Sheppard v. Arkansas Alcoholic Beverage Control Board

Cite as 2014 Ark. App. 604
ARKANSAS COURT OF APPEALS
DIVISION I
No. CV-14-80
LOUIS A. SHEPPARD Opinion Delivered November 5, 2014
APPELLANT
APPEAL FROM THE PULASKI
COUNTY CIRCUIT COURT, SIXTH
V. DIVISION [NO. CV-13-1269]
HONORABLE TIMOTHY DAVIS
ARKANSAS ALCOHOLIC BEVERAGE FOX, JUDGE
CONTROL BOARD
APPELLEE AFFIRMED
JOHN MAUZY PITTMAN, Judge
Louis A. Sheppard appeals the decision of the Arkansas Alcoholic Beverage Control
Board (the “Board”), which cancelled his conditionally granted application for A permit to
operate a retail liquor store. He raises several points on appeal, and after considering each of
his arguments, we affirm the decision of the Board.
In November 2010, the people of Clark County, Arkansas, voted to allow alcohol
sales. After this vote, the Arkansas Alcoholic Beverage Control Board began accepting
applications for retail liquor-store permits. Sheppard applied for a permit, and the Board
conditionally granted his application on October 16, 2011.
The approval of Sheppard’s permit was conditioned upon several modifications to the
premises where he intended to do business. The conditions required the remodeling of the
building, the installation of a fire-exit light and telephone, and re-inspection of the premises.
Alcoholic Beverage Control Division Rules and Regulations section 1.35 requires that any
Cite as 2014 Ark. App. 604
conditions attached to the granting of a permit be met within twelve months or the
application will be cancelled. Sheppard was allowed two extensions to this twelve-month
deadline, and he was given until December 31, 2012, to meet the conditions imposed by the
Board.
On December 31, 2012, Sheppard notified the Board that he was ready for a final
inspection. Seletia Smith, an inspection agent for the Alcoholic Beverage Control Division,
inspected the premises on January 2, 2013, and found that there was a restaurant buffet in the
center of the store, and that the premises lacked a telephone and shelving units. She returned
several days later, and a telephone had been installed. However, the buffet server remained
in the middle of the store, shelving units were not installed, and portions of the building were
partitioned off with plastic sheeting.
In the meantime, the Director of the Alcoholic Beverage Control Division, Michael
Langley, received a letter from Charles Singleton1 on January 3, 2013. In the correspondence,
Singleton asked that Sheppard’s conditionally granted application be rescinded because of false
material statements in his application and the delay in opening the business. On January 16,
2013, Langley advised the Board of the correspondence, and the Board determined that it
would hold a hearing on February 20, 2013, to review the information received.
The Board held an administrative hearing, and at its conclusion, it voted to terminate
Sheppard’s conditionally granted permit because of the delay in opening the liquor store and
1
Singleton is an attorney and former director of the Alcoholic Beverage Control
Division who represents Jay Arnold. Arnold stood to have his application for permit
considered in the event that Sheppard’s conditionally granted permit was cancelled.
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false material statements in his application. Sheppard appealed the Board’s decision to the
Pulaski County Circuit Court, and the circuit court affirmed the Board’s decision. This
timely appeal followed.
On appeal, Sheppard contends that: (1) the Board lacked jurisdiction to revoke his
permit based upon conditions it had no power to impose, (2) the Board lacked jurisdiction
to act because only the Director of the Alcoholic Beverage Control Division has the authority
to revoke a permit, (3) the Board lacked authority to revoke his permit for failure to conduct
business, (4) the Board lacked jurisdiction because it did not comply with notice requirements,
(5) the Director engaged in an improper ex parte communication with Charles Singleton, (6)
the Board lacked authority to apply Arkansas Code Annotated section 3-4-301(a)(2)(Repl.
2008), and (7) even if it had authority under section 3-4-301(a)(2), that section was arbitrarily
applied.
