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Estate of Deckard v. Pennsylvania Liquor Control Bd.

Commonwealth Court of Pennsylvania

July 31, 2015

Estate of Gloria Deckard, David I. Grunfeld, Administrator Ad Litem, t/a Beer Hut, Petitioner
v.
Pennsylvania Liquor Control Board, Respondent

Argued June 15, 2015

Appealed from No. 14-9122. State Agency: Pennsylvania Liquor Control Board.

Joshua J. Voss, Harrisburg, for petitioners.

Robert W. McAteer, Deputy Chief Counsel, Harrisburg, for respondent.

Stanley Wolowski, Pittsburgh, for intervenor Acme Markets, Inc.

BEFORE: HONORABLE MARY HANNAH LEAVITT, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge, HONORABLE ANNE E. COVEY, Judge.

OPINION

Page 1174

PATRICIA A. McCULLOUGH, J.

The Estate of Gloria Deckard, David I. Grunfeld, administrator ad litem, t/a Beer Hut (Petitioner) petitions for review of the November 1, 2014 order of the Pennsylvania Liquor Control Board (Board), which approved Acme Markets, Inc.'s (Applicant) application for double transfer of Restaurant Liquor License No. R-232 (License).

Facts/Procedural History

On January 24, 2014, Applicant filed an application for prior approval with the Board to transfer both the location and ownership of the License to Applicant's proposed restaurant located at 920 Red Lion Road, Philadelphia, Pennsylvania under section 404 of the Liquor Code (Code).[1] Applicant's proposed licensed restaurant would include the following: a 22'x80' outside serving area, accommodating 16 patrons; a serving area measuring 50'x73', accommodating 31 patrons; 2 kitchen areas measuring 24'x12' and 8'x12'; and a 4'x16' storage area. The Board's Bureau of Licensing scheduled a hearing on the application for September 4, 2014. (Board's Findings of Fact Nos. 1-2, 4.)

Michael Michlada (Michlada), a Board licensing analyst, testified that Applicant will have an interior connection to an unlicensed grocery store, which also is owned and operated by Applicant. Michlada stated that there will be fuel pumps located 294 feet from the proposed licensed restaurant on the same property. Michlada testified that he believed the fuel pumps had the " Acme" label and there was no indication that the fuel pumps were not part of the overall " Acme business." (Reproduced Record (R.R.) at 40a, 46a-47a, 52a, 57a.)

Kathleen Emory (Ms. Emory), owner and operator of Beer Hut, testified that Beer Hut is a licensed distributor whose property is located adjacent to Applicant's premises. (R.R. at 66a, 68a.) Steve Emory (Mr. Emory), Ms. Emory's husband and a Beer Hut employee, testified that the fuel pumps are labeled " Acme Gas" and that there is an attendant situated in a kiosk by the fuel pumps. Mr. Emory stated that he believes the sale of gasoline and alcohol on the same property is prohibited. (R.R. at 101a-03a.)

Daniel Croce (Croce), Applicant's Vice President of Operations, testified in support of the application. Croce stated that while Applicant's grocery store and proposed licensed restaurant will be " under the same roof," the proposed licensed restaurant will have a separate entrance with signage denoting Applicant's proposed business, " Frosted Mug." (R.R. at 105a, 110a-11a.) Croce further testified that customers may pay for prepared food items and non-alcoholic beverages at the unlicensed grocery stores' cash registers but may only purchase alcohol at the cash

Page 1175

registers in the proposed licensed restaurant. He said that there will be eleven ten-foot-wide interior connections between the proposed licensed restaurant and the unlicensed grocery store with signage indicating when a customer will enter the proposed licensed restaurant.[2] Croce stated that Applicant will not display alcohol in the grocery store. (R.R. at 119a, 124a-25a, 132a, 136a-37a.)

Croce testified that patrons may take alcohol purchased at the proposed licensed restaurant to the grocery store but may not consume the alcohol in the grocery store. Croce said that Applicant's employees working in the proposed licensed restaurant will be Responsible Alcohol Management Program (RAMP) certified. He testified that Applicant will have surveillance cameras at the proposed licensed restaurant with one camera specifically focused on the cash register area. Croce stated that the proposed licensed restaurant will have its own manager, and the manager and employees working at the proposed licensed restaurant will never work at the fuel pumps or the kiosk located near the fuel pumps. Croce further testified that Applicant owns and operates eight fuel pumps located on the property and that fuel may never be purchased at the proposed licensed restaurant or in the grocery store. (R.R. at 137a, 145a, 153a, 157a-58a, 164a-65a.)

