DocketNumber: No. PC-02-2837
Judges: THOMPSON, J.
Filed Date: 8/10/2004
Status: Non-Precedential
Modified Date: 4/18/2021
The liquor license at issue was originally issued to Continental Liquor Store as a full-privilege Class A liquor license. In 1960, this Class A liquor license was transferred to a holder of a Class E license for operation of Cole Avenue Pharmacy at 195 Cole Avenue in Providence. Then, in 1994, the Class A liquor license was transferred to Jacob Marks; the Class E liquor license, which previously belonged to Cole Avenue Pharmacy, was dropped. Mr. Marks did not operate a liquor store; the Class A license was renewed every year but was kept in the Board of Licenses' safe until 1996 or later. Decision at 7, n. 7. In 1996, the Class A liquor license was transferred to Wine Merchant; however, Wine Merchant never opened a liquor store at 195 Cole Avenue. These facts appear to be largely undisputed and were the operative facts before the Hearing Officer.
In April, 2001, the Board of Licenses decided that the Class A liquor license belonging to Wine Merchant was not abandoned, despite the fact that the liquor license had not been in active use for approximately seven years. In a separate decision, the Board of Licenses then decided to permit the transfer of this Class A liquor license to Green Point. On May 2, 2001, The Da Vinci Center filed a complaint with DBR against the Board of Licenses and Green Point alleging violations of G.L. §
(g) The court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings, or it may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error or law;
(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or
(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion." §
42-35-15 .
Sitting as an appellate court with a limited scope of review, the Superior Court justice may not substitute his or her judgment for that of the agency with respect to the credibility of the witnesses or the weight of the evidence as to questions of fact.Center for Behavioral Health v. Barros,
Additionally, as long as "substantial evidence" exists to support the agency's determination, the Superior Court must uphold the decision. Barros, 710 A.2d at 684 ("In reviewing an administrative agency's decision, the Superior Court is limited to an examination of the certified record to determine whether the agency's decision is supported by substantial evidence");see Environmental Scientific Corp. v. Durfee,
Green Point argues that DBR lacked standing to appeal a decision of the Board of Licenses or to prosecute its own case, and therefore did not have authority to intervene in the appeal brought by The Da Vinci Center. DBR, in contrast, contends, pursuant to both statutory and common law grounds, that it possesses sua sponte authority to intervene in The Da Vinci Center's case.
The Court has indeed held that G.L. §
Section
"Every license is subject to revocation or suspension and a license is subject to fine by the board, body or official issuing the license, or by the department or by the division of taxation, on its own motion, for breach by the holder of the license of the conditions on which it was issued or for violation by the holder of the license of any rule or regulation applicable, or for breach of any provisions of this section." (Emphasis added.)
The court has determined that this language gives the Liquor Control Administrator the power and jurisdiction to revoke a liquor license on its own motion. Belconis, 65 R.I. at 283-84, 14 A.2d at 703. In Belconis, the owner of a Class A liquor license argued that the Liquor Control Administrator was without jurisdiction to initiate a hearing, on its own motion, to decide that the licensee was violating a condition of the license and that the license should therefore be revoked. Id. The court explicitly rejected this contention, stating that the Liquor Control Administrator has the "power and jurisdiction, of his own motion, to revoke such license as that of the petitioner." Id.
There is no question that under §
Furthermore, DBR's sua sponte authority is necessary for DBR to fulfill the obligations it has been given by the Legislature. It has long been established that the role of the Liquor Control Administrator in Rhode Island is that of a "superlicensing board" with a broad and comprehensive power of review. Hallene v. Smith,
Further evidencing the wide powers of supervision and regulation vested in DBR and the scope of DBR's authority under §
As DBR may exercise its sua sponte authority to review, suspend, or revoke a license on its own motion, this Court finds that DBR did not act in excess of its statutory authority in initiating an action, on its own motion, relating to thetransfer of a license. In arguing that jurisdiction to review the transfer of a liquor license lies solely with the local licensing board, Green Point misplaces its reliance on Sunny DayRestaurant, Inc. v. Beacon Restaurant, Inc.
