Liquor Outlet v. Alcoholic Bev. Control Bd.

• Decision Date: 30 July 2004
• Docket Number: No. 2003-CA-001886-MR.,2003-CA-001886-MR.
• Citation: 141 S.W.3d 378
• Parties: LIQUOR OUTLET, LLC, Appellant, v. ALCOHOLIC BEVERAGE CONTROL BOARD, Commonwealth of Kentucky and Department of Alcoholic Beverage Control, Commonwealth of Kentucky, Appellees.
• Court: Kentucky Court of Appeals

141 S.W.3d 378

LIQUOR OUTLET, LLC, Appellant, v. ALCOHOLIC BEVERAGE CONTROL BOARD, Commonwealth of Kentucky and Department of Alcoholic Beverage Control, Commonwealth of Kentucky, Appellees.

No. 2003-CA-001886-MR.

Court of Appeals of Kentucky.

July 30, 2004.

Appeal from the Circuit Court, Franklin County, William L. Graham, J Kenneth S. Handmaker, Louisville, KY, for appellant.

Stephen B. Humphress, Frankfort, KY, for appellee.

Before COMBS, Chief Judge; SCHRODER and VANMETER Judges.

OPINION

SCHRODER, Judge.

This is an appeal from an opinion and order of the Franklin Circuit Court affirming a decision of the Alcohol Beverage Control ("ABC") Board suspending appellant's license for a period of five days for the sale of package liquor on Sunday. Upon review of the applicable statutes, we affirm the decision of the ABC Board because the city ordinance which appellant claims permitted the sale of distilled spirits and wine by the package on Sundays was enacted in contravention of the version of KRS 244.290 in effect in 1992, and was, thus, void. However, we reverse that portion of the opinion and order which further held that under the current version of KRS 244.290, local governments are not permitted to regulate the sale of package retail liquor and wine on Sundays.

Appellant, Liquor Outlet, is a retail seller of packaged distilled spirits and wine in the City of Bellevue, a fourth class city in Kentucky. In 2001, Liquor Outlet filed a declaratory judgment action in the Franklin Circuit Court seeking an advisory ruling on whether it could sell packaged distilled spirits and wine on Sundays under KRS 244.290 if the City of Bellevue passed an ordinance allowing such sales on Sundays. On November 29, 2001, the court dismissed the action because there was no case or controversy. Subsequently, it was discovered that the City of Bellevue had, in fact, enacted such an ordinance on October 14, 1992, which provided in pertinent part:

(A) Pursuant to the authority of KRS 244.290 and KRS 244.480, no distilled spirits, wine and malt beverages may be sold at retail in the city between the hours of 2:00 a.m. and 6:00 a.m. of any day, nor from 2:00 a.m. until 12 p.m. (Noon) on Sunday. Further, no distilled spirits, wine or malt beverages shall be sold at retail in the city during the hours the polls are open in the city on any election day.

Bellevue Ordinance § 112.40.

Because of its belief that the above ordinance permitted the retail sale of packaged distilled spirits and wine on Sundays after noon in Bellevue, Liquor Outlet invited investigators with the ABC Department to visit its store on a pre-arranged Sunday to purchase distilled spirits for the purpose of testing the ordinance. On Sunday July 28, 2002, at 12:30 p.m., an ABC department investigator arrived at the store and purchased a bottle of Jim Beam whiskey. Thereupon, Liquor Outlet was cited for unlawful sales of distilled spirits on Sunday in violation of KRS 244.290(3).

A hearing before the ABC Board was held on September 18, 2002. On November 14, 2002, the ABC Board issued its findings of fact, conclusions of law, and order in which it found Liquor Outlet acted in violation of KRS 244.290 and ordered that its various alcoholic beverage licenses be suspended for a period of five (5) days with the option of paying a $250 fine in lieu thereof. Liquor Outlet thereafter appealed the order to the Franklin Circuit Court. On August 19, 2003, the Franklin Circuit Court entered its opinion and order in which it affirmed the decision of the ABC Board. This appeal by Liquor Outlet followed.

The basic scope of judicial review of an administrative decision is limited to a determination of whether the agency's action was arbitrary. Bobinchuck v. Levitch, Ky., 380 S.W.2d 233 (1964). If an administrative agency's findings of fact are supported by substantial evidence of probative value, they must be accepted as binding and it must then be determined whether or not the agency has applied the correct rule of law to the facts so found. Kentucky Unemployment Ins. Comm'n v. Landmark Community Newspapers of Kentucky, Inc., Ky., 91 S.W.3d 575 (2002). The Court of Appeals is authorized to review issues of law involving an administrative agency decision on a de novo basis. Aubrey v. Office of the Attorney General, Ky.App., 994 S.W.2d 516 (1998). In particular, an interpretation of a statute is a question of law and a reviewing court is not bound by the agency's interpretation of that statute. Halls Hardwood Floor Co. v. Stapleton, Ky.App., 16 S.W.3d 327 (2000).

