer conducted an administrative hearing on October 27, 2003. The original complaint
advised Lagoon that ABC would consider whether “the place occupied by [Lagoon] is so located
that violations of the ABC Act or the laws of the Commonwealth relating to peace and good
order have resulted from issuance of the license and operation thereunder . . . .” The complaint
also alleged that “[f]rom April 13, 2002 to April 12, 2003, at various times, the licensee allowed
noisy or disorderly conduct upon the licensed premises, in violation of [Code] § 4.1-225(1)(h)
. . . .” Immediately prior to the hearing, the hearing officer amended the second charge to extend
the time period under consideration to July 5, 2003.
Evidence presented at the hearing indicated the police several times had warned the
club’s manager and owners of excessive noise coming from the establishment. Several noise
ordinance violations were issued for incidents occurring on May 25, 2002, July 22, 2002,
December 28, 2002, May 15, 2003, and June 5, 2003. Police officers also testified about several
fights involving injuries in and outside the club as well as violations of laws against underage
drinking and possession of narcotics by Lagoon patrons during the period in question.
The hearing officer dismissed the first charge against Lagoon, but found the evidence
substantiated the second charge. She recommended that Lagoon’s licenses be revoked. Lagoon
appealed the hearing officer’s decision to ABC. ABC heard the appeal on March 23, 2004 and
issued its final decision on March 25, 2004, upholding the hearing officer’s findings. Instead of
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revoking Lagoon’s licenses, ABC suspended them for ninety days, allowing a sixty-day
suspension if Lagoon paid a civil penalty of $5,000. ABC also placed Lagoon on probation for
two years beginning on June 1, 2004. Lagoon then appealed ABC’s decision to the circuit court.
The circuit court affirmed ABC’s action. It is from this decision that Lagoon appeals.
ANALYSIS
The standard by which a trial court must review the findings of a state agency is not
equivalent to a trial de novo. School Board v. Nicely, 12 Va. App. 1051, 1062, 408 S.E.2d 545,
551 (1991). In reviewing an agency decision, “[t]he scope of court review of a litigated issue
under the [Administrative Process Act] is limited to determination [of] whether there was
substantial evidence in the agency record to support the decision.” State Board of Health v.
Godfrey, 223 Va. 423, 433, 290 S.E.2d 875, 880 (1982); see Code § 9-6.14:17. The substantial
evidence standard is “designed to give great stability and finality to the fact-findings of an
administrative agency.” Va. Real Estate Comm’n v. Bias, 226 Va. 264, 269, 308 S.E.2d 123,
125 (1983). A trial court may reject the findings of fact “only if, considering the record as a
whole, a reasonable mind would necessarily come to a different conclusion.” Id. (citing B.
Mezines, Administrative Law § 51.01 (1981)).
I.
In pertinent part, Code § 4.1-225(1)(h) provides:
The Board may suspend or revoke any license other than a
brewery license, in which case the Board may impose penalties as
provided in § 4.1-227, if it has reasonable cause to believe that:
The licensee . . .
* * * * * * *
Has allowed noisy, lewd or disorderly conduct upon the
licensed premises . . . .
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Appellant asserts “[t]here are no standards or definitions set out in the statute,” thus causing the
enforcement to be “entirely discretionary on an individualized basis among law enforcement
officers.” Lagoon appears to assert the “reasonable cause” language in the statute is
unconstitutionally vague. Relying on the testimony of an ABC agent that the standard she uses
to decide whether to bring charges under Code § 4.1-225 is based on her “opinion,” Lagoon
complains that “there are absolutely no standards for law enforcement and the public is subjected
to the whim of completely ‘individualized’ discretion or opinion . . . .”
When testing the constitutional validity of statutes, courts
shall presume the statute to be valid. See Bennett v.
Commonwealth, 8 Va. App. 228, 235, 380 S.E.2d 17, 21 (1989).
Consequently, the burden to show the constitutional defect is on
the challenger. See id. In reviewing a void-for-vagueness
argument, courts employ a two pronged test. See Brewster v.
Commonwealth, 23 Va. App. 354, 357, 477 S.E.2d 288, 289
(1996). First, the language of the statute must provide a person of
average intelligence a reasonable opportunity to know what the
law expects from him or her. See id. Second, the language must
not encourage arbitrary and discriminatory selective enforcement
of the statute. See Coleman v. City of Richmond, 5 Va. App. 459,
463, 364 S.E.2d 239, 241-42 (1988).
