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Derry St. Pub, Inc. v. Pennsylvania State Police

Commonwealth Court of Pennsylvania

March 24, 2015

Derry Street Pub, Inc., Appellant
v.
Pennsylvania State Police, Bureau of Liquor Control Enforcement

Argued September 11, 2014.

Appealed from No. 2013-CV-6753-MP. Common Pleas Court of the County of Dauphin. Curcillo, J.

James W. Kollas, Camp Hill, for appellant.

John H. Pietrzak, Assistant Counsel, Harrisburg, for appellee.

BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge. OPINION BY JUDGE McCULLOUGH. Judge Leavitt concurs in the result only.

OPINION

Page 1241

PATRICIA A. McCULLOUGH, Judge

Derry Street Pub, Inc. (Licensee) appeals from the February 5, 2014 order of the Court of Common Pleas of Dauphin County (trial court) that dismissed Licensee's appeal from the July 24, 2013 order and decision of the Pennsylvania Liquor Control Board (Board). The Board's order reversed the decision and order of an administrative law judge (ALJ) insofar as it held that a conditional licensing agreement (CLA) was no longer in effect at the time of Licensee's alleged violation of its provisions.

Facts and Procedural History

Licensee is a restaurant and pub located at 2312 Derry Street, Harrisburg, Pennsylvania, and is the holder of a restaurant liquor license number R-12671. By letter dated February 18, 2010, the Board's Bureau of Licensing objected to the renewal of Licensee's liquor license for the licensing term effective March 1, 2010, due to violations of the Liquor Code,[1] improper conduct, and the late filing of Licensee's renewal application. (Reproduced Record (R.R.) at 4a-5a.) The CLA describes the Bureau of Licensing's reasoning as follows:

By letter dated February 18, 2010, [Bureau of] Licensing objected to the renewal of the liquor license for the licensing term effective March 1, 2010 based upon approximately forty-five (45) incidents of disturbance at or immediately adjacent to the licensed premises, one (1) adjudicated citation, and because the application was late-filed. The incidents included, but were not limited to shootings, fights, assaults, disorderly operations,

Page 1242

drugs and loud music. In addition, [Bureau of] Licensing objected to the renewal of the amusement permit based upon approximately twenty-five (25) incidents of loud music, and the aforementioned adjudicated citation.

( R.R. at 16a.) The February 18, 2010 letter also provided that a hearing would be held to determine whether the violations and improper conduct warranted non-renewal of Licensee's liquor license. (R.R. at 4a.)

After a hearing, the Board denied renewal of the liquor license. Licensee appealed to the trial court. Subsequently, in order to secure its liquor license renewal, Licensee entered into a CLA with the Board, effective December 6, 2011, under which the parties agreed to additional restrictions on the license and the premises as set forth therein, and the Board approved the renewal of Licensee's liquor license for the two-year licensing period beginning March 1, 2010. (ALJ's Finding of Fact No. 3; Board's op. at 2-3; R.R. at 9a-10a, 15a-23a.)

Generally, the CLA's restrictions require Licensee to comply with the Responsible Alcohol Management provisions in the Liquor Code; employ one security guard on Sunday through Thursday nights and two security guards on Friday and Saturday nights; patrol the exterior premises at night; initiate and attend semi-annual meetings with the Harrisburg Police Department; maintain and enforce a written barred patrons list; maintain surveillance cameras on the premises; use transaction scan devices; prohibit patrons from entering the premises with weapons; and prohibit amplified music after 11:30 p.m. on Friday and Saturday nights and after 10:00 p.m. on all other nights. (R.R. at 17a-20a.) Paragraph 10 of the CLA states as follows:

These terms shall remain in effect both on the license and on the premises unless and until a subsequent agreement is reached with the Board rescinding these restrictions. [Licensee] shall not be prohibited from seeking modification or rescission of this Agreement, but any such modification or rescission shall be at the sole discretion of the Board.

( R.R. at 22a) (emphasis added). The Bureau of Licensing confirmed this language in its December 8, 2011 letter to Licensee notifying Licensee that the Board approved the CLA as follows: " It is further understood that the conditions outlined in the [CLA] will remain in effect both on the license and on the location unless and until a subsequent agreement is reached with the [Board] rescinding the restrictions." (R.R. at 26a.) Licensee withdrew its appeal to the trial court. (Board's op. at 3)

Subsequently, on February 13, 2012, the Board notified Licensee by letter and corresponding order that it objected to the renewal of Licensee's liquor license for the licensing period beginning March 1, 2012, based upon violations of the Liquor Code relative to two separate citations and improper conduct related to seventeen instances of disturbance from June 2010 until February 2012 that included homicide, assaults, loud music, and disorderly conduct. The Board granted temporary authority for Licensee to continue operating prior to the scheduling of a hearing.

On March 30, 2012, a hearing examiner held a hearing on the issue of Licensee's license renewal. By order dated June 13, 2012, the Board refused to renew Licensee's liquor license for the licensing period beginning March 1, 2012, and rescinded Licensee's temporary authority. Licensee appealed to the trial court. By opinion and order dated January 8, 2013, the trial court reversed the Board's June 13, 2012 order, and granted the liquor license renewal.

Page 1243

(Trial court op. at 1-2; R.R. at 28a.) No appeal was taken.