We first consider whether the Board had the authority to conditionally grant
Sheppard’s application for a permit. State agencies only possess such powers as are conferred
by statute or necessarily implied from a statute. Brookshire v. Adcock, 2009 Ark. 207, 307
S.W.2d 22. Although not binding, this court gives great deference to an agency interpretation
of a statute, and will not overturn the construction of a state statute by an administrative
agency unless it is clearly wrong. Id. Our review encompasses several statutory provisions
relating to the powers of the Board, and we read these statutes relating to the same subject in
a harmonious manner if possible. City of Fort Smith v. Tate, 311 Ark. 405, 410, 844 S.W.2d
356, 359 (1993).
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Arkansas Code Annotated section 3-4-208(g)(1) (Repl. 2008) provides that an
application for permit will be approved if the Board finds that “an applicant is qualified and
that his or her proposed premises meet the public convenience and advantage of the area in
question.” Sheppard argues that, because this section is silent regarding the Board’s authority
to impose conditions on the approval of applications, the Board has no such power. We
disagree. Arkansas Code Annotated section 3-4-201(c)(2)(B) (Repl. 2008) vests the Board
with the authority to set qualifications for applicants. Furthermore, Arkansas Code Annotated
section 3-4-704 (Repl. 2008) provides that the “Alcoholic Beverage Control Division is
authorized to adopt reasonable rules and regulations to carry out the intent and provisions of
this subchapter,” and Arkansas Code Annotated section 3-2-205(b)(2) (Repl. 2008) provides
the Board with the authority to adopt rules and regulations for the supervision and control
of the manufacture and sale of alcohol.
From this authority, the Board has enacted the Alcoholic Beverage Control Division
Rules and Regulations. These rules and regulations are contemplated by the legislature and
within the Board’s jurisdiction. They set forth requirements regarding the supervision and
control of alcohol sales and allow the Board to impose conditions to meet these requirements.
After a de novo review of these statutory provisions, we find that the Board had the authority
to enact rules and regulations, which included the imposition of conditions on granting permit
applications.
Sheppard contends that the Board’s action on February 20, 2013, was to revoke his
permit. Only permits that have been issued may be revoked. Ark. Code Ann. § 3-4-301(a)
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(Repl. 2008). Sheppard was never issued a permit; the Board merely conditionally granted
his application for permit. Therefore, the Board could not have revoked Sheppard’s permit,
and we need not address Sheppard’s arguments regarding whether the Board had the authority
to revoke his permit and whether it complied with revocation procedures.
Next, we consider whether the Board had the authority to act on Sheppard’s permit
following its conditional grant of his application. Arkansas Code Annotated section 3-2-214
(Repl. 2008) allows the Board to review, on its own motion, any action of the director in
granting or failing to grant, renewing or failing to renew, revoking or suspending, or failing
to revoke or suspend upon complaint, any permit. This statutory provision afforded the
Board the authority to review Sheppard’s application to determine why the director had failed
to issue a permit fifteen months after his application had been conditionally granted.
Finding that the Board had the authority to conditionally grant Sheppard’s application
and to hold a review hearing to determine why the director had failed to issue a permit, we
shift to Sheppard’s argument that he was not provided with sufficient notice of the proceeding
held on February 20, 2013. Our review indicates that Sheppard did not challenge the
sufficiency of the notice that he received at the administrative hearing, and appellate courts
have repeatedly held that they will not set aside an administrative determination upon a
ground not presented to the agency because to do so would deprive the agency of the
opportunity to consider the matter, make its ruling, and state the reasons for its action.
Franklin v. Arkansas Department of Human Services, 319 Ark. 468, 892 S.W.2d 262 (1995). This
issue is not preserved for our review.
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Sheppard also challenges the Board’s decision by arguing that it was tainted by an ex
parte communication between Michael Langley and Charles Singleton. We do not reach the
merits of this argument because Sheppard also failed to raise this point at the administrative
hearing. We will not set aside an administrative determination upon a ground not presented
to the agency. Id.
We now consider the merits of the Board’s decision to cancel Sheppard’s conditionally
granted permit based upon his failure to open his business within twelve months and for false
material statements in his application. Our review is directed, not toward the circuit court,
but rather toward the decision of the agency. Arkansas State Highway & Transportation Dep’t
v. Kidder, 326 Ark. 595, 933 S.W.2d 794 (1996). Administrative decisions should be upheld
if they are supported by substantial evidence and are not arbitrary, capricious, or characterized
by an abuse of discretion. Wacaser v. Insurance Commissioner, 321 Ark. 143, 900 S.W.2d 191
(1995). Substantial evidence is defined as valid, legal, and persuasive evidence or such
relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Files
v. Arkansas State Highway & Transportation Dep’t, 325 Ark. 291, 925 S.W.2d 404 (1996).
