Opinion
No. CV 08 4035500-S
October 22, 2009
MEMORANDUM OF DECISION
In this application for a declaratory judgment and permanent injunction, the plaintiff, B.J. Alan Company CT, Inc. (B.J. Alan) seeks a determination as to whether the itinerant vendor licensing statutes, General Statutes § 21-27 et seq., apply to it, and, if so, whether B.J. Alan must obtain licenses for each temporary location from which it sells consumer pyrotechnics. Although B.J. Alan is incorporated in this state, it is engaged in temporary or transient business selling products in or from a structure. Accordingly, it is an itinerant vendor for purposes of § 21-27. B.J. Alan need not, however, obtain separate licenses for each of its locations, as such a result does not comport with the text and purpose of § 21-28.
FACTS AND PROCEDURAL HISTORY
The parties have agreed that this dispute is one of statutory interpretation and have stipulated to the following facts relevant to the present case. B.J. Alan is a registered Connecticut corporation that incorporated with the secretary of the state on May 6, 2003. It is in the business of distributing and selling consumer pyrotechnics in Connecticut under the name Phantom Fireworks. B.J. Alan advertises its products for sale on its website, and on this website, it solicits individuals, charitable organizations and other non-profit organizations to sell its products during the Fourth of July season. In 2007 and 2008, B.J. Alan leased land from Connecticut property owners for eight to ten days during the Fourth of July season so that it could use the property to sell consumer pyrotechnics. B.J. Alan leased forty-one of these temporary locations throughout Connecticut in 2007. Additionally, through August 31, 2009, B.J. Alan sold its products at a building located at 717 Berlin Turnpike, Berlin, Connecticut. This location was only unlocked and open for normal business hours from May through July. During the remainder of the year, the front door of 717 Berlin Turnpike was locked during normal business hours and a phone number was posted so that customers could call to schedule an appointment. As of August 31, 2009, B.J. Alan no longer holds a lease on this property, however, and stipulates that it currently lacks a permanent building to sell its products.
On June 12, 2007, Daniel Mahon was selling B.J. Alan products under the name "Phantom Fireworks" at 630 Enfield Street, Enfield, Connecticut, when the Enfield police department ordered him to cease operations and issued him a misdemeanor summons and complaint alleging a violation of General Statutes § 21-35. This order was part of the state Department of Consumer Protection's effort to work with local police to check for "temporary businesses" that were operating without itinerant vendor licenses. Mahon filed a motion to dismiss these charges on June 26, 2007, which the Superior Court granted on August 23, 2007, without a hearing or an articulation of its reasons.
On June 14, 2007, B.J. Alan filed an application for a single itinerant vendor license. The Department of Consumer Protection rejected the application on the ground that B.J. Alan would have to submit separate license applications for each of the locations from which it intended to sell consumer pyrotechnics. The application fee for each license was $200. As B.J. Alan maintained forty-one separate sites, it would have had to pay $8,200 in fees to obtain the required licenses. On June 20, 2007, B.J. Alan contacted Attorney General Richard Blumenthal to ask whether the itinerant vendor statute required it to file forty-one applications. The next day, B.J. Alan submitted forty-one separate applications, along with a check for $8,200, to the Department of Consumer Protection along with a letter stating that it was submitting the fees "under protest." On June 22, 2007, Attorney General Blumenthal informed B.J. Alan that he was of the opinion that B.J. Alan was required to obtain separate licenses for each of its temporary locations.
B.J. Alan commenced the present action by service of a writ, summons and complaint on the defendants, state of Connecticut, the Department of Consumer Protection and its commissioner, Jerry Farrell, Jr., Attorney General Richard Blumenthal, the division of criminal justice, Chief State's Attorney Kevin Kane, and the department of public safety and its commissioner, John Danaher III, (hereinafter, collectively, "the state") on February 5, 2008. B.J. Alan seeks a declaratory judgment that it is not an itinerant vendor for purposes of General Statutes § 21-28 or, in the alternative, that it is a single itinerant vendor that is only required to obtain one license in order to operate its forty-one temporary locations. B.J. Alan also seeks the "refund" of fees paid to the Department of Consumer Protection under protest in 2008. Furthermore, B.J. Alan requests that this court issue an injunction to prevent the state "from attempting to prosecute or otherwise hindering B.J. Alan's ability to operate fireworks stands in Connecticut based on the itinerant vendor statute" or, "[i]n the alternative, issue an injunction preventing [the state] from hindering B.J. Alan's operating of multiple fireworks stands with a single itinerant vendor license." (Complaint, ¶¶ 8-9.) The state filed its answer and special defenses on May 9, 2008, and B.J. Alan filed a general denial of these special defenses on May 27, 2008.
