Ark. Dep't of Fin. & Admin. v. 2600 Holdings, LLC

• Decision Date: 16 June 2022
• Docket Number: CV-21-505
• Citation: 2022 Ark. 140,646 S.W.3d 99
• Parties: ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION; Arkansas Alcoholic Beverage Control Division; and Arkansas Medical Marijuana Commission, Appellants v. 2600 HOLDINGS, LLC, d/b/a Southern Roots Cultivation, Appellee
• Court: Arkansas Supreme Court

2022 Ark. 140

646 S.W.3d 99

ARKANSAS DEPARTMENT OF FINANCE AND ADMINISTRATION; Arkansas Alcoholic Beverage Control Division; and Arkansas Medical Marijuana Commission, Appellants

v.2600 HOLDINGS, LLC, d/b/a Southern Roots Cultivation, Appellee

No. CV-21-505

Supreme Court of Arkansas.

Opinion Delivered: June 16, 2022

Leslie Rutledge, Att'y Gen., by: Jennifer L. Merritt, Sr. Ass't Att'y Gen., for appellee.

Cross, Gunter, Witherspoon & Galchus, P.C., by: Carolyn B. Witherspoon, Abtin Mehdizadegan, Little Rock, and Brett W. Taylor, for appellee.

BARBARA W. WEBB, Justice

The Arkansas Department of Finance and Administration (ADFA), the Arkansas Alcoholic Beverage Control Division (ABC), and the Arkansas Medical Marijuana Commission (MMC) have filed this interlocutory appeal from the Pulaski County Circuit Court's denial of its motion to dismiss on the basis of sovereign immunity. On appeal, appellants argue that the circuit court erred in its ruling. We affirm, in part, dismiss in part and remand.

I. Jurisdiction

This court's jurisdiction is pursuant to Arkansas Rule of Appellate Procedure–Civil 2(a)(10), which permits an interlocutory appeal of an order denying a motion to dismiss based on the defense of sovereign immunity.

II. Facts and Procedural History

Amendment 98 to the Arkansas Constitution, commonly known as the Arkansas Medical Marijuana Amendment of 2016, is a comprehensive body of law governing the legalization of cannabis for medical purposes. Section 8 of amendment 98 charges the MMC with administering and licensing dispensaries and cultivation facilities. Amendment 98 further states that cultivation facilities must be licensed through an application process, and empowers the MMC to adopt rules governing "[t]he manner in which the commission considers applications." Ark. Const. amend. 98, § 8. Amendment 98 required that the MMC issue "at least four (4) but no more than (8) cultivation licenses." Ark. Const. amend. 98, § 8 (j).

On July 10, 2018, the MMC issued medical marijuana cultivation licenses to each of the five highest-scoring applicants and, at the same time, announced that the sixth, seventh, and eighth highest-scoring applicants were River Valley Relief Cultivation (RVRC), New Day, and 2600 Holdings, doing business as Southern Roots. Not long thereafter, the MMC and the ABC received several protest letters, two of which specifically complained that RVRC's application was void because its proposed cultivation site was located within 3,000 feet of a public school, which violated an express provision in amendment 98. One of the applicants that was not awarded a cultivation license, 2600 Holdings, filed its original complaint on January 22, 2021. It amended its complaint on February 10, 2021, seeking a writ of mandamus and declaratory relief. In its amended complaint, 2600 Holdings stated: "This suit seeks to compel the Defendants (ADFA, MMC and ABC) to immediately take all steps necessary to correct an egregious injury to Southern Roots caused by Defendants’ failure and refusal to follow the mandates of a constitutional amendment adopted by the citizens of the State of Arkansas." Further, the amended complaint specifically asked the circuit court to compel ADFA, MMC, and/or ABC to revoke the cultivation facility license granted to Storm Nolan, the representative of RVRC, and award it instead to 2600 Holdings.

Appellants moved to dismiss. They asserted five grounds: (1) the complaint is barred by sovereign immunity because Plaintiff seeks to control the operations and administrative decisions of state agencies in the medical marijuana licensing and regulatory process; (2) under Arkansas Department of Finance and Administration v. Naturalis Health, LLC , 2018 Ark. 224, 549 S.W.3d 901, the decisions at issue are not subject to judicial review, and therefore, the circuit court lacks subject-matter jurisdiction over the claims raised in the complaint and should dismiss the complaint and amended complaint pursuant to Ark. R. Civ. P. 12(b)(1) ; (3) the complaint should be dismissed pursuant to Ark. R. Civ. P. 12(b)(6) because Plaintiff fails to state any cognizable legal claim; (4) Plaintiff's request for injunctive relief is moot and fails as a matter of law; and (5) Plaintiff's complaint should be dismissed pursuant to Rule 19 of the Arkansas Rules of Civil Procedure because it failed to name Storm Nolan, who was an indispensable party. After a hearing, the circuit court denied the motion to dismiss. Appellants timely filed a notice of appeal.

