21st Amendment, Inc. v. Indiana Alcohol & Tobacco Commission

FILED
Sep 27 2017, 10:33 am
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE
Michael A. Wukmer Curtis T. Hill, Jr.
Derek R. Molter Attorney General of Indiana
Robert A. Jorczak Patricia C. McMath
Ice Miller, LLP Aaron T. Craft
Indianapolis, Indiana Deputy Attorneys General
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
21st Amendment, Inc., September 27, 2017
Appellant-Petitioner, Court of Appeals Case No.
49A05-1612-PL-2863
v. Appeal from the Marion Superior
Court
Indiana Alcohol & Tobacco The Honorable Heather A. Welch,
Commission, Special Judge
Appellee-Respondent. Trial Court Cause No.
49D01-1606-PL-20999
Riley, Judge.
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STATEMENT OF THE CASE
[1] Appellant-Petitioner, 21st Amendment, Inc. (21st Amendment), appeals the trial
court’s Order granting a motion to dismiss filed by Appellee-Respondent, the
Indiana Alcohol & Tobacco Commission (Commission). 1
[2] We affirm.
ISSUE
[3] 21st Amendment raises one issue on appeal, which we restate as: Whether the
trial court properly dismissed 21st Amendment’s petition for judicial review of
an administrative decision by the Commission on the basis that 21st
Amendment lacks standing.
FACTS AND PROCEDURAL HISTORY
[4] LD Ventures, Inc. d/b/a Grapevine Cottage (Grapevine Cottage) holds a Type
115 grocery store alcoholic beverage permit, which allows it to sell beer and
wine as a “specialty or gourmet food store” in Fishers, Hamilton County,
Indiana. (Appellant’s App. Vol. II, p. 36). After Grapevine Cottage filed
applications with the Commission to renew and transfer the location of its
permit, on March 8, 2016, the Hamilton County Local Alcoholic Beverage
Board (Local Board) conducted a hearing. 21st Amendment, a permittee
1
We held oral argument in this matter on September 11, 2017, at the Indiana Court of Appeals courtroom in
Indianapolis, Indiana. We commend counsel for their excellent advocacy.
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authorized to sell alcoholic beverages in Hamilton County and thus a
competitor of Grapevine Cottage, appeared at the hearing as a remonstrator.
21st Amendment argued that Grapevine Cottage is ineligible for a Type 115
grocery store alcoholic beverage permit because it does not primarily engage in
the sale of specialty foods as statutorily required. Rather, 21st Amendment
presented evidence that the bulk of Grapevine Cottage’s revenue is derived from
alcohol sales. After the hearing, the Local Board voted to approve Grapevine
Cottage’s applications for renewal and transfer over 21st Amendment’s
remonstrance. On March 15, 2016, the Commission affirmed the Local
Board’s decision.
[5] On April 5, 2016, 21st Amendment filed an Objection, Petition for Intervention,
and Request for Appeal Hearing with the Commission. 21st Amendment
sought to intervene on grounds that it would be “personally aggrieved or
adversely affected if the permit is granted” because the value of its own Type
217 package store alcoholic beverage permit would be diluted. (Appellant’s
App. Vol. II, p. 36). Moreover, 21st Amendment asserted that it “has a
statutory right to bring an action to abate the sale of alcohol . . . which
constitutes a nuisance.” (Appellant’s App. Vol. II, p. 37). On May 13, 2016,
the Commission denied 21st Amendment’s petition to intervene, thereby
denying 21st Amendment the right to administratively appeal the renewal and
location transfer of Grapevine Cottage’s Type 115 grocery store alcoholic
beverage permit.
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[6] On June 13, 2016, 21st Amendment filed a Verified Petition for Judicial Review
pursuant to the Administrative Orders and Procedures Act (AOPA). 21st
Amendment contended that it had standing to contest the Commission’s
decision because it is “directly impacted and aggrieved or adversely affected by
the agency’s actions,” and because it is “a permittee with a statutory right to
abate a nuisance.” (Appellant’s App. Vol. II, p. 18). On August 22, 2016, the
Commission filed a Motion to Dismiss 21st Amendment’s petition for judicial
review pursuant to Indiana Trial Rule 12(B)(6). The Commission argued that
21st Amendment is barred from seeking judicial review of its decision under
Indiana law. Alternatively, even if not barred by law, the Commission asserted
that 21st Amendment lacked standing to seek judicial review. On September 6,
2016, 21st Amendment filed a response opposing the Commission’s Motion to
Dismiss, and on October 4, 2016, the Commission filed a response in
opposition to 21st Amendment’s opposition.