B.J. Alan filed an application for an ex parte temporary restraining order on May 14, 2008, which the court, Miller, J., denied. B.J. Alan also filed an application for a temporary injunction on May 14, 2008. The parties resolved the application for a temporary injunction by a stipulation filed on May 27, 2008, which provided that B.J. Alan would submit applications and fees for itinerant vendor licenses for each of its seasonal locations opened during each calendar year as long as the present litigation remains. Under the stipulation, these fees have been held in escrow pending the resolution of the present litigation. This stipulation further provides that if it wishes to operate its seasonal locations, B.J. Alan must continue to apply for itinerant vendor licenses for each of its locations and the Department of Consumer Protection will continue to hold these additional funds in escrow until this litigation is resolved. In turn, the Department of Consumer Protection will continue to issue itinerant vendor licenses for each of B.J. Alan's seasonal locations as long as the applications are in proper form and comply with applicable statutes.
The parties filed simultaneous trial briefs on May 26, 2009, and B.J. Alan filed a reply brief on June 19, 2009. The hearing on this matter was heard on September 17, 2009.
DISCUSSION
Practice Book § 17-55 provides: "A declaratory judgment action may be maintained if all of the following conditions have been met: (1) The party seeking the declaratory judgment has an interest, legal or equitable, by reason of danger of loss or of uncertainty as to the party's rights or other jural relations; (2) There is an actual bona fide and substantial question or issue in dispute or substantial uncertainty of legal relations which requires settlement between the parties; and (3) In the event that there is another form of proceeding that can provide the party seeking the declaratory judgment immediate redress, the court is of the opinion that such party should be allowed to proceed with the claim for declaratory judgment despite the existence of such alternate procedure." See General Statutes § 52-29(a). "The purpose of a declaratory judgment action . . . is to secure an adjudication of rights where there is a substantial question in dispute or a substantial uncertainty of legal relations between the parties." (Internal quotation marks omitted.) Interlude, Inc. v. Skurat, 253 Conn. 531, 536, 754 A.2d 153 (2000).
General Statutes § 52-29(a) provides: "The Superior Court in any action or proceeding may declare rights and other legal relations on request for such a declaration, whether or not further relief is or could be claimed. The declaration shall have the force of a final judgment."
A. Connecticut corporation can be "itinerant vendor"
B.J. Alan argues that the itinerant vendor licensing statutes do not apply to any of its operations in Connecticut because it is a registered corporation in this state with a permanent place of business, and, furthermore, that its business is not, by its nature, itinerant. The state argues that B.J. Alan's status as a Connecticut corporation is not relevant to the applicability of the itinerant vendor licensing statutes, and the nature of B.J. Alan's business subjects it to these licensing requirements. This is a case of first impression, as neither the parties nor the court have identified case law discussing whether a corporation registered in Connecticut must obtain an itinerant vendor license if the corporation otherwise meets the definition of an "itinerant vendor." The court concludes that a corporation registered in this state must obtain an itinerant vendor license if it falls within the definition of itinerant vendor provided by General Statutes § 21-27.
The court applies the following well-established rules of statutory interpretation. "When construing a statute, [o]ur fundamental objective is to ascertain and give effect to the apparent intent of the legislature . . . In other words, we seek to determine, in a reasoned manner, the meaning of the statutory language as applied to the facts of [the] case, including the question of whether the language actually does apply . . . In seeking to determine that meaning, General Statutes § 1-2z directs us first to consider the text of the statute itself and its relationship to other statutes. If, after examining such text and considering such relationship, the meaning of such text is plain and unambiguous and does not yield absurd or unworkable results, extratextual evidence of the meaning of the statute shall not be considered . . . When a statute is not plain and unambiguous, we also look for interpretive guidance to the legislative history and circumstances surrounding its enactment, to the legislative policy it was designed to implement, and to its relationship to existing legislation and common law principles governing the same general subject matter." (Internal quotation marks omitted.) Friezo v. Friezo, 281 Conn. 166, 181-82, 914 A.2d 533 (2007).