Croce testified that the fuel pumps will be located 300 feet away from the proposed licensed restaurant. He stated that the following will separate the proposed licensed restaurant from the fuel pumps: curbing that is part of the proposed licensed restaurant, horticultural planters along the curbing, a driveway immediately in front of the proposed licensed restaurant, a parking lot, six landscaped islands in between the driveway and the parking lot containing trees and mulch, a separate parking lot/drive lane designated for fuel station customers, and a landscaped oval separating the proposed licensed restaurant's parking lot from the fuel station's parking lot/drive lane. Croce said that the employee working at the fuel-pump kiosk is responsible for supervising, observing, and controlling the fuel pumps. He said that Applicant's customers at the proposed licensed restaurant will not obtain fuel rewards points for alcohol purchases. (R.R. at 154a-56a, 159a-60a.)

The hearing examiner issued a recommended opinion, concluding that our decision in Water Street Beverage, LTD v. Pennsylvania Liquor Control Board, 84 A.3d 786 (Pa.Cmwlth.), appeal denied, 97 A.3d 746 (Pa. 2014), upholding the Board's initial determination interpreting the term " location" as used in section 432(d) of the Code, 47 P.S. § 4-432(d), is controlling with respect to interpretations of section 404 of the Code. The hearing examiner found the facts of Water Street Beverage to be similar to this case, and, thus, recommended that the grant of Applicant's application would not violate section 404. The hearing examiner further found that this Court's holding in Water Street Beverage should also control regarding the interpretation of the terms " place" and " property" as used in section 468(a)(3) of the Code, 47 P.S. § 4-468(a)(3), because those terms have a similar meaning to " location." The hearing examiner determined that Applicant is selling liquid fuels separately from the proposed licensed restaurant, and, thus, a grant of Applicant's application would not be in violation of section 468(a)(3). Accordingly, the hearing

Page 1176

examiner recommended approval of Applicant's application.[3]

On November 1, 2014, the Board issued an order granting the application to transfer the License. In its opinion, the Board noted that, while the term " location" is found in sections 404, 431(b),[4] and 432(d) of the Code, section 468(a)(3) of the Code uses the terms " place" and " property." The Board acknowledged that this Court, in Water Street Beverage, interpreted the term " location" in section 432(d) to allow " an applicant applying for an eating place malt beverage license to have gasoline pumps located off its proposed licensed premises," because " 'location' is defined in relation to the particular area of the licensed premises." (Board's op. at 36-37.) Because " place" and " property" are not defined in section 468(a)(3), the Board applied the rules of statutory construction in defining the terms. Reading section 468(a)(3) in pari materia with sections 404, 431(b), and 432(d), the Board determined that the terms " place," " property," and " location" should be similarly interpreted. The Board concluded that any other interpretation would lead to an absurd result.

The Board explained as follows:

The record shows the gasoline pumps will be located approximately three hundred (300) feet from Applicant's proposed licensed premises, and between the proposed licensed premises and the gas pumps, there will be curbing; a driveway; six (6) landscaped islands located in front of the parking lot, which contain trees and mulch; parking spaces and additional landscaped areas; and a drive-lane for gas station customers to enter and exit.
The record provides that Applicant will have an employee located at the kiosk, which is located approximately twenty (20) feet from the gasoline pumps, who will be responsible for the gas pumps. Also, the record provides that gasoline may only be purchased at the gas pumps or kiosk and the employees who are working at Applicant's proposed licensed premises will not have any involvement with the gas pumps.
Therefore, the Board finds that liquid fuels will not be sold at the same location as the proposed licensed premises, and as such, there is no violation of sections 404 and 468 of the [Code].

(Board's op. at 38.)[5]

Discussion

On appeal to this Court,[6] Petitioner argues that the Board erred in its interpretation of the terms " place," " property," and " location" in sections 404 and

Page 1177

468(a)(3) of the Code when it granted Applicant's application for License transfer.

