J & P Market, Inc. v. Liquor Control Com'n

• Decision Date: 18 May 1993
• Docket Number: Docket No. 136244
• Citation: 502 N.W.2d 374,199 Mich.App. 646
• Parties: J & P MARKET, INC., Petitioner-Appellant, v. LIQUOR CONTROL COMMISSION, Respondent-Appellee, and Rite Aid of Michigan, Inc. Intervenor-Appellee.
• Court: Court of Appeal of Michigan — District of US

Page 374

502 N.W.2d 374

199 Mich.App. 646

J & P MARKET, INC., Petitioner-Appellant, v. LIQUOR CONTROL COMMISSION, Respondent-Appellee, and Rite Aid of Michigan, Inc. Intervenor-Appellee.

Docket No. 136244.

Court of Appeals of Michigan.

Submitted March 9, 1993, at Lansing.

Decided May 18, 1993, at 9:05 a.m.

Released for Publication July 30, 1993.

Norman C. Farhat & Associates, P.C. by Lester A. Owczarski, Farmington Hills, for J & P Market, Inc.

Frank J. Kelley, Atty. Gen., Thomas L. Casey, Sol. Gen., and Arthur E. D'Hondt and Richard I. Rubin, Asst. Attys. Gen., Lincoln Park, for Liquor Control Com'n.

Doyle Group Attorneys, P.C. by Fred C. Lovejoy, Lansing, for Rite Aid of Michigan, Inc.

Before BRENNAN, P.J., and HOOD and TAYLOR, JJ.

PER CURIAM.

This is an administrative case. Petitioner appeals as of right from a decision of the respondent, the Liquor Control Commission (LCC), to deny petitioner's request for a transfer of a license to sell hard liquor. We affirm.

Petitioner holds a specially designated merchant (SDM) license to sell carry-out beer and wine. See M.C.L. § 436.2q; M.S.A. § 18.972(17). In June of 1989, it filed a request with respondent for a transfer of a specially designated distributor (SDD) license to sell hard liquor on a carry-out basis. See M.C.L. § 436.2p; M.S.A. § 18.972(16). Petitioner apparently sought to acquire the SDD license from a nearby merchant.

Although petitioner obtained the approval of local authorities in accordance with M.C.L. § 436.17(3); M.S.A. § 18.988(3), respondent declined to approve the transfer request. Petitioner unsuccessfully appealed in circuit court. This appeal followed.

Pursuant to its rule-making authority, M.C.L. § 436.7; M.S.A. § 18.977, the LCC has promulgated 1980 AACS, R 436.1133 (Rule 33), governing SDD license transfers. Rule 33 provides that "[a]n application ... for the transfer of location of an existing specially designated distributor license shall not be approved by the commission if there is an existing specially designated distributor license located within 2,640 feet of the proposed site." However, "[t]his rule may be waived by the commission for 1 of the following reasons: ... (c) If the proposed location and the existing specially designated distributor's licensed establishment are separated by a major thoroughfare of not less than 4 lanes of traffic."

In this case, there are three SDD license holders--including the intervenor appellee- --within 2,640 feet of petitioner's proposed SDD location, all of whom opposed the license transfer request. However, all are separated from petitioner's proposed SDD location by four-lane roads, so that the above language of Rule 33(c) could apply. The LCC nevertheless refused to grant petitioner an exemption.

The LCC relied upon 1985 AACS, R 436.1105(2)(a), (c), and (j) (Rule 5), in denying petitioner's request. Rule 5 provides that "[t]he commission shall consider all of the following factors in determining whether an applicant may be issued a license: (a) The applicant's management experience in the alcoholic liquor business.... (c) The applicant's general business reputation.... (j) The effects (sic) that the issuance of a license would have on the health, welfare, and safety of the general public."

The LCC found that, although petitioner qualified for a waiver under Rule 33, the area's population was shrinking and did not need another SDD license. Further, it found that because petitioner had eight prior violations of the Liquor Control Act--seven for selling alcohol to minors and one for allowing the sale or possession of cocaine on its premises--"with the added responsibilities inherent upon receiving a[n] SDD license, a clear potential for undesirable business practices still exist[ed]." Despite petitioner not having any violations in the four years before the application, its transfer request was denied.