III. Standard of Review

When we review a circuit court's decision on a motion to dismiss based on sovereign immunity, we treat the facts alleged in the complaint as true and view them in the light most favorable to the plaintiff. Ark. Dep't of Fin. & Admin. v. Carpenter Farms Med. Grp., LLC , 2020 Ark. 213, 601 S.W.3d 111. We focus "only to the allegations in the complaint and not to matters outside the complaint." Id. at 6, 601 S.W.3d at 117. We construe the pleadings liberally, resolving all reasonable inferences in the complaint's favor. Id. However, we review the issue of sovereign immunity de novo. Id. at 7, 601 S.W.3d at 117.

IV. Writ of Mandamus

Arkansas's doctrine of sovereign immunity originates in article 5, section 20 of the Arkansas Constitution, which provides that "[t]he State of Arkansas shall never be made defendant in any of her courts." We note, however, that article 5 of the Arkansas Constitution is the legislative article, which expressly deals with grants of power to, and limitations on, the power of the General Assembly. Accordingly, it is easy to overstate the implications of article 5, section 20 if it is considered in isolation and not within the context of the entire Arkansas Constitution. As this court stated in Smith v. Cole , 187 Ark. 471, 475, 61 S.W.2d 55, 57 (1933), "It is the duty of this court to harmonize all provisions of the Constitution and amendments thereto and to construe them with the view of a harmonious whole." Likewise, in Wright v. Ward , this court stated:

The same general rules which govern the construction and interpretation of statutes and written instruments generally, apply to and control in the interpretation of written constitutions. They are made by practical and intelligent men for the practical administration of the government, and they are to receive that interpretation which will give effect to the intent of the framers as deducible from the language employed and operate most benignly in the interest of the governed, and best harmonize with and give effect to the general scope and design of the instruments. As in other written instruments, the intent and design of a particular provision being ascertained from the words used, effect will be given to it in harmony with such intent and design.

170 Ark. 464, 467, 280 S.W. 369, 370–71 (1926) (quoting with approval People v. Fancher , 50 N.Y. 288 (1872) ).

Furthermore, in construing the Arkansas Constitution, well-recognized canons of construction apply. We recently held in Rutledge v. Remmel , 2022 Ark. 86, 643 S.W.3d 5, the general provision regarding sovereign immunity found in article 5, section 20, must yield to a specific express constitutional provision to the contrary. In that case we held that the constitutional provision concerning the right of the people to prosecute illegal exactions found in article 16, section 13 of the Arkansas Constitution must take precedence over the general concept of sovereign immunity. Remmel is consistent with well-established canons of construction providing that where a general term or expression in one part is inconsistent with more specific or particular provisions in another part, the particular provisions will be given effect as clearer and more definite expressions of the drafters’ intent. Hodges v. Dawdy , 104 Ark. 583, 149 S.W. 656 (1912).

Here, 2600 Holdings has petitioned for a writ of mandamus. Writs of mandamus are provided for in Arkansas Constitution amendment 80, sections 2 (E) and 10. Pursuant to these sections, the legislature empowered circuit courts with subject-matter jurisdiction to issue writs of mandamus. Ark. Code Ann. § 16-115-102 ; See Rutledge v. Remmel , 2022 Ark. 86, at 8, 643 S.W.3d 5 ; Chesshir v. Copeland , 182 Ark. 425, 428, 32 S.W.2d 301, 302 (1930). We, therefore, hold that the sovereign-immunity defense does not preclude writs of mandamus. And consequently, the circuit court did not err in denying the motion to dismiss the writ of mandamus on the basis of sovereign immunity.

Citing

Arkansas Dep't of Hum. Servs. v. Fort Smith Sch. Dist. , 2015 Ark. 81, 455 S.W.3d 294, appellants argue that the circuit court erred in denying their motion to dismiss based on sovereign immunity because 2600 Holdings seeks to control the lawful administrative decisions of MMC and ABC. However, in Fort Smith , the school district's complaint sought declaratory and injunctive relief, not a writ of mandamus as 2600 Holdings pleaded here. Furthermore, appellants reliance on Fort Smith is misplaced because this court affirmed the circuit court's denial of the Arkansas Department of Human Services’ motion to dismiss based on sovereign immunity.

We also note that Clowers v. Lassiter , 363 Ark. 241, 213 S.W.3d 6 (2005), which served as the legal underpinning for Arkansas Dep't of Human Services. v. Fort Smith School District , 2015 Ark. 81, 455 S.W.3d 294, does not compel a different result. Clowers is like the case at bar because the litigant's complaint included a petition for writ of mandamus. In Clowers , a constable sued the Arkansas Crime Information Supervisory Board and the county sheriff because he wanted radio access to the Arkansas Crime Information Center (ACIC) information. The circuit court granted the ACIC's motion to dismiss, and the constable appealed that final order. Clowers held that because the constable was seeking to force a state agency to do something more than a purely ministerial action...