Green Point Liquors, Inc. v. McConaghy

• Decision Date: 10 August 2004
• Docket Number: PC 02-2837
• Parties: GREEN POINT LIQUORS, INC. Plaintiff v. MARILYN SHANNON MCCONAGHY, in her capacity as Director of the Department of Business Regulation, a department of the State of Rhode Island, Defendant
• Court: Rhode Island Superior Court

GREEN POINT LIQUORS, INC. Plaintiff
v.
MARILYN SHANNON MCCONAGHY, in her capacity as Director of the Department of Business Regulation, a department of the State of Rhode Island, Defendant

No. PC 02-2837

Superior Court of Rhode Island

August 10, 2004

DECISION

THOMPSON, J.

Green Point Liquors, Inc. ("Green Point") appeals the decision of the Department of Business Regulation ("DBR"), declaring Green Point's Class A liquor license null and void and ordering the Board of Licenses, City of Providence ("Board of Licenses"), to cancel said license. This Court has jurisdiction over this appeal pursuant to G.L. § 42-35-15, which allows a party to appeal a final decision of the Department of Business Regulation to the Superior Court within 30 days after the agency mails notice of the final decision.

Facts and Travel

This matter arises out of DBR's intervention in an appeal from the Board of Licenses to DBR originally brought by The Da Vinci Center for Community Progress, Inc. ("The Da Vinci Center"). The Da Vinci Center appealed a decision of the Board of Licenses, allowing the transfer of a Class A liquor license from The Wine Merchant, Inc. ("Wine Merchant") to Green Point. Although a Motion to Dismiss Wine Merchant's appeal due to lack of standing was filed prior to DBR's Motion to Intervene, DBR was first allowed to intervene in the matter, and Wine Merchant's appeal was subsequently dismissed. The DBR Hearing Officer then granted summary judgment in favor of DBR, thereby invalidating Green Point's Class A liquor license.

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. § 3-1-1 et seq. arising out of the transfer of this Class A liquor license. Green Point filed a Motion to Dismiss; on the day of the hearing for this motion, DBR filed a Motion to Intervene. Prior to dismissing The Da Vinci Center's action, DBR was allowed to intervene. The Hearing Officer then dismissed The Da Vinci Center's appeal for lack of standing and untimeliness. Thus, once The Da Vinci Center's appeal was dismissed, DBR proceeded on its own against the Board of Licenses and Green Point. Green Point filed a second Motion to Dismiss, arguing that DBR lacked standing to intervene; this second Motion to Dismiss was denied. DBR then moved for summary judgment. On May 3, 2002, DBR's Motion for Summary Judgment was granted; the Hearing Officer found that the Class A liquor license was null and void because it was not legally available to be transferred to Green Point as the license should have been canceled prior to the transfer pursuant to G.L. § 3-5-16.1.^[1] Accordingly, DBR ordered the Board of Licenses to cancel the Class A license and declare the transfer invalid.

DBR's Jurisdiction

Under Rhode Island law, DBR has the right, power, and jurisdiction to issue manufacturer's wholesaler's or retailer's Class G and Class I licenses, and local licensing authorities possess the right, power and jurisdiction to issue, revoke, suspend, or transfer all other licenses authorized in § 3-1-1 et. seq.. See § 3-5-14, §3-5-15, §3-5-19, §3-5-21. Matters which come before DBR on appeal are reviewed de novo. Tedford, et al. v. Reynolds, 87 R.I. 335, 340, 141 A 264, 267 (R.I. 1958) (citing Kaskela v. Daneker, 76 R.I. 405, 407, 71 A.2d 510, 511 (R.I. 1950)) ("the power of review vested in the liquor control administrator is not limited to a mere review of error of law, and ... the administrator may in his discretion hear cases de novo"); Baginski v. Alcoholic Beverage Commission, 62 R.I. 176, 181-82, 4 A.2d 265, 267-68 (R.I. 1939); see Clark v. Alcoholic Beverage Commission, 54 R.I. 126, 127, 170 A. 79, 80 (R.I. 1934). Additionally, the "administrator [DBR] has the power, for proper cause, to revoke any kind of license." Belconis v. Brewster. 65 R.I. 279, 283-84, 14 A.2d 701, 703 (R.I. 1940); see § 3-5-21.

Standard of Review

A party who has "exhausted all administrative remedies available to him within the agency and who is aggrieved by a final order in a contested case is entitled to judicial review" by the Superior Court pursuant to § 42-35-15. Rhode Island General Laws § 42- 35-15(g) governs the standard of review for an appeal of a final agency decision. The statute provides, in relevant part:

(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, 710 A.2d 680, 684 (R.I. 1998); Mine Safety Appliances Co. v. Berry, 620 A.2d 1255, 1259 (R.I. 1993). This directive applies even if the court may have been inclined to arrive at different conclusions and inferences upon review of the evidence and the record. Johnston Ambulatory Surgical Assocs. v. Nolan, 755 A.2d 799, 805 (R.I. 2000) (quoting Rhode Island Pub. Telecomm. Auth. v. Rhode Island State Labor Relations Bd.. 650 A.2d 479, 485 (R.I. 1994)); Barrington Sch. Comm. v. Rhode Island State Labor Relations Bd.. 608 A.2d 1126, 1138 (R.I. 1992).

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, 621 A.2d 200, 208 (R.I. 1993) ("The Superior Court is confined to a determination of whether there is any legally competent evidence to support the agency's decision"). The Rhode Island Supreme Court has defined substantial evidence as " 'such relevant evidence that a reasonable mind might accept as adequate to support a conclusion, and means an amount more than a scintilla but less than preponderance.' "^[2] Newport Ship Yard v. Rhode Island Comm'n for Human Rights. 484 A.2d 893, 897 (R.I. 1984) (quoting Caswell v. George Sherman Sand & Gravel Co.. 424 A.2d 646, 647 (R.I. 1981)). Thus, only where "factual conclusions of administrative agencies ... are totally devoid of competent evidentiary support in the record" may the Superior Court reverse. Baker v. Department of Employment & Training Bd. of Review. 637 A.2d 360, 363 (R.I. 1994) (quoting Milardo v. Coastal Resources Management Council 434 A.2d 266, 272 (R.I. 1981)). "Questions of law, however, are not binding upon the court and may be reviewed to determine what the law is and its applicability to the facts." Narragansett Wire Co. v. Norberg. 118 R.I. 596, 607, 376 A.2d 1, 6 (1977).

Analysis

DBR's Sua Sponte Authority

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. §3-7-21 provides only three groups of people with the right of appeal from the local licensing board to the liquor control administrator^[3]: (1) applicants who have been denied a license, (2) licensees who have had their licenses revoked or suspended, (3) any person authorized to protest against the granting of a license (such as those persons living within 200 feet of the proposed site of a license). See §3-7-21; Earle v. Pastore. 511 A.2d 989, 990 (R.I. 1986). However, Green Point's contention that this limitation on the right of appeal precludes DBR from intervening or bringing its own action is without merit.

Section 3-5-21(a) makes clear that DBR possesses sua sponte...