Thai Ginger Restaurant, Inc., Relators v. City of Saint Paul, City Council

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A15-0288
Thai Ginger Restaurant, Inc., et al.,
Relators,
vs.
City of Saint Paul, City Council,
Respondent.
Filed December 21, 2015
Affirmed
Harten, Judge
St. Paul City Council
File No. RES PH 14-349
Shuly Her, Der Yang, Village Lawyer, LLC, St. Paul, Minnesota (for relators)
Samuel J. Clark, St. Paul City Attorney, Virginia D. Palmer, Assistant City Attorney, St.
Paul, Minnesota (for respondent)
Considered and decided by Johnson, Presiding Judge; Larkin, Judge; and Harten,
Judge.
UNPUBLISHED OPINION
HARTEN, Judge
Relators, a restaurant and its owner, argue that respondent city acted on unlawful
procedure when it revoked relators’ liquor license and that the revocation was not based on

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
substantial evidence and was unreasonable, arbitrary, and capricious. Because we
conclude that the city did not exceed its authority or act on unlawful procedure and that the
revocation was a reasonable exercise of the city’s discretion, we affirm.
FACTS
In April 2014, relators Thai Ginger Restaurant, Inc. and its president, Kyrina
Sengmavong, purchased liquor at retail while on the no-sale list, a violation of state law
that resulted in a $1,500 fine, which they paid.
In October 2014, the license inspector for the Department of Safety and Inspections
(DIS) notified relators that their insurer had reported cancellation of their liquor liability
insurance since December 2013 and ordered them to stop serving liquor until they
submitted a certificate showing no lapse in coverage. The certificate relators submitted
showed coverage only after 31 October 2014, indicating a ten-month gap in coverage
during which relators served liquor.
The city’s legislative code includes a matrix of penalties for various violations. The
penalty for a second appearance on a failure to comply with statutory requirements for
liability insurance is revocation. St. Paul Legislative Code, § 409.26(b). On a first
appearance, a licensee may elect to pay the recommended fine rather than appear, and that
payment “shall be considered an ‘appearance’ for the purpose of determining presumptive
penalties for subsequent violations.” Id. Relators paid the recommended fine for their first
violation; thus, this was their second appearance.
On 14 November 2014, relators received a notice of their violation. It recommended
that their license be revoked based on “the egregiousness of [their] conduct, and the public
2
safety risk it posed” and gave them the option of contesting the recommendation at a
hearing. After relators requested a hearing, a notice of the hearing date, 17 December 2014,
was mailed to them.
On that date, city council members and relator’s husband, David Souvanphong,
appeared. Souvanphong explained that relator Sengmavong was in the hospital following
a C-section, that she handled the restaurant finances, that he was not familiar with the
restaurant’s paperwork, that neither he nor Sengmavong knew the insurance had lapsed,
and that he did not know if Sengmavong had seen the cancellation notice sent out by the
insurer.
A council member then said to Souvanphong, “[Y]ou’re trying to answer questions
for things that . . . you typically aren’t responsible for, so . . . it might make sense to do [a]
layover [of the hearing] . . . .” The council president then said, “Does that work for
every[one] . . . [a] motion to lay the matter over until January 7th?” The clerk then read
out the names of the council members present and said, “Six in favor. None opposed. The
resolution is laid over to January 7th.” Souvanphong was present throughout these
proceedings.
On 7 January, the hearing reconvened. Neither Sengmavong nor Souvanphong was
present. The city council voted to revoke relators’ liquor license.
Relators challenge the revocation, arguing that the revocation was made upon
unlawful procedure and was an upward deviation unsupported by substantial evidence.1
1
Relators argued in their brief that the city also exceeded its authority by revoking the
license, but conceded at oral argument that the city did have authority for the revocation.
