Comptroller of the Treasury v. Two Farms, Inc.
| Citation | 174 A.3d 453,234 Md.App. 674 |
| Decision Date | 29 November 2017 |
| Docket Number | No. 944 Sept. Term, 2016,944 Sept. Term, 2016 |
| Parties | COMPTROLLER OF the TREASURY v. TWO FARMS, INC. |
| Court | Court of Special Appeals of Maryland |
Argued by Brian L. Oliner (Brian E. Frosh, Attorney General on the brief), all of Annapolis, MD, for Appellant.
Argued by H. Dean Bouland (Alan A. Abramowitz, Judah Fuld, Bouland & Brush, LLC on the brief), all of Baltimore, MD, for Appellee.
Panel: Meredith, Beachley, Robert A. Zarnoch (Senior Judge, Specially Assigned), JJ.
This appeal raises two overlapping issues: 1) whether the Comptroller of the Treasury has the authority to suspend the cigarette retail license of a business that illegally sells tobacco products to a minor; and 2) whether the Comptroller possesses such power under Md. Code (1992, 2015 Repl. Vol.), Business Regulation ("BR") Article, § 16–210(a)(2), which authorizes discipline of a licensee that "fraudulently or deceptively uses a license." For reasons that follow, we conclude that the Comptroller has implied power—legislatively-recognized—to suspend a license for unlawful sales of tobacco products to a minor. Under these circumstances, the licensee is acting outside the scope of the license conferred by Title 16 of the BR Article. However, the authority to suspend is not derived from BR § 16–210(a)(2). Because the administrative adjudication here was premised on the latter provision, the Circuit Court for Baltimore County correctly held that the suspension in this case cannot stand.
Two Farms is the operator of retail chain stores that are licensed to sell, among other things, cigarettes and tobacco products. On May 20, 2015, the Baltimore County Department of Health (the "Department") warned Two Farms about making sales to minors and not asking for identification in violation of local ordinances.1
In August 2015, the Department cited Two Farms for selling tobacco to minors on three separate occasions. All three violations occurred at the same location. On August 6, 2015, a minor purchased a Black and Mild cigar. On August 10, 2015, a minor bought a tin of chewing tobacco and was not asked for identification. On August 11, 2015, a minor purchased a Black and Mild cigar from the retailer. In each instance, a Department officer brought the minor to the store to attempt to purchase tobacco. Each time, Two Farms was issued a citation proposing a civil penalty for selling tobacco to a minor and, in one instance, for failing to ask for identification in violation of § 13–12–103.1 of the Baltimore County Code. These citations were adjudicated at a hearing before a county administrative law judge—a hearing that Two Farms did not attend. The retailer was found liable and civil penalties were imposed.
The County Department notified the Comptroller about Two Farms's violations. On November 2, 2015, the Comptroller sent the retailer a Notice of Hearing directing the licensee to show cause why its license should not be suspended for violations of BR § 16–210(a)(2). On November 19, 2015, a hearing was held at the Comptroller's office. Two officials from the County Department appeared as witnesses; however, Two Farms did not attend. One of the Department's witnesses testified to the events described at the County adjudicative hearing. At that point, the hearing officer issued his ruling, finding:
Well, in light of the fact that [Two Farms] has failed to appear, the evidence is sufficient to substantiate a finding here of guilty, and as a result, since the Comptroller has the authority to impose a suspension or revocation of a license, this is a first offense for [Two Farms] on the State level, so they will be suspended for a period of ten days and their cigarette and tobacco licenses will be suspended for a period of ten days.
