GC Bros. Entm't LLC v. Alcoholic Beverage Control Appeals Bd.
| Decision Date | 01 November 2022 |
| Docket Number | B316346 |
| Citation | 84 Cal.App.5th 1019,300 Cal.Rptr.3d 823 |
| Parties | GC BROTHERS ENTERTAINMENT LLC, Petitioner, v. ALCOHOLIC BEVERAGE CONTROL APPEALS BOARD, Respondent, Department of Alcoholic Beverage Control, Real Party in Interest. |
| Court | California Court of Appeals Court of Appeals |
Blake & Ayaz, Rick A. Blake, Santa Ana; Roger Jon Diamond, for Petitioner.
Rob Bonta, Attorney General, Chris A. Knudsen, Assistant Attorney General, Gabrielle H. Brumbach and Mark Schreiber, Deputy Attorneys General, for Real Party in Interest.
No appearance for Respondent.
The Department of Alcoholic Beverage Control (Department) revoked a nightclub's liquor license after the club's owner, GC Brothers Entertainment LLC dba The Palms (Petitioner), failed to respond to an accusation alleging several violations of California statutes and regulations. Petitioner appealed the Department's decision to the Alcoholic Beverage Control Appeals Board (Appeals Board), which affirmed it, and now seeks a writ of mandate directing the Department to vacate its decision. We grant the writ.
We take the facts from an accusation the Department filed against Petitioner, accepting them as true for purposes of this proceeding. ( Code Civ. Proc., § 431.20, subd. (a) [].)
The Palms, a nightclub, holds an on sale general public premises license issued to Petitioner which authorizes the sale of beer, wine and distilled spirits for consumption on the premises. In September 2019, undercover Department personnel discovered several illicit activities taking place at The Palms, and on January 30, 2020, the Department issued a misdemeanor citation to George Cataloiu, Petitioner's president, demanding that he appear before the superior court by June 15, 2020.
On September 11, 2020, the Department instituted a 40-count accusation against Petitioner, alleging it exceeded its license privileges by knowingly permitting the illegal sale, possession and consumption of alcohol and controlled substances on its licensed premises, and permitting several of its employees to violate the Health and Safety Code, Business and Professions Code, and California Code of Regulations by: consuming alcohol in unlicensed areas; exposing their genitalia and performing simulated sex acts; furnishing cocaine and drug paraphernalia to club patrons; soliciting the purchase of alcohol for their own consumption; and smoking or ingesting cannabis on the premises.
On September 11, 2020, the Department served the accusation on Petitioner by certified mail to The Palms’ address pursuant to California Code of Regulations section 145 (Rule 145), which prescribes that notices will be mailed to the premises for which a license is issued unless the licensee requests otherwise. United States Postal Service (USPS) tracking information showed the accusation was delivered to the licensed premises on September 14, 2020, at 10:05 a.m.
Along with the accusation, the Department served Petitioner notification that it could either settle the controversy and submit to possible revocation of its alcohol license or dispute the violations by requesting a hearing before an administrative law judge (ALJ). The Department further notified Petitioner that if it took no action within 15 days all charges in the accusation would be sustained and found proven, an administrative default judgment would be entered, and the Department would impose penalties commensurate with the charges.
Petitioner failed to respond.
On November 23, 2020, the Department adopted a "Decision Following Default," finding Petitioner was properly served with the Accusation but made no timely response, the allegations of the accusation were true, and the Department was authorized to suspend or revoke Petitioner's license. The Department found that continuance of Petitioner's license would be "contrary to public welfare and morals," and ordered that the license be revoked effective immediately.
The Department served the decision on Petitioner by certified mail to The Palms’ address, USPS tracking information showing it was delivered to the licensed premises on November 28, 2020, at 9:51 a.m.
On December 2, 2020, Petitioner filed a one-page motion with the Department, unsupported by any evidence, to vacate the default, arguing that Petitioner never received the September 11 accusation.1
The Department opposed the motion, arguing no good cause existed to vacate the default because the accusation was sent to the address Petitioner had provided in its license application, and by Petitioner's own admission that The Palms had been closed for months before service of the accusation, Petitioner had been afforded plenty of time to update its address pursuant to Rule 145 but chose not to do so.