Propriety of Allowing Intervention
Although DBR has the right, on its own motion, to review, revoke, or suspend a license, this Court may still consider whether allowing intervention was proper under the circumstances. The rule of permissive intervention articulated in Super. R. Civ. P. 24(b) states:
"Upon timely application anyone may be permitted to intervene in an action . . . (2) when an applicant's claim or defense and the main action have a question of law or fact in common. . . . In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties."
Thus, this Court must first determine whether DBR and The Da Vinci Center presented common questions of law and fact. In cases where there exist common questions of law and fact, allowing intervention may prevent multiplicity of litigation and promote judicial or administrative efficiency. See Coventry v. HickoryRidge Campground,
If the parties have presented common questions of law and fact, the Court must then decide whether allowing intervention will unduly delay or prejudice the adjudication of the rights of the original parties. Court's are primarily concerned with prejudice to a party's rights due to untimely intervention. "[I]t is well settled that the timeliness of a motion to intervene is a matter committed to the sound discretion of the trial justice." DirectAction for Rights Equality v. Gannon,
With respect to the common issues requirement for permissive intervention, DBR argues that DBR's claim and The Da Vinci Center's claim raise common questions of law and fact. In arguing that DBR had no independent "claim" against Green Point and that allowing intervention would not serve the purpose of preventing multiplicity of litigation, Green Point essentially argues that intervention should not have been allowed because no common questions of law and fact exist. Green Point's arguments are predicated on the proposition that DBR did not have the right to bring its own action.
This Court has found that DBR has the right to review a liquor license on its own motion. Thus, DBR undoubtedly had a claim against Green Point insofar as it had authority to review, revoke, or suspend Green Point's liquor license on its own motion and after a hearing. There is also no question that DBR's claim had questions of law and fact in common with the claim raised by The Da Vinci Center. DBR's motion to intervene alleged that the Board of Licenses violated §
Additionally, allowing DBR to intervene certainly served the purpose of preventing multiple actions because, as the Hearing Officer noted, "the Department has independent authority and jurisdiction to bring a separate matter against Respondents. . . . [and] [t]he Department has already indicated that it plans to file a separate action against Green Point and Providence if its Motion to Intervene is denied." Order at 4. Permitting intervention served to conserve administrative resources and encouraged accelerated — not delayed — determination of the status of the license in question.
With respect to the timeliness requirement for permissive intervention, Green Point claims that intervention was not timely, and that Green Point's rights were prejudiced by this delay. Although DBR did not submit its motion to intervene with expedience, the record does not demonstrate that intervention was not timely under standard articulated in Marteg. See 425 A.2d at 1243. DBR was aware of the suit for a protracted period of time and did not act until the last minute; DBR filed a motion to intervene on the day of the hearing for Green Point's motion to dismiss The Da Vinci Center's appeal. The present case, however, involves the unique feature that DBR possesses sua sponte
authority to revoke a license, and there is no statutory or other limitation on the time period in which DBR may bring its own action to do so. Thus, although it is not an ideal course of conduct, it is plausible that an agency charged with supervisory responsibilities such as DBR might — as a means of conserving administrative resources — adopt a "wait-and-see" approach until such time as it appears necessary to intervene in order to protect the agency's interest. This approach may be permissible so long as the rights of the original parties are not prejudiced by the delay. See generally Banco Popular de Puerto Rico v.Greenblatt,
The Hearing Officer's determination that, of the two criteria articulated in Marteg, the harm or prejudice to a party resulting from allowing intervention is more important than the length of time a party has known of its interest in a matter without acting, did not constitute an abuse of discretion. SeeMcDonald, 430 F.2d at 1072 (citations omitted) ("[t]he most important consideration in determining timeliness is whether any existing party to the litigation will be harmed or prejudiced by the proposed intervener's delay in moving to intervene");Marteg, 425 A.2d at 1240; Order at 4. Courts have noted that, as a matter of policy, courts and agencies should be more concerned with prejudice to parties than they should be with refusing intervention as a means of punishing slothful interveners. See McDonald, 430 F.2d at 1074 (timeliness requirement is not a tool to punish intervener for not acting more promptly, but rather should be used to insure that original parties should not be prejudiced by intervener's failure to apply earlier). In the instant case, the Hearing Officer did not abuse her discretion and relied on substantial evidence in allowing DBR to intervene, noting that "[t]he Department has already indicated that it plans to file a separate action against Green Point and Providence if its Motion to Intervene is denied. Therefore, a denial of the Motion to Intervene would only serve to cause a delay in the final adjudication of this matter." Order at 4. Indeed, because DBR had the right to revoke the liquor license in question on its own motion and after a hearing, and because DBR was prepared to do so, allowing intervention here furthered the efficiency of adjudicating the matter instead of impeding it, and therefore did not prejudice the rights of the original parties.