[7] On October 24, 2016, the trial court heard arguments, and on November 22,
2016, the trial court issued an Order granting the Commission’s motion to
dismiss. The trial court found that
21st Amendment cannot seek to abate a public nuisance on
petition for judicial review. . . . Abating a public nuisance is not a
petition for judicial review. Rather, it is a separate cause of
action that allows several individuals, including [an alcoholic
beverage] permittee, to enjoin an act, practice, or manner of
conducting business by a permittee or by a non-permittee that is
contrary [to] a rule or regulation of the [Commission] or the
[a]lcohol and [t]obacco statutes provided in the Indiana Code.
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(Appellant’s App. Vol. II, p. 13). Accordingly, the trial court determined that
21st Amendment lacked standing to proceed on a petition for judicial review.
However, because “21st Amendment may still pursue its abatement of public
nuisance claim,” the trial court accorded thirty days for 21st Amendment to file
an amended complaint.
[8] 21st Amendment now appeals. Additional facts will be provided as necessary.
DISCUSSION AND DECISION
I. Standard of Review
[9] The trial court granted the Commission’s Trial Rule 12(B)(6) motion to dismiss
based on 21st Amendment’s lack of standing. Trial Rule 12(B)(6) allows for
dismissal for “[f]ail[ing] to state a claim upon which relief can be granted.” A
plaintiff’s alleged lack of standing falls under the category of failure to state a
claim upon which relief can be granted. Thomas v. Blackford Cnty. Area Bd. of
Zoning Appeals, 907 N.E.2d 988, 990 (Ind. 2009). A motion to dismiss tests the
legal sufficiency of a claim, rather than the facts that support it. Nat’l Wine &
Spirits Corp. v. Ind. Alcohol & Tobacco Comm’n, 945 N.E.2d 182 186 (Ind. Ct.
App. 2011), trans. dismissed. Thus, when considering a motion to dismiss under
Trial Rule 12(B)(6), “the allegations of the complaint are required to be taken as
true.” Thomas, 907 N.E.2d at 990. Only “where it appears that under no set of
facts could the plaintiff be granted relief is dismissal appropriate.” Nat’l Wine &
Spirits Corp., 945 N.E.2d at 186. “A successful 12(B)(6) motion alleging lack of
standing requires that the lack of standing be apparent on the face of the
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complaint.” Thomas, 907 N.E.2d at 990. We review rulings on a 12(B)(6)
motion to dismiss de novo. Liberty Landowners Ass’n, Inc. v. Porter Cnty. Comm’rs,
913 N.E.2d 1245, 1249 (Ind. Ct. App. 2009), trans. denied. Whether a party has
standing is purely a question of law and requires no deference to the trial court’s
decision. Common Council of Mich. City v. Bd. of Zoning Appeals of Mich. City, 881
N.E.2d 1012, 1014 (Ind. Ct. App. 2008).
II. Standing Under the AOPA
[10] The AOPA specifies, in relevant part, that only parties who have standing are
entitled to judicial review of a final agency action. Ind. Ass’n of Beverage
Retailers, Inc. v. Ind. Alcohol & Tobacco Comm’n, 836 N.E.2d 255, 257 (Ind. 2005);
see Ind. Code §4-21.5-5-2(b). “The judicial doctrine of standing focuses on
whether the complaining party is the proper person to invoke the court’s
power.” Nat’l Wine & Spirits Corp., 945 N.E.2d at 184. “The standing
requirement is a limit on the court’s jurisdiction which restrains the judiciary to
resolving real controversies in which the complaining party has a demonstrable
injury.” Id. (quoting Schloss v. City of Indianapolis, 553 N.E.2d 1204, 1206 (Ind.
1990)). The AOPA has specifically delineated that
[t]he following have standing to obtain judicial review of an
agency action:
(1) A person to whom the final agency action is specifically
directed.
(2) A person who was a party to the proceedings of the ultimate
authority that led to the final agency action, including the agency
whose order was under review in the proceeding.
(3) A person eligible for standing under a law applicable to the
final agency action.
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(4) A person otherwise aggrieved or adversely affected by the
final agency action.[ 2]
I.C. § 4-21.5-5-3(a).
[11] Under the AOPA, “a person must be ‘aggrieved or adversely affected’ in order
to seek administrative review” as an intervening remonstrator. Ind. Ass’n of
Beverage Retailers, Inc., 836 N.E.2d at 259; see 905 IAC § 1-36-2(d). Thereafter,
in seeking judicial review, a party must have standing and must have exhausted
the administrative remedies—i.e., “must have pursued administrative review.”
Ind. Ass’n of Beverage Retailers, Inc., 836 N.E.2d at 259. Accordingly, our
supreme court has stated that “the standing requirement for judicial review is
essentially congruent with the ‘aggrieved or adversely affected’ requirement for
administrative review.” Id. In this case, 21st Amendment pursued its
administrative remedies by petitioning to become an intervening remonstrator
and requesting an administrative appeal. The Commission denied 21st
Amendment’s petition to intervene, in part, on the basis that 21st Amendment
was not adversely affected or aggrieved as required for administrative review.