Gray v. Commonwealth, 30 Va. App. 725, 731-32, 519 S.E.2d 825, 828 (1999). “In determining
whether a legislative enactment is unconstitutionally vague, the Supreme Court has considered
whether the words used have a well-settled . . . meaning . . . .” Flannery v. City of Norfolk, 216
Va. 362, 366, 218 S.E.2d 730, 733 (1975); see also, e.g., Pedersen v. City of Richmond, 219 Va.
1061, 1065, 254 S.E.2d 95, 98 (1979) (citing dictionary to determine “generally understood”
meaning for adjective in ordinance).
As applied to appellant, Code § 4.1-225(1)(h) survives the constitutional challenge. The
terms “noisy,” “disorderly conduct,” and “reasonable cause” have well established meanings.1 A
1
“Noise” is defined as “loud, confused, or senseless shouting or outcry: din or uproar of
persons.” Webster’s Third New International Dictionary 1533 (1981); Code § 18.2-415
criminalizes specific enumerated acts as “disorderly conduct”; “[t]he ‘reasonable cause’ standard
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person of average intelligence would know what type of conduct is prohibited. Appellant also
contends the statute is unconstitutionally vague because it authorizes and encourages
discriminatory enforcement. However, the terms used in the ordinance describe particularized
acts, the occurrence of which, when measured by common practice and understanding, are
deemed to violate the statute. Therefore, the statute is sufficiently definite to avoid arbitrary and
discriminatory enforcement and is not unconstitutionally vague.
The bulk of Lagoon’s argument supporting its first question presented focuses on the
constitutionality of the Virginia Beach noise ordinance. We need not address this argument.
Whether Lagoon actually violated the local noise ordinance was not an issue decided by the
hearing officer or the lower court. Instead, the fact that Lagoon had been cited under the
ordinance was introduced as evidence to prove the licensee had allowed noisy and disorderly
conduct upon the licensed premises. Even if the Virginia Beach noise ordinance is vague – a
question we do not decide – it would merely affect the weight to be given to the evidence that
Lagoon had been cited under that ordinance numerous times. Because Lagoon does not
challenge the sufficiency of the evidence supporting the finding of a violation of Code
§ 4.1-225(1)(h), we need not decide whether any problems with the local ordinance would
discredit the substantial evidence that Lagoon had “allowed noisy . . . or disorderly conduct upon
the licensed premises.”
II.
Citing Cantrell v. Commonwealth, 229 Va. 387, 329 S.E.2d 22 (1985), Lagoon contends
it was improper for a city attorney for the City of Virginia Beach to “act as prosecutor in this
matter.” In Cantrell, the Supreme Court of Virginia found a conflict of interests where a crime
requires less than the probable cause standard and does not require a showing that a violation has
in fact occurred.” Paramount Builders, Inc. v. Commonwealth, 260 Va. 22, 28, 530 S.E.2d 142,
144 (2000).
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victim’s family hired a private attorney to institute a civil suit and the trial court designated the
same attorney to act as a special prosecutor to assist the Commonwealth’s attorney in Cantrell’s
criminal prosecution. In this case, a civil action, a city attorney represented ABC at the initial
hearing before the hearing officer. We find no error in the court’s conclusion that the city
attorney acted within her authority by “prosecuting” the case.
The matter before the court was civil in nature rather than criminal. See Jackson v. W.,
14 Va. App. 391, 410, 419 S.E.2d 385, 396 (1992). Although Code § 2.2-507 provides that the
Office of the Attorney General shall provide legal services for the Board in civil matters, Code
§ 2.2-509 contemplates that a substitute may represent the Board in administrative proceedings.
Lagoon correctly notes that the record does not indicate the Attorney General specifically
authorized the city attorney to represent ABC in the administrative proceeding. However, we
find any error in the process by which the city attorney presented evidence at the hearing was
harmless.
“In short, error which does not injuriously affect the interest of the party complaining is
not reversible.” Jenkins v. Winchester Dep’t of Soc. Servs., 12 Va. App. 1178, 1186, 409 S.E.2d
16, 21 (1991). Lagoon asserts it was harmed by the city attorney’s participation in the hearing
due to an inherent bias and a conflict of interests. The record reveals no such bias or conflict on
the part of the city attorney.
III.
Lagoon challenges the denial of its motion for a rehearing and for the recusal of Board
members.
3 VAC 5-10-180 provides, in pertinent part:
A rehearing before a hearing officer shall not be held in any matter
unless it be affirmatively shown that relevant and material
evidence, which ought to produce an opposite result on rehearing,
is available, is not merely cumulative, corroborative or collateral,
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and could not have been discovered before the original hearing by
the use of ordinary diligence. . . .