We note that " an administrative agency's interpretation of a statute is given controlling weight unless it is clearly erroneous." Pennsylvania Liquor Control Board v. Richard E. Craft American Legion Home Corporation, 553 Pa. 99, 718 A.2d 276, 278 (Pa. 1998).

Section 404 of the Code (pertaining to the issuance, transfer, or extension of hotel, restaurant, and club liquor licenses) provides that: " The board shall refuse any application for a new license, the transfer of any license to a new location or the extension of any license to cover an additional area where the sale of liquid fuels or oil is conducted." 47 P.S. § 4-404.[7] Section 431(b) of the Code (pertaining to malt and brewed beverages manufacturers', distributors', and importing distributors', and importing distributors' licenses)

Page 1178

states that: " The board shall refuse any application for a new license or the transfer of any license to a location where the sale of liquid fuels or oil is conducted." 47 P.S. § 4-431(b).[8] Section 432(d) of the Code states that: " The board shall refuse any application for a new license, the transfer of any license to a location where the sale of liquid fuels or oil is conducted or the extension of an existing license to cover additional area[.]" 47 P.S. § 4-432(d).[9] Section 468(a)(3) of the Code provides that: " No license shall be transferred to any place or property upon which is located as a business the sale of liquid fuels and oil." 47 P.S. § 4-468(a)(3).[10]

Page 1179

Specifically, Petitioner contends that the terms " place" and " property" found in section 468(a)(3) are clear and unambiguous and are not synonymous with this Court's interpretation of " location" in Water Street Beverage, and, as undefined terms in the Code, " place" and " property" should be interpreted according to their " common and approved usage." [11] Section 1903(a) of the Statutory Construction Act of 1972, 1 Pa.C.S. § 1903(a) (" [W]ords and phrases shall be construed according to rules of grammar and according to their common and approved usage; but technical words and phrases and such others as have acquired a peculiar and appropriate meaning or are defined in this part, shall be construed according to such peculiar and appropriate meaning or definition." ).

In the alternative, Petitioner asserts that, if the terms " place" and " property" are ambiguous, the Code must be interpreted to restrain the sale of alcohol and that the Board's interpretation failed to do so. Section 104 of the Code, 47 P.S. § 1-104(c) (" Except as otherwise expressly provided, the purpose of this act is to prohibit the manufacture of and transactions in liquor, alcohol and malt or brewed beverages which take place in this Commonwealth . . . ." ).

Here, we are bound by our Supreme Court's decision in Malt Beverages Distributors Association v. Pennsylvania Liquor Control Board, 8 A.3d 885, 607 Pa. 560 (Pa. 2010) ( Wegmans ). The Supreme Court in Wegmans affirmed our orders that affirmed the Board's grant of Wegmans Food Markets, Inc.'s (Wegmans) applications for transfer of five liquor licenses to its pre-existing market café s within five separate grocery stores because of clearly defined parameters between the unlicensed grocery stores and the proposed licensed café s.

In Water Street Beverage, this Court applied the reasoning of the Supreme Court in Wegmans. Weis Markets, Inc., (Weis) filed an application with the Board for the double transfer of a liquor license. Weis planned to sell malt beverages in the café at its grocery store. Weis also planned to install gas pumps approximately 340 feet from the grocery store and café

Page 1180

that would be separated by parking spaces, trees, and islands of shrubbery. Water Street Beverage, LTD., t/a Keller's Beer (Water Street) filed a petition for intervention, objecting to Weis' application.

After a hearing, the hearing examiner recommended that the Board grant Weis' application. The Board granted the application, concluding that Weis would not be selling liquid fuels at the same location as the licensed premises in accordance with section 432(d) of the Code. The Board noted that the Code does not define the term " location" and considered the " common and approved usage" pursuant to section 1903 of the Statutory Construction Act. The Board found that Weis would sell liquid fuels at a location approximately 378 feet from the proposed licensed premises, have numerous barriers in between, have an employee solely for the sale of liquid fuels that has no responsibilities on the proposed licensed premises, and that the liquid fuels would be purchased at the gas kiosk or the gas pumps. Accordingly, the Board found that, " under a reasonable and practical interpretation of the term 'location,' the record indicates that Weis has taken appropriate measures to show that its liquid fuels would be sold at a different location from the proposed licensed premises." Water Street Beverage, 84 A.3d at 791.