General Statutes § 21-27 provides in relevant part: "As used in this chapter, `itinerant vendor' means any person, whether principal or agent, who engages in a temporary or transient business in this state, either in one locality or in traveling from place to place, selling goods, wares and merchandise and who, for the purpose of carrying on such business, hires, leases or occupies any building or structure for the exhibition and sale of such goods, wares and merchandise; . . . `temporary or transient business' means and includes any exhibition and sale of goods, wares or merchandise which is carried on in any tent, booth, building or other structure, unless such place is open for business during usual business hours for a period of at least nine months in each year . . . The provisions of this chapter shall not apply to sales made to dealers by commercial travelers or selling agents in the usual course of business, or to bona fide sales of goods, wares and merchandise by sample for future delivery, or to hawkers on the streets or peddlers from vehicles, or to any sale of goods, wares or merchandise on the grounds of any incorporated agricultural society during the continuance of any annual fair held by such society, or to any general sale, fair, auction or bazaar held or sponsored by an ecclesiastical society, church corporation, governmental entity or any corporation which is exempt from taxation under [§] 501(c)(3) of the Internal Revenue Code of 1986, or any subsequent corresponding Internal Revenue Code of the United States, as from time to time amended, or to tag sales or garage sales on premises devoted to residential use and where permitted by local law."
A "person" meeting the definition of an itinerant vendor "shall obtain a license from the [d]epartment of [c]onsumer [p]rotection prior to conducting business in this state . . ." General Statutes § 21-28. To obtain this license, the itinerant vendor must pay a license fee of one hundred dollars and a one hundred dollar fee payable to a designated guaranty find. The guaranty fund was established to "satisfy consumer claims against a licensed itinerant vendor . . ." See General Statutes § 21-33b(b). Additionally, "[b]efore selling under the state license prescribed in [§] 21-28 in any town, city or borough, each itinerant vendor shall make application for a municipal license to the selectmen or other authority of such town, city or borough authorized to issue licenses therein; . . ." Failure to comply with these licensing rules subjects the itinerant vendor to a fine of not more than fifty dollars or imprisonment not more than sixty days or both. General Statutes § 21-35.
First, B.J. Alan argues that the itinerant vendor laws do not apply to any of its Connecticut operations because it is a registered Connecticut corporation. It is true that the definition of "itinerant vendor" contains a number of exclusions. General Statutes § 21-27. Nowhere in the statutes, however, does the legislature limit the definition of "itinerant vendor" to exclude duly registered Connecticut corporations. Nor has B.J. Alan presented any legislative history suggesting an intent to do so. Rather, § 21-28 plainly requires that "any person" meeting the definition of an "itinerant vendor" to obtain a license.
Furthermore, B.J. Alan's interpretation would contravene the remedial purpose of the itinerant vendor laws. "It is a basic principle of statutory construction that remedial statutes should be construed liberally in order to effectuate the legislature's intent." (Internal quotation marks omitted). Commission on Human Rights Opportunities v. Sullivan, 285 Conn. 208, 222, 929 A.2d 541 (2008). The primary purpose of these laws is to protect consumers from unscrupulous vendors. "The legislature has seen fit to accept a deposit by the applicant as sufficient evidence of his intention and ability to ply his occupation with safety to the public." State v. Feingold, 77 Conn. 326, 332, 59 A. 211 (1904) (upholding constitutionality of itinerant vendor laws). An itinerant vendor's license, which must be displayed in a "conspicuous manner in all printed advertisements"; General Statutes § 21-28(a); gives notice to the public that the vendor is registered and provides consumers with a means of locating itinerant vendors once they have closed. Furthermore, these laws provide a measure of recovery to the public in the event that an itinerant vendor commits fraud. General Statutes § 21-33b establishes a guaranty fund that is financed through licensing fees. This fund will pay up to five hundred dollars for any single consumer claim. General Statutes § 21-33b(b).