Lagoon proffered as the basis for its rehearing motion documentation of a November 14, 2003
ABC meeting attended by the city attorney. Although Lagoon speculates that the merits of its
case before the Board was discussed at the meeting, the documentation demonstrates only that
the meeting was procedural in nature. There is no proof that Lagoon, either overtly or covertly,
was the topic of conversation at the meeting. In sum, Lagoon has failed to proffer any material
evidence and the rehearing request was properly denied.
Similarly, Lagoon’s request that the Board members recuse themselves was also properly
denied. The evidence simply fails to establish that any ex parte communication between the
Board and Virginia Beach officials occurred with respect to Lagoon.
IV.
Lagoon argues it was error for the hearing officer to amend the second charge
immediately before the hearing. Lagoon asserts it “was not prepared to address the additional
months and incidents” and that the “last minute” amendment constituted a due process violation.
To show a due process violation, Lagoon must overcome “the presumption of official
regularity” which is bestowed upon agency decisions. Code § 2.2-4027. The record reveals an
informal conference was conducted in August 2003, prior to the original hearing date, at which
time the proposed amendment was discussed. The hearing was continued twice at Lagoon’s
request. The hearing officer correctly noted Lagoon had “prior knowledge” of the extended time
period. Furthermore, Lagoon, while objecting to the amendment, did not request a continuance
at the October 23, 2003 hearing. As such, there was no due process violation and we find no
error in granting the amendment.
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V.
Citing no authority, Lagoon asserts Rule 2A:3 “denies equal protection and due process.”
Although Lagoon raised this issue in its petition for appeal before the trial court, it failed to
obtain a ruling on this matter from that court. Lagoon presented no argument on the issue before
the court, and the court’s ruling merely affirms the Board’s suspension of Lagoon’s licenses.
Accordingly, we need not address this issue as “there is no ruling for us to review on appeal.”
Ohree v. Commonwealth, 26 Va. App. 299, 308, 494 S.E.2d 484, 489 (1998).
However, we note that while Lagoon complains it “was forced to file its circuit court
petition making certain assumptions as to what would be included in the record, and without
being able to dissect and analyze the exact, full record,” it failed to demonstrate it suffered any
actual prejudice as a result. “It is a fundamental principle of constitutional law, firmly supported
by both Federal and State authorities, that a person who challenges the constitutionality of a state
statute has the burden of proving that he himself has been injured or is threatened with injury by
its enforcement.” DeFebio v. County Sch. Bd., 199 Va. 511, 514, 100 S.E.2d 760, 762-63
(1957).
For the reasons stated above, the ruling of the circuit court is affirmed.
Affirmed.
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Benton, J., dissenting.
I.
The record indicates that on October 27, 2003 the ABC Board’s hearing officer
conducted an evidentiary hearing on the ABC Board’s two charges that Lagoon operated in a
manner that subjected its license to suspension or revocation. At that hearing, an associate city
attorney for the City of Virginia Beach acted on the ABC Board’s behalf, presenting evidence in
support of the revocation and suspension. During the course of her closing argument, the
associate city attorney said the following:
Another thing to go on the record: Yes, we do object to new
licenses that are going into premises that didn’t used to have
licenses. I will go right on the record with that. We come here to
ABC hearings, and we get basically talked about every time,
saying, basically, the ABC doesn’t know how many is too many.
The City of Virginia Beach thinks that we know how many is too
many, and we have too many down there right now.
The associate city attorney further asserted that the evidence was sufficient to support both
charges and argued “the license [should be] revoked.” At the conclusion of the arguments, the
hearing officer announced she would “take the matter under advisement.”
Two weeks later, on November 14, 2003, while the matter was still pending for decision,
representatives from the City of Virginia Beach met with representatives from the ABC Board in
the Board’s Richmond office. Among the persons present at the meeting were the associate city
attorney, who had represented the interest of the ABC Board at the suspension and revocation
hearing of Lagoon’s license, the chief hearing officer, who supervises the work of the hearing
officer that was considering the revocation and suspension of Lagoon’s license, and the chairman
of the ABC Board.
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The record further indicates that at the meeting, the representatives of the City presented
two documents that concerned issues to be discussed. The first document specifically mentioned
Lagoon and raised the following concern:
ISSUE: Hearings not timely set - ex parte continuances granted
upon applicant’s request (allows establishments to finish the resort
season even when problems are critical).