On further appeal to this Court, Water Street argued that the Board erred in approving Weis' application because the sale of liquid fuels and alcohol would occur at the same location in violation of sections 432(d) and 468(a)(3) of the Code. We first determined that Water Street waived any argument pertaining to section 468(a)(3), because no objection regarding that section had been made in the proceedings below. We stated that the Board properly resorted to the rules of statutory construction in interpreting " location," because " location" was an undefined term in the Code. This Court rejected Water Street's interpretation of the term " location" to mean a " single tract of land." We stated that such an interpretation would lead to absurd results, because " an applicant could operate a licensed premises only steps away from the gas pumps so long as the pumps and licensed premises are on separate deeds." Water Street Beverage, 84 A.3d at 794.

We noted that, pursuant to Richard E. Craft, the Board's interpretation of the Code and its regulations should be afforded deference unless clearly erroneous. We concluded that the Board's interpretation of the term " location" was consistent with the Code and its regulations. Relying on the Supreme Court's decision in Wegmans, we held that, after reviewing the Code and the Board's regulations, " a license is granted to a specific 'location,' i.e., premises, with clearly defined parameters, especially, as in this case, when a licensed premises is interiorly connected to an unlicensed premises/business." Water Street Beverage, 84 A.3d at 796. Specifically, we stated:

Here, the Board has interpreted, and our Court affirms that the term " location" is defined in relation to the particular area of a licensed premises. Sections 432 and 436 of the Code, as well as sections 3.22, 3.53-3.56, 7.8-7.9, and 7.21 of the Board's regulations, consistently refer to the specific " premises," " place," or " portion" to be licensed. Although section 432(d) of the Code does not define " location," the Board's interpretation of this term is reasonable and supported by the aforementioned sections of the Code and existing regulations, as well as established case law. Based on all of the above, and in light of the deference to be afforded to the Board's interpretation of the Code and its regulations,

Page 1181

the Board did not err in approving Weis' transfer application.

Id. at 796-97.

In Wegmans, Wegmans filed transfer applications for five restaurant liquor licenses to its Market Café s in five separate grocery store locations. Malt Beverage Distributors Association (MBDA) and some of its members intervened in the licensure proceedings, arguing that the interconnections between the proposed licensed premises and the attached grocery stores would violate the Board's regulations at 40 Pa. Code § § 3.52-3.54,[12] and, thus, effectively allow supermarkets to sell beer. As a result of the objections, the Board held five separate hearings regarding each liquor license transfer, but viewed all of the evidence presented as constituting one record applicable to each license application. The hearing examiner recommended that the Board approve each liquor license transfer.

Subsequently, the Board approved Wegmans' restaurant liquor license transfer applications. The Board stated that its approval of interior connections in between restaurants and unlicensed premises is entirely discretionary and that it historically permitted such interior connections. The Board found that the requirements of the Board's regulations at 40 Pa. Code § § 3.53-3.54 had been met because the perimeter of the proposed licensed premises was clearly marked with four-foot walls and the beer storage and sales were confined to the café s. The Board concluded that Wegmans also met the requirements of the Board's regulation at 40 Pa. Code § 3.52(c), because, in exercising its discretion, the Board found that the public welfare, health, peace, and morals would not be compromised by the preparation and storage of food items on the licensed premises that would be sold in the grocery store. The Board specifically found that Wegmans built its café s in order to provide its customers with easy access to food options and not as a " veiled attempt to have the opportunity to sell takeout beer." Wegmans, 8 A.3d at 891 (citation and quotations omitted). MBDA appealed to this Court.

We first noted that neither party disputed whether Wegmans met the definition of a " restaurant" under section 102 of the Code, 47 P.S. § 1-102.[13] We concluded

Page 1182

that merely because Wegmans' café s resided within the grocery stores did not disqualify them from receiving a restaurant liquor license. This Court further concluded that the requirements of the Board's regulations at 40 Pa. Code § § 3.52-3.54 had been met by Wegmans " demarcating the proposed restaurant by four-foot walls and restricting beer storage and sales exclusively to that area." Wegmans, 8 A.3d at 891. Accordingly, we affirmed the approval of Wegmans' applications.