In allowing DBR to intervene, the Hearing Officer noted that "[i]t is more efficient and serves to conserve administrative resources to allow the Department to proceed in this matter rather than have to initiate a new proceeding with the same results . . . a hearing before this Department." Order at 5. Additionally, the Hearing Officer recognized that
"[a]llowing the Motion to Intervene does not delay the adjudication rights of the original parties in that the Department had no position on Green Point's Motion to Dismiss and a hearing has been heard on this already. If the Motion to Dismiss is granted, there has been no delay in adjudicating the rights of the original parties. If the Motion to Dismiss is denied, the Department will be in the same position as Da Vinci: the discovery phase." Order at 5.
As DBR could have, and evidently would have exercised its suasponte authority had intervention not been allowed, the alternative course of conduct — dismissing The Da Vinci Center's claim and requiring DBR to bring its own motion to revoke Green Point's license — would have resulted in the adjudication of the same issue over a longer period of time.
Green Point also asserts that its rights were prejudiced by the Hearing Officer's choice to first allow DBR to intervene prior to allowing Green Point's motion to dismiss The Da Vinci Center's claim because a party seeking post-judgment intervention has a much greater burden to satisfy than a party seeking intervention prior to judgment. See Marteg, 425 A.2d at 1240. This Court finds that Green Point's rights were not prejudiced by the order in which the Hearing Officer made her determinations. If the Hearing Officer had first dismissed The Da Vinci Center's claim, DBR would have initiated an action on its own motion, and would not have sought post-judgment intervention. For this reason, DBR would not have had to satisfy a higher burden had the motion to dismiss The Da Vinci Center's claim been granted first. Therefore, the Hearing Officer relied on substantial evidence and properly exercised discretion in allowing DBR to intervene prior to deciding Green Point's motion to dismiss.
Finally, Green Point argues that DBR should not have been allowed to intervene because DBR was in conflict as intervener and arbiter. Although Green Point claims that "[i]t is obvious that the Department ignored procedure, as well as the concepts of fairness and equity to allow itself intervention," this Court sees no difference between DBR bringing its own motion to revoke or suspend a license and DBR intervening in a matter already before a DBR hearing officer dealing with those same issues.Memorandum for Green Point at 9. Furthermore, "[t]o overcome the presumption in favor of an adjudicator's honesty and integrity, a party claiming bias or some other disqualifying factor must adduce evidence that: (1) the same person(s)
involved in building one party's adversarial case is also adjudicating the determinative issues; and/or (2) other special circumstances render the risk of unfairness intolerably high."Kent County Water Auth. v. State (Department of Health),
Granting Summary Judgment in Favor of DBR
After allowing DBR to intervene, the Hearing Officer granted summary judgment in favor of DBR, finding that "[a]s a matter of law, the License was abandoned and does not exist to be transferred. It is not necessary to determine whether the License existed to be transferred in 1994 as the License ceased operations after 1994 and pursuant to R.I. Gen. Laws §
Cancellation of an abandoned license is not merely a discretionary course of action for the Board of Licenses; the language of §
In granting summary judgment in favor of DBR, the Hearing Officer determined that
[a]s a matter of law, under R.I. Gen. Laws §
3-5-16.1 , the License clearly should have been cancelled by Providence.Therefore, assuming that the License was properly transferred in 1994 or 1996, existed within the statutory cap of R.I. Gen. Laws §
3-5-16 , or was properly split from a Class E liquor license, the License transferred to Green Point as a matter of law should never have been transferred. Under the undisputed facts, the License ceased operations no later than ninety (90) days or one (1) year from the alleged transfer to Wine Merchant. Thus, pursuant to R.I. Gen. Laws §3-5-16.1 and R.I. Gen. Laws §3-5-21 , the License transferred to Green Point as a matter of law should never have been transferred. Decision at 8 (emphasis added).