Sheppard contends that the Board lacked jurisdiction to apply Arkansas Code
Annotated section 3-4-301(a)(2) and arbitrarily applied this statute, which provides that “any
permit issued . . . must be revoked . . . for making any false material statement in an
application for a permit.” This statute only applies to the revocation of permits that have
been issued. Because a permit was never issued to Sheppard, we conclude that the Board
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lacked authority under Arkansas Code Annotated section 3-4-301(a)(2) to revoke Sheppard’s
permit for making false material statements in his application.
However, the Board’s decision was also based upon Sheppard’s failure to open his
business within twelve months. Sheppard does not argue on appeal that this decision was
grounds for reversal. When an appellant fails to attack an independent, alternative basis for
a ruling, we will not reverse. Pugh v. State, 351 Ark. 5, 89 S.W.3d 909 (2002); Thomsen v.
Arkansas Department of Human Services, 2009 Ark. App. 687, 370 S.W.3d 842. Even if
Sheppard did attack the Board’s alternative ground, there is substantial evidence to support
the Board’s decision. The Board heard evidence from inspector Seletia Smith. Her first
investigation following Sheppard’s deadline for meeting the conditions imposed revealed that
the premises lacked a telephone and shelving units for inventory. Additionally, there was a
restaurant buffet in the center of the premises. When she returned for reinspection, a
telephone had been installed, but the buffet server remained in the middle of the premises,
shelving units were uninstalled, and portions of the building were partitioned off with plastic
sheeting. Agent Smith testified that she did not consider the premises ready to open. Her
testimony constituted substantial evidence to support the Board’s determination that Sheppard
failed to meet within twelve months the conditions attached to the granting of his permit.
With this determination, we find that there was substantial evidence to support the Board’s
decision to cancel Sheppard’s conditionally granted application for permit.
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Affirmed.
GLADWIN, C.J., agrees.
WYNNE, J., concurs.
ROBIN F. WYNNE, Judge, concurring. I concur with the decision of the majority
to affirm the action taken by the Arkansas Alcoholic Beverage Control Board. I write
separately regarding preservation of issues for appeal by persons appearing pro se before an
administrative board.
Appellant was notified by a letter of the Board dated February 8, 2013, that his
application for a permit was going to be reviewed by the Board at its meeting on February
20, 2013. He was not notified in the letter that a revocation was being considered. Indeed,
the Board’s attorney admitted at oral argument before this Court that no one anticipated that
the Board would take the action that it did before the motion to revoke was made. After the
motion was made, the Board voted and announced its decision to “revoke” appellant’s
“permit” although a permit had never been issued. It appears that appellant failed to preserve
his notice argument for appeal, as it was first raised to the circuit court in appellant’s petition
for review of the Board’s decision. However, I find it troubling that it also appears that
appellant was offered no real opportunity to object to improper notice of a revocation before
the Board. I believe that under certain circumstances it would be unreasonable to require a
person appearing pro se before an administrative board, who has been given no indication
from that board that any action the average person would believe required the services of an
attorney is being considered, to formally raise an argument before that administrative board
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in order to preserve it for appeal, especially an administrative body such as the Alcoholic
Beverage Control Board that routinely conducts more informal proceedings than other
administrative bodies, such as the Workers’ Compensation Commission or the Arkansas
Appeal Tribunal.
I concur in the result reached in this case because the facts presented are not sufficiently
favorable to appellant such that a reexamination of the preservation requirements is warranted
in this case. However, a case may come before our appellate courts that does present
sufficiently favorable facts, and I highly suggest that our appellate courts take an opportunity
to review what is necessary to preserve an issue before an administrative board at that time.
Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Kevin M. Lemley, for
appellant.
Mary Robin Casteel, Arkansas Alcholic Beverage Control Administration, for appellee.
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