On further appeal, our Supreme Court also concluded that the Board did not abuse its discretion in approving the interior connections between the proposed licensed premises and the grocery stores under the Board's regulation at 40 Pa. Code § 3.52, because " the [café s] predate the applications for liquor license, are vastly larger and more sophisticated than the minimum statutory requirements for restaurants, and easily satisfy every other applicable statutory and regulatory criterion[.]" Id. at 894. The court further determined that the Board's regulations at 40 Pa. Code § § 3.53-3.54 were satisfied, because the record supports the Board's findings that Wegmans " has made a physical distinction between the proposed licensed area and the rest of the store by way of a four-foot dividing wall with interior and exterior passageways," and " beer is being stored and sold exclusively on the licensed premises." Wegmans, 8 A.3d at 894.

The court concluded that " [r]efusing to acknowledge the validity of these restaurants would violate, rather than vindicate, legislative intent. The legislature has stated clearly that restaurants are entitled to obtain liquor licenses if they satisfy criteria, and those criteria are met here." Id. at 896. Accordingly, the Supreme Court affirmed this Court's orders affirming the Board's approvals of Wegmans' applications for transfer of the restaurant liquor licenses.

The Supreme Court in Wegmans clearly set the standard that, as long as the requirements set forth in the Code and the Board's regulations for plainly defined parameters between a licensed and an unlicensed premises are satisfied, the Board does not abuse its discretion in granting a liquor license to a proposed licensed premises that has clear physical demarcations from the interconnected unlicensed premises.

Similar to the situation found in Water Street Beverage, Applicant has met the requirements to have physical demarcations between the grocery store/fuel station and the proposed licensed restaurant. There are approximately 300 feet in between the proposed licensed restaurant and the liquid fuel pumps, which are separated by curbing, a parking lot, landscape planters, and driveways. The proposed licensed restaurant and the unlicensed grocery store will have separate entrances, cash registers, managers, and employees and will have signs denoting that customers are entering the licensed restaurant at each of the ten-foot-wide interior connections. Further, all liquid fuel sales occur on the unlicensed premises, and the employee working at the kiosk near the fuel pumps is solely charged with supervising, observing, and controlling the fuel pumps. Accordingly, Applicant has met the standard announced by the Supreme Court in Wegmans to have clearly defined parameters in between the proposed licensed and unlicensed premises, and, thus, the Board did not err or abuse its discretion in granting Applicant's application for License transfer.

Page 1183

Petitioners attempt to parse the Code's language in an effort to differentiate between this Court's interpretation of the term " location" in section 432(d) of the Code in Water Street Beverage, based on our Supreme Court's opinion in Wegmans, and the terms " place" and " property" in section 468 of the Code. As Petitioner concedes, this Court's interpretation of " location" in Water Street Beverage is binding on this case. Giving deference to the Board, Richard E. Craft, the Board's interpretation of " place" and " property" is consistent with the Code and its own regulations. As we stated in Water Street Beverage, the Code and the Board's regulations " consistently refer to the specific 'premises,' 'place,' or 'portion' to be licensed." 84 A.3d at 797. The terms " location," " place," and " premises" are also used interchangeably in sections 404, 431(b), 432(d), and 468(a)(1)-(3) of the Code. Such use reflects the Legislature's intent that the terms " location," " place," " premises," and " property" should be similarly construed.

The Legislature's use of each of these words in the noted sections reflects an overall intent to control the " licensed premises." As the Board correctly asserts, absurd results would follow if " place," " property," and " location" are interpreted differently. Notably, a new liquor license could be granted under section 432 but may not be transferred under section 468(a)(3) if a stricter analysis is applied when dealing with a " place" or " property" where liquid fuels and alcohol are sold.

Conclusion

As it must under Wegmans, Applicant has constructed clearly defined parameters in between the proposed licensed premises and the unlicensed premises. The Board concluded that the prohibitions in the Liquor Code against licensing locations, places, or properties that sell liquid fuels apply to the actual licensed premises. We discern no error or abuse of discretion in the Board's interpretation of the terms " place" and " property" in section 468 of the Code to have the same meaning as the term " location" in section 404 of the Code.

Accordingly, we affirm.

ORDER

AND NOW, this 31st day of July, 2015, the November 1, 2014 order of the Pennsylvania Liquor Control Board is affirmed.


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