Opinion
No. 74-051
Decided January 28, 1975.
Pharmacy sought injunction against ten-day suspension of its license ordered by State Board of Pharmacy. Trial court dismissed the complaint and pharmacy appealed.
Reversed
1. DRUGS AND DRUGGISTS — Pendency — Suspension Proceedings — Corporate Pharmacy — Merger — Another Pharmacy — License Not Exist — Not Transferred — — Entire Matter — Moot. Where during pendency of litigation concerning suspension of its pharmacy license, corporate pharmacy was merged with another corporate pharmacy, that merger did not convert the suspension proceedings to proceedings against the license of the surviving corporate pharmacy, and absent a showing that the license subject to suspension was still in existence or that that license was transferred to the surviving corporate pharmacy, the entire matter of the suspension of the merged corporate pharmacy license is moot.
2. Merger — Pharmacy — Subject to Suspension — Surviving Pharmacy — Suspension — Procedurally Irregular — Set Aside — Enjoined. In situation where during pendency of litigation concerning suspension of corporate pharmacy's license that pharmacy was merged with another corporate pharmacy, the order of the pharmacy board that the surviving corporate pharmacy serve the suspension originally imposed against the merged pharmacy was made without a complaint being filed against the surviving pharmacy, without any hearing or notice thereof, and even without a copy of the order being served on the surviving pharmacy; and, under such circumstances, the trial court should have set aside the Board action and enjoined enforcement of its order.
Appeal from the District Court of the City and County of Denver, Honorable George M. McNamara, Judge.
Geer, Goodwin Chesler, P.C., Robert E. Goodwin, David L. McCarl, for plaintiff-appellant.
John P. Moore, Attorney General, John E. Bush, Deputy Attorney General, William Tucker, Assistant Attorney General, for defendants-appellees.
Alcott Pharmacy, Inc., (Alcott) appeals from the dismissal of its complaint for an injunction against a ten-day suspension of its pharmacy license by the State Board of Pharmacy (Board). We reverse.
In Central Drug, Inc. v. State Board of Pharmacy, 511 P.2d 944 (Colo.App., not selected for official publication) (the Central Drug case), this Court reversed in part a 1971 judgment of the district court which had vacated a 1970 decision of the Board suspending for twelve days the pharmacy license of Central Drug, Inc., (Central). Inasmuch as the original suspension in that case had been based on two violations of the drugs and druggists statute, only one of which had been upheld on appeal, the matter was remanded for a reconsideration of the penalty to be imposed. On October 9, 1973, upon reconsideration of the penalty, the Board ordered Central's license suspended for ten consecutive days from November 15 through November 24, 1973. The Board further ordered that Alcott, as the successor by merger to Central, serve this suspension of Central's license.
On November 14, Alcott instituted this action seeking to enjoin the Board from suspending its license for a violation committed by Central. On November 27, after trial to the court, the complaint was dismissed. Proceedings to enforce the judgment were stayed pending this appeal.
The evidence establishes that Central was incorporated in June of 1969 and operated a drug store under a pharmacy license at 3770 Sheridan Boulevard in Denver. The violation charged occurred at that store in 1969. Alcott was incorporated in April of 1970 and operated a drug store under its own pharmacy license at 4301 West 38th Avenue, several blocks from Central's store. In June of 1972, after the district court ruling in favor of Central and before reversal by this Court, Central merged into Alcott, the survivor, and the Sheridan store formerly occupied by Central was closed. Alcott continued operations at the West 38th Avenue location. Nothing in the record indicates that this merger was a device to evade the suspension order.
As a result of the merger, the stockholders of Central became stockholders in Alcott. The two controlling stockholders of Central initially controlled Alcott after the merger, but one of those, the former manager of Central, sold out before the end of 1972. Before and after the merger, Alcott was under the direct charge of a pharmacist manager different from the manager of Central.
[1] The trial court, based on the fact that Alcott was the survivor in the merger of the two corporations, concluded that Alcott was bound by the Board's order of suspension of Central's license. We disagree. The merger did not convert the Central Drug case to a proceeding against Alcott's license. Absent a showing that the Central license is still in existence, there is nothing left against which to proceed. There is no showing that Central's license was transferred to Alcott — which already had one of its own — or that Central's license was renewed at the end of June in 1972 (the statutory termination and renewal date) when the Central store was closed. Therefore, the entire matter of the suspension of Central's license is moot.
On the other hand, before the Board could have taken any action against the license of Alcott — a separate and distinct license from Central's — there must have been a violation alleged against Alcott and the Board must comply with the pertinent provisions of the drugs and druggists statute pertaining to procedure for suspension of a pharmacy license, § 12-22-114, C.R.S. 1973. As specified in that section, the Board's proceedings for suspension of a license must be in accordance with the provisions of the State Administrative Procedure Act, §§ 24-4-101 to 107, C.R.S. 1973. Under these statutes, the Board cannot suspend Alcott's pharmacy license, and any attempted suspension thereof is in excess of the Board's authority and is invalid for lack of procedural due process, unless and until there is appropriate notice of an alleged violation given to Alcott, followed by a proper hearing and proof of such violation. See Mountain State Telephone Telegraph Co. v. Department of Labor Employment, 184 Colo. 334, 520 P.2d 586.
[2] These procedures were not followed with regard to Alcott or its license. The order of the Board, that Alcott serve the suspension originally imposed against Central, was made without a complaint being filed against Alcott, without any hearing or notice thereof, and even without a copy of the order being served on Alcott. Under such circumstances, the court should have set aside the Board action and enjoined enforcement of its order. Section 24-4-106(4) and (7), C.R.S. 1973. From the record there was and is no basis for any Board action against licensee Alcott on its license. See Colorado State Board of Medical Examiners v. Palmer, 157 Colo. 40, 400 P.2d 914.
The judgment is reversed and the cause is remanded with directions that the district court grant the injunction against the Board's suspension of Alcott's license.
JUDGE ENOCH and JUDGE BERMAN concur.