3
DECISION
Standard of Review
“On appeal from a municipality’s revocation of a liquor license, review is limited
to determining whether the city council exercised reasonable discretion, or whether it acted
capriciously, arbitrarily, or oppressively.” Bourbon Bar & Cafe Corp. v. City of St. Paul,
466 N.W.2d 438, 440 (Minn. App. 1991).
1. Was the procedure unlawful?
Relators argue that, because Sengmavong was unable to testify at the 17 December
hearing and was not notified of the 7 January hearing, the procedure was unlawful. But
her husband, Souvanphong, was present and testified at the 17 December hearing; he also
heard the resolution to continue the hearing until 7 January when Sengmavong would be
able to be present. When neither Sengmavong nor Souvanphong appeared on 7 January or
notified the council that they would be absent, the matter proceeded in their absence. But
Sengmavong was not deprived of the essentials of due process, i.e., adequate notice and a
meaningful opportunity to be heard. See Staeheli v. City of St. Paul, 732 N.W.2d 298, 304
(Minn. App. 2007). Souvanphong and other witnesses testified on Sengmavong’s behalf
at the 17 December hearing, and Sengmavong could have testified herself if she had
appeared on 7 January. The city’s procedure was not unlawful.
2. Was the revocation supported by substantial evidence and not unreasonable,
arbitrary, or capricious?
“Municipal authorities have broad discretion to determine the manner in which
liquor licenses are issued, regulated, and revoked.” Bourbon Bar & Cafe, 466 N.W.2d at
440. A liquor license applicant must demonstrate proof of financial responsibility, which
4
includes “a certificate that there is in effect for the license period an insurance policy . . . .”
Minn. Stat. § 340A.409, subd. 1(1) (2014). The municipal authority, “[o]n a finding that
the license . . . holder ha[d] . . . failed to comply with an applicable statute . . . relating to
. . . the operation of the licensed establishment . . . may [1] revoke the license . . . .” Minn.
Stat. § 340A.415 (2014).
The city has adopted a matrix of “[p]resumptive penalties for violations” of 12
regulations, including “(12) Failure to comply with statutory . . . requirements for liability
insurance.” St. Paul Legislative Code, § 409.26(b) (2014). The penalties increase in
severity if the licensee has one or more prior “appearances” for previous violations. Id.
The penalty for “(12) Failure to comply with statutory . . . requirements for liability
insurance” is a ten-day suspension on the licensee’s first appearance and revocation on the
licensee’s second appearance. Id. Having found that (1) relators had failed to comply with
the statute requiring an insurance policy to be maintained and (2) this was relators’ second
appearance, the city revoked relators’ license.
Relators argue that “there was no evidence . . . to substantiate a deviation from the
[c]ity’s own matrix of ten days’ suspension for a first time violation,” implying that this
was their first appearance because they paid a fine rather than appearing for their first
violation. But the code explicitly rejects this argument: “A licensee who would be making
a first appearance . . . may elect to pay the fine . . . without an appearance . . . . Payment of
the recommended fine . . . shall be considered an ‘appearance’ for the purpose of
determining presumptive penalties for subsequent violations.” Id.
5
Relators also argue that, because their previous appearance was not for failure to
maintain liability insurance but for a different violation, this was their first appearance in
regard to that offense. Again, the code rejects this argument.
(d) Subsequent appearances. Upon a second, third, or
fourth appearance . . . by a particular licensee, the council shall
impose the presumptive penalty for the violation or violations
giving rise to the subsequent appearance without regard to the
particular violation or violations that were the subject of the
first or prior appearance.
(e) Computation of time.
(1) Second appearance. A second violation within
twelve (12) months shall be treated as a second appearance for
the purpose of determining the presumptive penalty.
Id. This was relators’ second appearance; the presumptive penalty for their offense was
revocation.
The city exercised reasonable discretion and did not act capriciously, arbitrarily, or
oppressively when it imposed the presumptive penalty and revoked relators’ license. See
Bourbon Bar & Cafe, 466 N.W.2d at 440.
Affirmed.
6