In seeking judicial review, 21st Amendment claimed that it had standing not
2
In this case, the trial court also concluded that 21st Amendment lacks standing because it is not personally
aggrieved. However, during the hearing, 21st Amendment indicated that while it was not waiving its
argument concerning its status as an aggrieved party, it was only actively pursuing its claim that it was
statutorily entitled to abate a nuisance and therefore had standing under Indiana Code section 4-21.5-5-
3(a)(3). On appeal, 21st Amendment relies primarily on its theory of standing under a law applicable to the
final agency action, only briefly mentioning in a footnote that it is also an aggrieved party. We find that 21st
Amendment has waived any claim regarding Indiana Code section 4-21.5-5-3(a)(4) on appeal by failing to
develop a cogent, appropriately-cited argument. Ind. Appellate Rule 46(A)(8)(a).
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because it was adversely affected or aggrieved, but because it had standing
under another law applicable to the Commission’s action—namely, the public
nuisance statutes.
[12] Thus, at issue in this case is Indiana Code section 4-21.5-5-3(a)(3), which
accords standing for judicial review if the party has “standing under a law
applicable to the final agency action.” While our courts have previously
decided standing questions under the other subsections of the statute, it appears
that our courts have not yet had occasion to address standing under Indiana
Code section 4-21.5-5-3(a)(3). Thus, 21st Amendment has presented this court
with an issue of first impression.
[13] Statutory interpretation is a matter of law and is reviewed de novo. City of
Greenwood v. Town of Bargersville, 930 N.E.2d 58, 68 (Ind. Ct. App. 2010), transfer
granted and opinion reinstated. The primary purpose of statutory interpretation
“is to ascertain and give effect to” the intent of the legislature. Id. (quoting State
v. Oddi-Smith, 878 N.E.2d 1245, 1248 (Ind. 2008)). The best evidence of
legislative intent is the statutory language itself, “and we strive to give the words
in a statute their plain and ordinary meaning.” Id. (quoting Oddi-Smith, 878
N.E.2d at 1248). “A statute should be examined as a whole, avoiding excessive
reliance upon a strict literal meaning or the selective reading of individual
words. The [c]ourt presumes that the legislature intended for the statutory
language to be applied in a logical manner consistent with the statute’s
underlying policy and goals.” Id. (quoting Oddi-Smith, 878 N.E.2d at 1248).
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[14] Title 7.1 of the Indiana Code governs alcohol and tobacco. It specifically
provides that any building or structure where “[a]n alcoholic beverage of any
type is sold[ or] possessed” in violation of the law or a rule of the Commission,
or “[a] place where alcoholic beverages are kept for sale” in violation of the law
or a rule of the Commission, is “declared to be a public nuisance.” I.C. § 7.1-2-
6-1(a)(1)(A), -(2). Also, “[a]n act or practice, or manner of conducting a
business by a permittee contrary to a provision of [Title 7.1] or to a rule or
regulation of the [C]ommission, . . . shall also constitute a public nuisance if
done, carried on, or permitted to take place in a building or upon a premises in
or on which an alcoholic beverage is possessed, kept, stored, or consumed . . .
.” I.C. § 7.1-2-6-2.
[15] According to 21st Amendment, Grapevine Cottage’s sales practices constitute a
public nuisance because they do not comport with Title 7.1. Specifically,
evidence presented at the hearing before the Local Board indicates that
Grapevine Cottage primarily derives its revenue from the sale of alcohol. Yet,
Grapevine Cottage holds a Type 115 grocery store alcoholic beverage permit,
and Indiana Code section 7.1-1-3-18.5(a)(4) defines a grocery store, in relevant
part, as
a store or part of a store that is known generally as: . . . a
specialty or gourmet food store primarily engaged in the retail sale
of miscellaneous specialty foods not for immediate consumption
and not made on the premises, not including:
(A) meat, fish, and seafood;
(B) fruits and vegetables;
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(C) confections, nuts, and popcorn; and
(D) baked goods.
(Emphasis added). Thus, 21st Amendment maintains that the Commission
should not have renewed Grapevine Cottage’s Type 115 permit as Grapevine
Cottage’s sales run afoul of Title 7.1.
[16] Indiana Code section 7.1-2-6-4 provides that
[t]he [C]omission, the chairman, the attorney general, a
prosecuting attorney, a permittee authorized to sell alcoholic beverages
within the county in which a common nuisance exists, kept, or
maintained, or a number of permittees authorized to sell
alcoholic beverages within the county or elsewhere within the
state, or a taxpayer of the county, may maintain an action in the
name of the state to abate and perpetually enjoin a public
nuisance or to abate, or enjoin, or both, a practice, or conduct of
a person, whether a permittee or not, in violation of this title or a
rule or regulation of the [C]ommission.