The Hearing Officer had before her undisputed evidence that the license was not in active use in the period of time between the transfer of the license to Wine Merchant and the subsequent transfer of the license from Wine Merchant to Green Point. Green Point, having had opportunity to present evidence in the hearings held by the Hearing Officer,6 has not presented any evidence that would suggest the license in question was in operation at any time from 1996 to the present time. Accordingly, there was nothing left for DBR to do but to revoke, or direct the Board of Licenses to revoke the license previously transferred, as there was no jurisdiction in the Board of Licenses to allow the transfer of a license that had, by statute, been abandoned.See Baginski, 62 R.I. at 182, 4 A.2d at 268 (supervisory licensing authority had no choice but to revoke license in light of undisputed evidence that local licensing authority had no jurisdiction to grant the license in the first instance).
Additionally, allowing the transfer and prolonged non-use of liquor licenses contravenes public policy. Allowing an individual to purchase a liquor license, allow that license to lie dormant, and subsequently transfer that license to a future user promotes private market speculation of licenses that are otherwise difficult to obtain through proper application to the Board of Licenses. It is not the purpose of the liquor licensing statutes to create or allow to exist a private market for the transfer of liquor licenses, outside the purview of DBR's regulatory watch.See Marty's Liquors, 1985 R.I. Super. LEXIS 134, *20 ("[t]he general assembly clearly did not want Class A licenses to be held in limbo in over-licensed cities and towns"). Moreover, allowing licenses to remain dormant for prolonged periods of time renders ineffective the function of the rigid statutory limitations on the number of licenses that may exist at any time. Indeed, DBR'ssua sponte authority, as well as the statutory directive that local licensing authorities cancel abandoned licenses, appear to be protections against liquor-license speculators who may impede efficient distribution of such licenses when they are in high demand and of limited availability. In light of the evidence and applicable rules of law, this Court finds that the Hearing Officer's grant of summary judgment in favor of DBR was not affected by error of law.
Equitable Estoppel
Green Point also argues that equity prohibits revocation of the license in question because DBR acquiesced to the dormancy of the license and subsequently chose to selectively enforce the abandonment provision against Green Point. Additionally, Green Point asserts that equity prohibits revocation of the license because Green Point is a bona fide purchaser of the license with no knowledge of the Class E history. DBR argues that Green Point did not demonstrate prejudicial reliance on any affirmative representations made to Green Point by DBR. Additionally, DBR notes that Green Point may, at its option, commence a civil action for damages against a prior license holder if Green Point has suffered damages as a result of purchasing a license that it believed to be valid.
The key elements in the doctrine of estoppel "are, first, an affirmative representation or equivalent conduct on the part of the person against whom the estoppel is claimed which is directed to another for the purpose of inducing the other to act or fail to act in reliance thereon; and, secondly, that such representation or conduct in fact did induce the other to act or fail to act to his injury." Lichtenstein v. Parness,
"in an appropriate factual context the doctrine of estoppel should be applied to public agencies to prevent injustice and fraud where the agency or officers thereof, acting within their authority, made representations to cause the party seeking to invoke the doctrine either to act or refrain from acting in a particular manner to his detriment." Romano v. Retirement Board of the Employees' Retirement System of the State of Rhode Island,
767 A.2d 35 , 39 (R.I. 2001) (citation omitted) (emphasis in original).
Additionally, a party seeking estoppel against the government should show that imposition of such doctrine would not be against the public interest. Lerner v. Gill,
The Hearing Officer found Green Point's estoppel argument to be without merit, writing,
The Department did not make any affirmative representations to Providence or Green Point in order to induce reliance thereon nor did Providence or Green Point rely on any representations by the Department to its detriment. . . . There are no facts shows [sic] any detriment suffered by Green Point by relying on the Department's representations. Indeed, Aitchison's affidavit shows that Providence was informed of problems with this License and not the contrary. . . .