The facts in the present case are undisputed. The sole issue is whether KRS 244.290 permitted the sale of package liquor on Sunday given the existence of the Bellevue ordinance in question. The current version of KRS 244.290, as amended in 1998, provides:

(1) A premises that is licensed to sell distilled spirits or wine at retail shall not be permitted to remain open during the hours the polls are open on any regular or primary election day unless the licensee provides a separate locked department in which all stock of distilled spirits and wine are kept during the hours the polls are open.

(2) In any county containing a city of the first or second class in which the sale of distilled spirits and wine by the drink is permitted under KRS Chapter 242, an election on the question of permitting the sale of distilled spirits and wine by the drink on Sunday may be held as provided in KRS Chapter 242.

(3) Except as provided in KRS 243.050, a premise for which there has been granted a license for the sale of distilled spirits or wine at retail shall not remain open for any purposes between midnight and 6 a.m. or at any time during the twenty-four (24) hours of a Sunday, unless:

(a) The licensee provides a separate locked department in which all stocks of distilled spirits and wine are kept during those times; or

(b) The legislative body of a city of the first, second, third, or fourth class, or the fiscal court of a county containing a city of the first, second, third, or fourth class, has otherwise established the hours and times in which distilled spirits and wine may be sold within its jurisdictional boundaries.

(4) In any county containing a city of the first, second, or third class or any city located therein in which the sale of distilled spirits and wine is permitted under KRS Chapter 242, the legislative body of the city or county may, by ordinance, permit the sale of distilled spirits and wine by the drink on Sunday from 1 p.m. until the designated closing hour of that locality at hotels, motels, or restaurants which:

(a) Have dining facilities with a minimum seating capacity of one hundred (100) people at tables; and

(b) Receive at least fifty percent (50%) or more of their gross annual income from the dining facilities from the sale of food.

(5) In any county containing a city of the first class or in any city located therein in which the sale of distilled spirits and wine is permitted under KRS Chapter 242, the distilled spirits administrator may issue a license to holders of a distilled spirits and wine retail drink quota license or a special private club license which permits the sale of distilled spirits and wine by the drink on Sunday from 1 p.m. until the prevailing time for that locality.

(6) Any city of the fourth class or county containing a city of the fourth class which has enacted a comprehensive, regulatory ordinance relating to the licensing and operation of hotels, motels, inns, or restaurants for the sale of alcoholic beverages by the drink under KRS 242.185(1), may also regulate and provide for the limited sale of distilled spirits and wine by the drink on Sundays if:

(a) The limited Sunday drink licenses are issued only to those hotels, motels, inns, or restaurants authorized to sell alcoholic beverages by the drink under KRS 242.185(3); and

(b) The holders of distilled spirits and wine retail drink licenses have applied to the state administrator and meet all other legal requirements for obtaining a limited Sunday liquor by the drink license.

The circuit court first found that the exception in section (3)(b) of the above statute would not apply to allow for Sunday package liquor sales in Bellevue because the city ordinance in question, which was enacted in 1992, was in conflict with the provisions of the version of KRS 244.290 that existed in 1992 and was therefore void. It has long been held that local government ordinances cannot be enacted without statutory authority and cannot be contrary to statutory law. Rottinghaus v. Board of Commissioners of the City of Covington, Ky.App., 603 S.W.2d 487 (1979). An ordinance which is not in compliance with statutory authorization is void. City of Erlanger v. American Isowall Corp., Ky.App., 607 S.W.2d 128 (1980). Thus, in order for the Bellevue ordinance to be valid, it must have been enacted in conformity with KRS 244.290 as it existed in 1992, which provided as follows:

(1) No premises for which there has been granted a license for the sale of distilled spirits or wine at retail shall be permitted to remain open for any purpose between midnight and 8 a.m., or at any time during the twenty-four (24) hours of a Sunday, or during the hours the polls are open on any regular, primary, school, or special election day, provided, that if a licensee provides a separate department within his licensed premises capable of being locked and closed off, within which is kept all stocks of distilled spirits and wine, and all fixtures and apparatus connected with his business as a licensee, and said department is kept locked during the times mentioned above, he shall be deemed to have complied with this section; except that the city council, board of aldermen, or other municipal legislative body of cities of the first, second, third, or fourth class in which traffic in distilled spirits and wine is permitted under KRS Chapter 242 shall have the...