I.C. §7.1-2-6-4 (emphasis added). Notwithstanding the merits of the underlying
public nuisance claim, based on its statutory right to abate and perpetually
enjoin a public nuisance for improper alcohol sales, 21st Amendment now
argues that it has standing to pursue judicial review in the instant case because
of its “standing under a law applicable to the final agency action.” I.C. § 4-
21.5-5-3(a)(3).
[17] In this case, the trial court gave 21st Amendment leave to amend its complaint
to “style the lawsuit as pursuing an abatement of public nuisance claim under
Title 7.1 rather than as a petition for judicial review under [the] AOPA.”
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(Appellant’s Br. p. 19). However, 21st Amendment argues that the trial court’s
“reasoning misapprehends the plain language of [the] AOPA.” (Appellant’s Br.
p. 19). According to 21st Amendment, the
AOPA does not preclude standing for judicial review where the
party’s standing is based on a law outside of [the] AOPA that is
applicable to the agency action (e.g., Title 7.1), and [the] AOPA
does not provide that the party must instead sue under the
separate statute that is applicable to the final agency action.
(Appellant’s Br. pp. 19-20). If such were the case, 21st Amendment insists that
“there would be no use for [Indiana Code section 4-21.5-5-3(a)(3)], as the party
would just always have to sue under the separate statute applicable to the
agency action.” (Appellant’s Br. p. 20). Furthermore, 21st Amendment argues
that
[u]nder the Commission’s view, the only parties with standing to
challenge the issuance of a specialty grocery store permit would
be the business that received the illegally issued permit and
parties that the Commission granted intervening remonstrator
status. That view in effect insulates the Commission’s decision
from any judicial review, as no business that is improperly issued
a permit would seek judicial review, and it is the Commission
that decides whether to grant intervening remonstrator status.
(Appellant’s Br. p. 24) (internal citation omitted).
[18] We agree with 21st Amendment to the extent that a party with “standing under
a law applicable to the final agency action” is not obligated to pursue relief
under the separate statute; rather, judicial review under the AOPA is
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appropriate in those situations. I.C. § 4-21.5-5-3(a)(3). Here, however, we
cannot say that the Commission’s issuance of an alcoholic beverage permit
constitutes a final agency action to which the public nuisance laws apply.
Rather, as the public nuisance statutes establish, it is the conduct of the
permittee (i.e., Grapevine Cottage) or conduct otherwise carried on in premises
where alcoholic beverages are kept/sold that may give rise to a public nuisance
claim. See I.C. §§ 7.1-2-6-1; -2. As the alleged nuisance is not the result of the
agency’s action, but rather the subsequent conduct of the permittee, 21st
Amendment does not have standing under Indiana Code section 4-21.5-5-
3(a)(3) of the AOPA. As the trial court found, 21st Amendment’s statutory right
to abate and enjoin a public nuisance for improper alcohol sales must be
achieved through a separate nuisance action. 3
3
In the alternative, 21st Amendment claims that it should be able to pursue judicial review under the public
standing doctrine. The public standing doctrine “is an exception to the general requirement that a plaintiff
must have an interest in the outcome of the litigation different from that of the general public.” Liberty
Landowners Ass’n, Inc., 913 N.E.2d at 1251. The public standing doctrine is applicable in cases that involve
the “enforcement of a public rather than a private right” and “is limited to extreme circumstances and should
be applied with ‘cautious restraint.’” State ex rel. Cittadine v. Ind. Dep’t of Transp., 790 N.E.2d 978, 980 (Ind.
2003) (quoting Schloss, 553 N.E.2d at 1206 n.3); Liberty Landowners Ass’n, Inc., 913 N.E.2d at 1251 (quoting
Cittadine, 790 N.E.2d at 983). Although noted by neither the Commission nor 21st Amendment itself, we are
unable to find any indication in the record that 21st Amendment raised the matter of public standing before
the trial court. In fact, we do not find any mention of the term ‘public standing’ in any filings; rather, 21st
Amendment relied solely on the statutory bases for standing under the AOPA. Accordingly, 21st
Amendment has waived the issue for our review. See Liberty Landowners Ass’n, Inc., 913 N.E.2d at 1251.
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CONCLUSION
[19] Based on the foregoing, we conclude that the trial court properly granted the
Commission’s motion to dismiss because 21st Amendment lacks standing to
pursue judicial review under the AOPA.
[20] Affirmed.
[21] Najam, J. and Bradford, J. concur
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