Leichliter v. LIQUOR LICENSING AUTH.

• Decision Date: 20 January 2000
• Docket Number: No. 99CA0119.,99CA0119.
• Parties: Robert LEICHLITER, d/b/a Top Hat Lounge, Plaintiff-Appellee, v. STATE LIQUOR LICENSING AUTHORITY, DEPARTMENT OF REVENUE, STATE OF COLORADO, Defendant-Appellant.
• Court: Colorado Court of Appeals

9 P.3d 1153

Robert LEICHLITER, d/b/a Top Hat Lounge, Plaintiff-Appellee, v. STATE LIQUOR LICENSING AUTHORITY, DEPARTMENT OF REVENUE, STATE OF COLORADO, Defendant-Appellant.

No. 99CA0119.

Colorado Court of Appeals, Div. I.

January 20, 2000.

Rehearing Denied April 6, 2000.

Certiorari Denied October 10, 2000.

Patrick H. Renworth, Fort Collins, Colorado, for Plaintiff-Appellee.

Ken Salazar, Attorney General, Barbara McDonnell, Chief Deputy Attorney General, Michael E. McLachlan, Solicitor General, Robert H. Dodd, Jr., Assistant Attorney General, Denver, Colorado, for Defendant-Appellant.

Opinion by Judge DAVIDSON.

This is an appeal from the judgment entered in a C.R.C.P. 106(a)(4) proceeding reversing the action of the Colorado Department of Revenue Liquor Licensing Authority (Liquor Authority) in suspending the liquor license of plaintiff, Robert Leichliter, d/b/a Top Hat Lounge, for permitting gambling on its premises. The primary issue is whether the National Collegiate Athletic Association (NCAA) basketball pool held on the premises was incidental to a bona fide social relationship. We agree with the trial court that it was and therefore affirm.

The relevant facts as set forth in the trial court's order are not in dispute. On March 25, 1998, two investigators from the Liquor Authority went to the Lounge on an unrelated complaint. While there, the investigators noticed a grid for an NCAA basketball pool on a shelf on the back bar and, at their request, were allowed to participate in the pool. Based upon this, the Liquor Authority issued an order to show cause to plaintiff alleging a violation of the Colorado Liquor Code relating to the prohibition of gambling at an establishment licensed to serve alcoholic beverages.

Under the Colorado Liquor Code, § 12-47-901(5), C.R.S.1999, with exceptions not relevant here, a licensed retailer may not authorize or permit gambling on its premises. "Gambling," as used in this statute has the same meaning as "gambling" in the criminal code, see Brownlee v. State, 686 P.2d 1372 (Colo.App.1984),

and includes, inter alia, risking money or other things of value for gain contingent, in whole or part, upon the happening of a sporting event over which the person taking a risk has no control. See § 18-10-102(2), C.R.S.1999. However, any game, wager, or transaction which is incidental to a bona fide social relationship, is participated in only by natural persons, and in which no person is participating, directly or indirectly, in professional gambling, is excluded from the definition of gambling. See § 18-10-102(2)(d), C.R.S.1999.

After a hearing on the alleged violation, the hearing officer determined that the basketball pool was not incidental to a bona fide social relationship and, therefore, constituted illegal gambling in violation of § 12-47-901(5), C.R.S.1999, and regulation 47-922 A 1., 1 Code Colo. Reg. 203-2 (prohibiting licensee from authorizing or permitting gambling on the premises). Plaintiff's liquor license was suspended for ten days, but six days of the suspension were deferred for one year pending proof of any future violation.

Plaintiff then instituted this C.R.C.P. 106(a)(4) action for review of the Liquor Authority's decision. The trial court reversed after determining that the hearing officer's finding that the basketball pool was not a game, wager, or transaction which was incidental to a bona fide social relationship was clearly erroneous, unsupported by substantial evidence, and contrary to law. On appeal, the Liquor Authority argues that this was error. We agree with the trial court.

In order for a reviewing court to set aside a decision by an administrative agency, the decision must be clearly erroneous, without evidentiary support in the record, or contrary to law. Brownlee v. State, supra.

Under C.R.C.P. 106(a)(4), the appropriate consideration for an appellate court is whether there is sufficient evidentiary support for the decision rendered by the administrative tribunal. The appellate court is not bound by any determination made by the trial court, but reviews the issues presented to that court de novo. See City of Colorado Springs v. Givan, 897 P.2d 753 (Colo.1995).

Here, the hearing officer based his determination that the activity did not constitute social gambling on his finding that there was no bona fide social relationship among the participants in the transaction because, although "the establishment was characterized as a friendly neighborhood bar, it is apparent that anyone could walk in and participate in the gambling activity." Indeed, argues the Liquor Authority, there could be no bona fide social relationship among the participants here because this was an "open" pool in which the individuals who participated did not necessarily know one another. We disagree.

The phrase, "incident to a bona fide social relationship" is not defined in the statute or Liquor Code regulations. However, it has been addressed in prior decisions of the supreme court.

In People v. Wheatridge Poker Club, 194 Colo. 15, 569 P.2d 324 (1977), the court held that poker playing for money in a social club that derived its profits solely from yearly membership dues, a set "per chair" fee, and in which members were brought together through advertisements and promotions for the sole purpose of gambling was not incidental to a bona fide social relationship. In Houston v. Younghans, 196 Colo. 53, 580 P.2d 801 (1978), however, the court determined that poker playing for money among friends at the home of one of the players was incidental to a bona fide social relationship. More recently, in Charnes v. Central City Opera House Ass'n, 773 P.2d 546 (Colo.1989), the court held that a fundraising event...