Example:
May 2003, requested hearing to revoke license of Lagoons. July
2003, requested expedited hearing to revoke license of Lagoons
due to public safety concerns. The case was set for August 14,
2003. Defense attorney requested continuance because he was not
available and would not be available until September. He provided
September 19th as an agreeable date. After the continuance was
granted and the date was set, the City was informed. After filing a
FOIA with the City regarding Lagoons, defense counsel contacted
the Board, again requesting a continuance because he was not
available on September 19th. The Board granted the continuance
and has yet to set a new hearing date. The City found out about
this when the Associate City Attorney called the Agent involved to
let her know about the FOIA request which had been filed. The
hearing was held October 27th; no result as of November 11th.
The second document did not specifically mention Lagoon but listed various instances in
which the City had opposed the issuance of licenses in the same vicinity in which Lagoon is
located and included as an issue the following:
ISSUE: Hearing Officers refuse to rely upon § 4.1-222(A)(3) to
deny licenses (too many establishments/public safety concerns).
See attached statute.
As of 5 November 2002, there were approximately 114 businesses
with ABC licenses on Atlantic and Pacific, between 5th Street and
31st Street. Of those businesses approximately 42 are located on
Atlantic and Pacific between 17th and 21st Street.
Code of Virginia Section 4.1-222.A.3 lists one of the reasons the
Board may refuse to grant a license is if it has reasonable cause to
believe that there are already too many licensed establishments in
the area.
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The City has objected to the issuance of a license in the Block area
of the Resort area (17th and 21st Street and Atlantic) under the
provisions of this section on numerous occasions. Each time the
attorney representing the interests of the City has been advised by
the hearing officer that the Board would not refuse to issue a
license if the objection was based solely on the provisions of
Section 4.1-222.A.3 because the officer had no way of determining
how many licenses were too many, and to attempt to do so without
further guidance from the General Assembly, would be arbitrary
and capricious . . . .
This issue is directly related to the associate city attorney’s argument to the hearing officer about
“too many” licensed establishments on the Beach and the request to revoke Lagoon’s license.
The record indicates that among the topics discussed at this meeting was the timing of the
issuance of license suspensions. The associate city attorney was quoted, following the meeting,
as urging that license suspensions should be served in the summertime and asserting that
suspensions at any other time would be a useless act. After the meeting, the City issued the
following press release:
Representatives of Virginia Beach City Council, City Attorney’s
office and Police Department met in Richmond with members of
the Alcoholic Beverage Control Board and senior management
officials today to discuss cooperative efforts to improve the levels
of enforcement of ABC laws and regulations in the City.
During a two-hour meeting, Beach officials shared local concerns
with what they described as a small number of alcohol-licensed
operations which threaten public safety in the city. They requested
additional ABC enforcement efforts and expedited disciplinary
proceedings for problem establishments. ABC officials provided
the city visitors with an explanation of the ABC licensing and
disciplinary process, and pledged renewed effort at communication
and cooperation with Virginia Beach to address problem licensees.
No specific licensees were discussed.
Preliminary discussions were held on a city proposal under
consideration to create a team of various city regulatory
departments and ABC to inspect licensed establishments for
zoning, tax, public health and other local code compliance as well
as compliance with liquor laws.
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II.
Lagoon alleges that the proceedings were tainted by the ex parte contact between the
ABC Board’s decisionmakers and the City’s representatives, one of whom was the associate city
attorney prosecuting the Board’s two charges against Lagoon at the evidentiary hearing. As the
record demonstrates, this ex parte contact occurred while the charges were pending for
adjudication. This record brings into focus the well established principle that ex parte contacts
by one party with the fact finder during an adjudicatory proceeding raises the specter of a
violation of the other party’s due process rights. See Chessman v. Teets, 354 U.S. 156, 162
(1957); Haller v. Robbins, 409 F.2d 857, 859 (1st Cir. 1969). This is so because ex parte
contacts violate the most fundamental tenant of due process: the right to be heard by an unbiased
decisionmaker.
[A] “fair trial in a fair tribunal is a basic requirement of due
process.” In re Murchison, 349 U.S. 133, 136 (1955). This applies
to administrative agencies which adjudicate as well as to courts.
Gibson v. Berryhill, 411 U.S. 564, 579 (1973). Not only is a
biased decisionmaker constitutionally unacceptable but “our
system of law has always endeavored to prevent even the
probability of unfairness.” In re Murchison, supra, at 136; cf.
Tumey v. Ohio, 273 U.S. 510, 532 (1927).
Withrow v. Larkin, 421 U.S. 35, 46-47 (1975).
The record contains indications that the ABC Board rendered its decision in part based on
what it and the City officials discussed during its meeting while the charges were pending for
adjudication. The City officials disclosed in a press release that they specifically discussed with
the ABC Board the issue of licensing on the Beach. Moreover, the documents Lagoon obtained
through a freedom of information request demonstrated that the parties may have specifically
discussed Lagoon. A local newspaper also reported that the city attorney who prosecuted the
ABC Board’s charges against Lagoon and a city councilman said they urged the ABC Board to
revise its processes to impose suspensions for establishments at the Beach during the summer.