At hearing, Green Point could not point to any statutory or case law in support of its argument that it is protected from any finding that the License is invalid due to being a bona fide purchaser. Green Point argues that it did not have `any knowledge of the history of the case.' Green Point apparently argues that it did not know about the issue of the A/E split. See Transcript, p. 46.
This argument is disingenuous. On April 2, 2001, Providence considered the issue of the failure [sic] the Wine Merchant to have an active Class A liquor license (the License at issue here). On April 9, 2001, a decision was issued by Providence that the License was not abandoned. The current counsel for Green Point represented Wine Merchant at the April 2, 2001 hearing. There was discussion regarding the A/E issue and the issue of abandonment. . . . From the transcript of this hearing, there was extensive discussion regarding the alleged flaws of the license. In addition, at that time the License had not been transferred to Green Point. So this discussion was prior to Green Point purchasing the License. Decision at 21-23.
After considering all of the facts and circumstances of the instant case in light of the applicable rules of law, this Court concludes that the Hearing Officer's decision was not clearly erroneous or arbitrary. The record contains no evidence of affirmative representations made by DBR on which Green Point detrimentally relied; indeed, Green Point's estoppel argument lacks (1) any showing that DBR made affirmative representations or engaged in equivalent conduct regarding the status of the license in question, (2) any showing that, if such conduct existed, it induced Green Point to act in reliance on such a representation, and (3) any showing that such reliance, if it exists, was detrimental to Green Point.
Green Point insists that equitable estoppel should apply because DBR failed to challenge the license at an earlier time and therefore acquiesced to the dormancy of the license, and because DBR selectively enforced the abandonment provision in §
Green Point also argues that equity prohibits revocation of the license because Green Point was a bona fide purchaser with no knowledge of the Class E history of the license in question. DBR suggests that this argument is disingenuous because Green Point was aware of the Board of Licenses hearing related to the potential abandonment of Wine Merchant's license. As this Court has found that abandonment of the license constitutes sufficient grounds for revoking the license in question, this Court need not consider the equity argument brought by Green Point on the Hearing Officer's alternative reason for revoking the license — the illegal A/E split. It bears mention, however, that in light of the fact that Green Point was represented by counsel before the Board of Licenses and DBR, and in light of the fact that counsel for Green Point was the same counsel as that for Wine Merchant, Green Point should have had a priori knowledge of the precarious status of the Class A liquor license, the statutory directive ordering cancellation of liquor licenses not in use, and the authority of DBR to consider the status of a license on its own motion. See Casa DiMario v. Richardson, etal.,
Although Green Point urges this Court to apply the doctrine of estoppel against DBR, Green Point has not demonstrated that estoppel would not contravene public policy in this case. Indeed, it is clear to this Court that applying the doctrine of estoppel against a public agency accused of inaction — in a circumstance where that agency is expected to engage in supervisory, and not detailed, daily action — would explicitly redefine DBR's authority and responsibilities in a manner inconsistent with the legislative intent underlying §
Counsel shall prepare an appropriate judgment for entry.
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Standard Bottling Co. v. Brewster ( 1940 )
Ferrelli v. Department of Employment Security ( 1970 )
Southwest Marine, Inc. v. Gizoni ( 1991 )
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Clark v. Alcoholic Beverage Commission ( 1934 )
Kent County Water Authority v. State (Department of Health) ( 1999 )
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Romano v. Retirement Board of the Employees' Retirement ... ( 2001 )
Newport Shipyard, Inc. v. Rhode Island Commission for Human ... ( 1984 )
Caswell v. George Sherman Sand & Gravel Co. ( 1981 )
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