On December 10, 2015, the Comptroller sent Two Farms a Notice of Final Determination, informing the business that its license to sell tobacco products would be suspended for ten days, pursuant to BR § 16–210(a)(2) for "fraudulently or deceptively us[ing] a license."2
On January 7, 2016, Two Farms sought judicial review of the Comptroller's decision in the Circuit Court for Baltimore County. At a June 10, 2016 hearing, the business claimed that it was not aware of the proceeding before the Comptroller's office because the citations had been served on store employees, and not on the company.3 Two Farms argued that there was no evidence of fraudulent or deceptive use of a tobacco license, as required under BR § 16–210(a)(2). The retailer asserted that the minors were not being deceived when they bought the tobacco products. The Comptroller countered that an unlawful action in and of itself proves fraud or deceit. The circuit court observed that there was no evidence of any misrepresentations made by the store. At the conclusion of the hearing, the court found that the evidence did not show a fraudulent or deceptive use of the license and vacated the order suspending Two Farms's license. The Comptroller appealed from that decision.4
The Comptroller frames the issue in this case as whether there was "substantial evidence that Two Farms fraudulently or deceptively used its license."5 However, in our view, this is not a substantial evidence case, but one presenting a purely legal issue of statutory interpretation—a question that we review de novo . Matthews v. Hous. Auth. of Baltimore City 216 Md. App. 572, 582, 88 A.3d 852 (2014).
The facts in the instant case are not complicated. Two Farms received three citations for selling tobacco products to minors. Based on that evidence, the Comptroller suspended Two Farms's license to sell tobacco products for ten days. In his order, the Comptroller stated that the license was being suspended pursuant to BR § 16–210(a)(2) for "fraudulently or deceptively use[ing] a license."6 Two Farms challenged that finding and the circuit court agreed, ruling that the facts did not support a fraudulent or deceptive use of the license. Therefore, the primary issue we must decide is whether the act of selling tobacco products to a minor constitutes a fraudulent or deceptive use of a license to sell tobacco products. However, given the Comptroller's reliance on BR § 16–212(e)(1)'s purported recognition of the power to suspend or revoke a license for illegal sales of tobacco, we also consider whether Title 16 or any part of it supports such authority.
BR § 16–210(a) provides grounds upon which the Comptroller can suspend or revoke a license. Specifically, the Comptroller can suspend or revoke a license if the licensee:
BR § 16–210(a) (Emphasis added).7
Furthermore, BR § 16–212(e)(1) provides that "Except for a violation of § 10–107 of the Criminal Law Article ,[8 ]whenever any license issued under the provisions of this subtitle is suspended or revoked by the Comptroller, the licensee may, before the effective date of the suspension or revocation, petition the Comptroller for permission to make an offer of compromise consisting of a sum of money in lieu of serving the suspension or revocation." (Emphasis added).
The Comptroller argues that the language of BR § 16–212(e)(1) makes it clear that he can suspend or revoke a license when a licensee distributes tobacco products to a minor.9 According to the Comptroller, the only paragraph this could fall under is BR § 16–210(a)(2) ; therefore, a licensee's unlawful distribution of tobacco to a minor constitutes a deceptive or fraudulent use of that license subject to discipline under BR § 16–210(a)(2). Two Farms argues that a suspension for violating CL § 10–107 is authorized under BR § 16–210(a)(6)(ii), which allows the Comptroller to suspend or revoke a license when the licensee is convicted of certain misdemeanors that are crimes of moral turpitude. The retailer also contends that simply selling a tobacco product to a minor is not a deceptive or fraudulent act by itself. Two Farms also argues that there must be some fraudulent scheme involved in the sale to a minor in order for BR § 16–210(a)(2) to apply. In addition, the business points to the failure of 2015 legislation, which among other things, would have expressly authorized the Comptroller to suspend or revoke a license for illegal sales to minors; and argues that this demonstrates a legislative intent to deny the Comptroller this authority.
In addition to the text, the purpose and legislative history of the relevant statutes and the consequences of the proffered constructions are critical to resolving these contentions. Also, of special importance here are three precepts of statutory construction. The first is when interpreting a statute, we should "give effect to all of the language and avoid a construction that renders any portion superfluous." Alston v. State , 433 Md. 275, 283, 71 A.3d 13 (2013) (quoting Stanley v. State , 390 Md. 175, 183–84, 887 A.2d 1078 (2005) ). Second, although a court is not authorized to ignore the text, it is free to explore "what is below the surface of the statute and yet fairly part...
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