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Although this issue was never argued during the hearing, that is precisely what the ABC Board
did when it rendered its decision in this case.
The Virginia Administrative Process Act does not have explicit rules governing ex parte
contacts.2 Due process requires, however, procedural safeguards be observed to protect a party’s
right to be heard by an unbiased decisionmaker during the adjudicatory proceeding. Thus, even
without an explicit proviso in the Act, due process principles should have required the Board to
document the ex parte communication, notify Lagoon, make the content of the communication a
part of the record, and provide Lagoon a meaningful opportunity to respond. See Professional
Air Traffic Controllers Org. v. FLRA, 672 F.2d 109, 113 (D.C. Cir. 1982). The due process
requirements for adequate notice and an opportunity to be heard mandate disclosure of the ex
parte communications on the record before any decision is rendered. Id.
Disclosure requirements serve the “fundamental notions of
fairness implicit in due process and . . . the ideal of reasoned
decisionmaking on the merits which undergirds all of our
administrative law.” Only through disclosure of ex parte
communications may we protect the . . . “right to participate
meaningfully in the decisionmaking process” and “the critical role
of adversarial comment in ensuring proper functioning of agency
decisionmaking and effective judicial review.”
North Carolina Environmental Policy Institute v. Environmental Protection Agency, 881 F.2d
1250, 1258 (4th Cir. 1989).
2
Unlike Virginia’s Act, the federal act and the administrative procedure acts of most
states prohibit ex parte contacts, and most require ex parte communications be made part of the
record. See, e.g., 5 U.S.C. §§ 554(d), 557(d); Alaska Stat. § 44.62.630; Ark. Code Ann.
§ 25-15-209; Conn. Gen. Stat. § 4-181; Fla. Stat. § 120.66; Idaho Code § 67-5253; 5 Ill. Comp.
Stat. 100/10-60; Iowa Code § 17A.17; Kan. Stat. Ann. § 77-525; 5 Me. Rev. Stat. § 9055; Md.
Code Ann. § 10-219; Mich. Comp. Laws § 24.282; Mont. Code Ann. § 2-4-101; Neb. Rev. Stat.
§ 84-914; N.H. Rev. Stat. Ann. § 541-A:36; N.M. Stat. Ann. § 12-8-13; N.Y. Comp. Laws. St.
Admin. P. Act § 307; N.C. Gen. Stat. § 150B-35; 75 Okl. St. § 313; Or. Rev. Stat. § 183.462; 24
Vt. Stat. Ann. § 1207; Wash. Rev. Code § 34.05.455; W. Va. Code 29A-1-4.
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When, as here, an ex parte communication is made that involves a key issue of a pending
case, the ABC Board’s failure to disclosure the communication gives the appearance that it made
its decision based on what occurred at its meeting with City officials. This “appearance” of
impropriety was underscored by the ABC Board’s failure to provide Lagoon with notice of the
meeting. Moreover, as appeared was warranted here, the ABC Board should have ordered and
conducted “‘an evidentiary hearing to determine the nature, extent, [and] source’” of the ex parte
communications. Id. (quoting Professional Air Traffic Controllers Org., 672 F.2d at 113). In
addition, as the party making the communication, it should have been the City’s burden “‘to
show cause why [its] claim or interest in the proceeding should not be dismissed, denied,
disregarded, or otherwise adversely affected on account of such violation . . . .’” North Carolina
Environment Policy Institute, 881 F.2d at 1258 (quoting the federal requirement of 5 U.S.C.
§ 557(d)(1)(D)).
For these reasons, I would hold that this record provides a basis upon which the trial
judge should have ruled that the ABC Board erred in denying Lagoon’s motion for an
evidentiary hearing to inquire into the topics discussed at the City’s meeting with the ABC Board
and to determine whether the ex parte contact impaired Lagoon’s right to have an impartial
decision by the hearing officer and the ABC Board. Ex parte contacts in adjudicatory
administrative proceedings are disturbing; they occur unnoticed to the public yet, at a local level,
substantially affect the due process rights of private businesses and business persons. Whether
the City and representatives of the ABC Board held a discussion concerning matters related to
the pending proceeding implicates Lagoon’s right to due process. Therefore, I would reverse the
judgment and remand with instructions to the trial judge to remand the proceeding to the ABC
Board for an evidentiary hearing and for reconsideration of the matter at issue.
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