On December 16, 2020, Petitioners belatedly filed a declaration by Cataloiu to support its motion. In it, Cataloiu argued that the accusation should not have been mailed to The Palms in the first instance because Department staff knew the club had been closed since March 2020 due to the Covid pandemic. Instead, the accusation should have been sent to Cataloiu or his attorney, both of whom were known to Department staff as a result of the January 2020 misdemeanor proceedings. Cataloiu implied but failed explicitly to state that he never received the September 11 accusation. He complained it was "unconscionable that a government agency such as the Department of Alcoholic Beverage Control would act so unfairly to try to take advantage of a miscue."
On December 21, 2020, the Department filed a declaration by Bradley Beach, the supervising agent in charge of the Department's Lakewood district office, who stated that when the Department notified him that Petitioner failed to respond to the accusation, he telephoned Petitioner at the two numbers the Department had on file. There was no answer at the first number, and the mailbox for the second was full.
On June 7, 2021, the Department found that Petitioner's attorney's allegation—in the motion to vacate the default—to the effect that Petitioner failed to receive the accusation did not constitute evidence of that fact. The Department therefore denied Petitioner's motion.
Petitioner appealed this decision to the Appeals Board. In its briefs in support of the appeal, Petitioner challenged Beach's declaration about having attempted to telephone Petitioner, denied that delivery of mail was possible at The Palms when it was closed, and argued that an employee arriving at the club to retrieve office items found no accusation there. Petitioner requested that the Appeals Board order the Department to hold a hearing concerning Petitioner's nonreceipt of the accusation. Petitioner further argued that the interests of leniency and "[r]estoring the credibility of a governmental entity such as the [Department]" constituted good cause to vacate the default considering the chaos caused by the pandemic, especially given that no prejudice would result because Petitioner moved to vacate the default only a few days after it was issued.
After the appeal was fully briefed and submitted to the Appeals Board, and two days prior to the hearing on the matter, Petitioner submitted the declaration of Lambert Adouki, a consultant Petitioner hired to investigate mail delivery to The Palms, who stated he had been informed by Ayaz Brianna Flores, a supervisor at the Signal Hill USPS station, that the mail carrier who allegedly delivered the accusation to The Palms had informed Flores that the mail was not in fact delivered because the business was closed.
On October 19, 2021, the Appeals Board affirmed the Department's order denying Petitioner's motion to vacate the default, and denied Petitioner's request to remand the matter to the Department for consideration of new evidence.
Petitioner timely seeks a writ of mandate directing the Appeals Board and Department to reverse their decisions. In its petition, Petitioner admits "there was no need for Petitioner to update their mailing address as Petitioner regularly checked their mail."
Petitioner contends the Appeals Board erred in affirming the Department's order denying relief from default, and requests that we either order the Appeals Board to vacate its order, vacate the Department's order denying relief from default, or vacate the Department's initial order finding petitioner to be in default.
The California Constitution grants the Department "exclusive power" to license the sale of alcoholic beverages "in accordance with laws enacted by the Legislature." ( Cal. Const., art. XX, § 22.) The Department may, "in its discretion, ... deny, suspend or revoke any specific alcoholic beverage license if it shall determine for good cause that the granting or continuance of such license would be contrary to public welfare or morals, or that a person seeking or holding a license has violated any law prohibiting conduct involving moral turpitude." (Ibid. ; see Rondon v. Alcoholic Beverage Control Appeals Bd . (2007) 151 Cal.App.4th 1274, 1281, 60 Cal.Rptr.3d 295.)
Any party aggrieved by the Department's decision to revoke a license may appeal that decision to the Appeals Board. ( Cal. Const., art. XX, § 22 ; Bus. & Prof. Code, §§ 23081, 23084.)2 The Appeals Board's scope of review is narrow: it "shall not receive evidence in addition to that considered by the [D]epartment," and its review "shall be limited to the questions whether the [D]epartment has proceeded without or in excess of its jurisdiction, whether the [D]epartment has proceeded in the manner required by law, whether the decision is supported by the findings, and whether the findings are supported by substantial evidence in the light of the whole record." ( Cal. Const., art. XX, § 22 ; § 23084 ; see Department of Alcoholic Beverage Control v. Alcoholic Beverage Control Appeals Bd . (2002) 100 Cal.App.4th 1066, 1073, 123...
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