In a separate matter, the Pennsylvania State Police, Bureau of Liquor Control Enforcement (Bureau) commenced an investigation of Licensee regarding new violations on December 19, 2011. During the investigation, the Bureau conducted twelve visits to the licensed premises. On ten of those visits, no violations were found. However, on February 17, 2012, an undercover Bureau enforcement officer entered the Licensee's premises at 11:00 p.m. without being required to show any identification. The enforcement officer purchased an alcoholic beverage. On July 15, 2012, an undercover Bureau enforcement officer entered the premises at 10:40 p.m. without being questioned as to age and without undergoing a metal detection device search. The enforcement officer purchased an alcoholic beverage. The enforcement officer remained at the premises from 10:40 p.m. to 11:50 p.m., and Licensee provided amplified music the entire time. The Bureau completed its investigation of Licensee on August 17, 2012, and sent a notice to Licensee at the Licensee's premises by certified mail, return receipt requested, on August 28, 2012, that Licensee had violated the CLA by failing to adhere to the agreed upon additional restrictions. (ALJ's Findings of Fact Nos. 1-2, 4-6a, 6c; R.R. at 34a.)

On September 13, 2012, the Board issued a citation against Licensee that contained one count as follows:

On February 17 and July 15, 2012, you, by your servants, agents or employees, failed to adhere to the conditions of the agreement entered into with the Board placing additional restrictions upon the subject license, in violation of Section 404 of the Liquor Code, 47 P.S. § 4-404.[2]

( R.R. at 35a.) The citation stated Licensee would be scheduled to appear before an ALJ, unless Licensee waived the hearing. (R.R. at 36a.) After a hearing on February 27, 2013, regarding the Board's September 13, 2012 citation, the ALJ concluded as follows:

3. The three legal conclusions which follow independently mandate dismissal.
a. The CLA's effective term ended on February 29, 2012, by agreement of the parties [in the CLA].
b. Alternatively, the statutory supersedeas provided for in Liquor Code Section 464 [47 P.S. § 4-464][3] prevails over the CLA.
c. Alternatively, by operation of law, a license renewal CLA expires at the end of the licensing term for which it was issued.

(ALJ's Conclusion of Law No. 3a-c.)

The ALJ stated that, under relevant principles of law, the CLA only applied to the two-year licensing period beginning on March 1, 2010, and its terms cannot be extended beyond that licensing period. Thus, the ALJ concluded that the CLA terminated on February 29, 2012. The ALJ also concluded that, pursuant to section 464 of the Liquor Code, a supersedeas of the Board's June 13, 2012 order denying Licensee's liquor license renewal was in place when the July 15, 2012 violation occurred, because Licensee had appealed from the Board's decision denying its license renewal for the two-year licensing

Page 1244

period beginning on March 1, 2012. Thus, the ALJ determined that the CLA was not in effect at that time.

Lastly, citing statutory construction principles, the ALJ concluded that section 470 of the Liquor Code[4] contains no provisions allowing for an extension of a CLA beyond a two-year licensing period. The ALJ noted that, in contrast, section 404 of the Liquor Code provides that a CLA already in place may remain in effect at the same location beyond the two-year licensing period if a license is transferred to a new holder. Thus, the ALJ affirmed the citation as to the February 17, 2012 violation, finding that the CLA was still in effect during that two-year licensing period, but dismissed the citation as to the July 15, 2012 violation, and imposed a $50.00 fine.

The Bureau appealed to the Board regarding the ALJ's dismissal of the citation as to the July 15, 2012 violation. In its July 24, 2013 decision, the Board first determined that the CLA did not terminate under its own terms, noting that the CLA unambiguously provides that its terms " shall remain in effect both on the license and on the premises unless and until a subsequent agreement is reached with the Board rescinding these restrictions." (R.R. at 22a.) Thus, the Board concluded that the ALJ erred and abused his discretion in determining that the CLA had expired upon agreement of the parties. The Board also stated that a statutory supersedeas returns a licensee to the operating status immediately prior to the Board's decision on license renewal. The Board concluded that Licensee was operating under the CLA immediately prior to the Board's 2012 non-renewal determination and that the ALJ erred and abused his discretion in determining otherwise.

Further, citing section 1922(5) of the Statutory Construction Act, 1 Pa.C.S. § 1922(5), the Board noted that statutes are to be read in favor of the public interest and, citing In re Application of El Rancho Grande, Inc., 496 Pa. 496, 437 A.2d 1150 (Pa. 1981), that the Liquor Code is to be read to restrain, not promote, the sale of alcohol. In considering these principles, the Board determined that there is no language in the Liquor Code that requires a CLA to terminate at the end of a two-year licensing period. Thus, the Board determined that the ALJ erred and abused his discretion in concluding that the CLA terminated by operation of law.

Lastly, the Board determined that the trial court's January 8, 2013 order reversing the Board's non-renewal decision did not invalidate the CLA, because the trial court was not asked to do so. The Board remanded to the ALJ in order for him to impose an additional penalty, if so warranted, and sustained the Bureau's appeal as to the July 15, 2012 violation date, holding that the ALJ committed an error of law and abused his discretion in finding that the CLA expired or was otherwise not in effect as of July 15, 2012, and that his decision was not supported by substantial evidence.

Licensee appealed to the trial court, which heard the appeal de novo.[5] The trial court first determined that, although the citation improperly referenced section 404 instead of section 471 of the Liquor Code,[6] the " citation clearly indicates that the violations were of the ...


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