Petitioner first argues that the circuit court used an incorrect standard for reviewing the agency's decision. We agree, but find that on this record the error was harmless. We write to settle the confusion surrounding the applicable standard of review. In order to do that, we will examine the various possible sources of a standard for appellate review.

The Liquor Control Act does not prescribe a procedure for requesting license transfers or provide a standard of review for the denial of such requests. See M.C.L. § 436.17(3); M.S.A. § 18.988(3). The act does not require that a hearing be held to consider a transfer request. M.C.L. § 436.17(3); M.S.A. § 18.988(3); but compare M.C.L. § 436.17(4); M.S.A. § 18.988(4) (a hearing is required before revocation of a liquor license). Rather, the procedure for considering transfer requests is spelled out in Rule 33.

The Administrative Procedures Act (APA) confers a right to appeal, after exhaustion of all administrative remedies, upon a person "aggrieved by a final decision or order in a contested case," M.C.L. § 24.301; M.S.A. § 3.560(201) (emphasis added). A "contested case," however, is defined as "a proceeding including ... licensing, in which determination of legal rights, duties, or privileges of a named party is required by law to be made by an agency after an opportunity for an evidentiary hearing." MCR 7.105(A)(2) (emphasis added). Because an evidentiary hearing is not required by statute in connection with a transfer request, such a proceeding is not a contested case and therefore is not covered by the appeals procedure of the APA. Delly v. Bureau of State Lottery, 183 Mich.App. 258, 263, 454 N.W.2d 141 (1990); see also Kassab v. Acho, 150 Mich.App. 104, 108-109, 388 N.W.2d 263 (1986) (Kassab II ); T.D.N. Enterprises, Inc. v. Liquor Control Comm., 90 Mich.App. 437, 439, 280 N.W.2d 622 (1979); see M.C.L. § 24.306(1); M.S.A. § 3.560(206)(1) (scope of review applicable to appeals under the APA).

Under the Michigan Constitution, "[a]ll final decisions ... of any administrative ... agency existing under the constitution or by law, which are judicial or quasi-judicial and affect private rights or licenses, shall be subject to direct review by the courts as provided by law. This review shall include, as a minimum, the determination whether such final decisions ... are authorized by law; and in cases in which a hearing is required, whether the same are supported by competent, material and substantial evidence on the whole record." Const.1963, art. 6, § 28. (Emphasis added.) Because a hearing is not required, a decision by the LCC to deny a license transfer is reviewed only under the minimum standard. Semaan v. Liquor Control Comm., 425 Mich. 28, 40-41, 387 N.W.2d 786 (1986); see also Delly, supra 183 Mich.App. at 263-264, 454 N.W.2d 141; 13-Southfield Associates v. Dep't of Public Health, 82 Mich.App. 678, 685-686, 267 N.W.2d 483 (1978). Cases applying the substantial evidence standard to SDD license denials were incorrectly decided. See Kassab v. Acho, 125 Mich.App. 442, 449-452, 336 N.W.2d 816 (1983) (specifically disapproved in Kassab II ); T.D.N., supra 90 Mich.App. at 439-440, 280 N.W.2d 622 (applying constitutional and APA standards of review although acknowledging that a contested case was not involved).

Under the Revised Judicature Act (RJA), "[a]n appeal shall lie from any order, decision, or opinion of any state board, commission, or agency, authorized under the laws of this state to promulgate rules from which an appeal or other judicial review has not otherwise been provided for by law, to the circuit court of the county of which the appellant is a resident or to the circuit court of Ingham County." M.C.L. § 600.631; M.S.A. § 27A.631. "Such appeals shall be made in accordance with the rules of the Supreme Court." Id. The Supreme Court rules, however, only provide a scope of review for "appeal[s] to the circuit court from an agency decision in a contested case." MCR 7.105(B)(1); see MCR 7.105(M) (scope of review); compare with M.C.L. § 24.306(1); M.S.A. § 3.560(206)(1) (scope of review). Again, because a hearing is not...