B.J. Alan argues that consumers would still have recourse if it were exempt from the itinerant vendor laws because they could send complaints to its corporate address, which is on file with the secretary of the state by virtue of being a Connecticut corporation. A consumer, however, who shopped at "Phantom Fireworks" might not associate this temporary operation with the corporation. Furthermore, a consumer sophisticated enough to bring a complaint to B.J. Alan's corporate address would have a more difficult time resolving her problem than a consumer bringing a complaint to a permanent location. Unlike a permanent store that is open for normal business hours, B.J. Alan's temporary locations are closed once the Fourth of July season ends. Under B.J. Alan's business model, consumers who purchase B.J. Alan's pyrotechnics cannot bring the products back to a convenient physical location or talk in-person with an agent or employee about their concerns. Even when B.J. Alan's location in Berlin was still in existence, consumers did not have the same ability to bring complaints as they would with a permanent store because that location was only unlocked and open for normal business hours from May through July. At all other times, the front door was locked and consumers had to make an appointment. The itinerant vendor laws address such inconveniences by providing consumers with a mechanism for obtaining detailed information that would facilitate communication with the vendor in order to help consumers resolve their complaints. Thus, remedial purpose of the itinerant vendor laws would be undermined if B.J. Alan could operate in temporary and transient locations without a license.
A secondary goal of the statute is to ensure that municipalities have notice of the itinerant vendor's presence for taxation purposes. General Statutes § 21-29 provides that before selling under the state's itinerant vendor license, the vendor must apply to the municipality where it intends to sell goods to obtain a municipal license. As payment for the municipal license, § 21-29 permits the municipality to levy a fee on the vendor "equal to the taxes assessable in such town, city or borough under the last-preceding tax levy therein upon an amount of property of the same valuation" or it may impose a fixed licensing fee. These local licensing requirements allow municipalities to receive revenue from itinerant business who otherwise would avoid property taxes despite having a physical, albeit temporary, presence within the municipality. Thus, allowing B.J. Alan to avoid municipal licensing would contravene this statute by improperly depriving revenue from the municipalities where it leases land.
Alternatively, B.J. Alan argues that even if duly registered Connecticut corporations are not per se excluded from the itinerant vendor laws, it is not an itinerant vendor. B.J. Alan contends that the itinerant vendor laws only apply to those individuals or companies that pass through the state and conduct business at places like trade fairs, and not to businesses that have a fixed location.
B.J. Alan's interpretation of the definition of "itinerant vendor" under General Statutes § 21-27 is too narrow. It is true that a license is only required of "persons" engaged "in a temporary or transient business in this state, either in one locality or in traveling from place to place, selling goods, wares and merchandise." The focus, however, of § 21-27 is not only on how the vendor sells its products, but where the products are sold. An itinerant vendor is a person "who, for the purpose of carrying on [temporary or transient] business, hires, leases or occupies any building or structure for the exhibition and sale of such goods, wares and merchandise . . ." (Emphasis added.) General Statutes § 21-27. Indeed, "temporary or transient business" means "any exhibition and sale of goods, wares or merchandise which is carried on in any tent, booth, building or other structure, unless such place is open for business during usual business hours for a period of at least nine months in each year . . ." (Emphasis added.) General Statutes § 21-27.
General Statutes § 21-27, which regulates itinerant vendors who carry out business in a structure, may be contrasted with § 21-36. That statute regulates "hawkers" and "peddlers," meaning "any person . . . who goes from town to town or from place to place in the same town selling or bartering, or carrying for sale or barter, or exposing therefore, any goods, wares or merchandise, either on foot or from any animal or vehicle." (Emphasis added.) General Statutes § 21-36. This statute subjects hawkers and peddlers to permitting requirements that may be duly imposed by municipalities.
Thus, the text of the statute itself indicates that it should be applied to vendors selling goods in a "tent, building or other structure" as long as "such place" is not open for usual business hours for at least a nine-month period each year. As a result, B.J. Alan is subject to these licensing statutes for its temporary locations, where it engages in the sale of goods on a transient basis in a tent or other structure. Additionally, B.J. Alan would continue to be subject to statutes even if it still leased the Berlin location because that location was not open "during usual business hours for a period of at least nine months in each year."
In sum, the fact that B.J. Alan is a registered corporation in this state does not exempt it from the itinerant vendor laws. B.J. Alan is engaged in the temporary or transient business of selling consumer pyrotechnics in a "tent, booth, building or other structure" for eight to ten days per year at forty-one locations in the state. Allowing it to conduct this business without obtaining a state license would undermine the remedial purpose of the itinerant vendor laws by permitting any temporary or transient business that simply incorporates in Connecticut to avoid the itinerant vendor licensing laws. In turn, these laws would be less effective because consumers would lack recourse if they wished to return a product or bring a complaint against a vendor and, furthermore, vendors would no longer pay into the guaranty fund, which helps ensure that consumers can recover in the event of fraud. Municipalities would also be impacted because itinerant vendors could sell goods on land leased within a municipality without making any payments in lieu of property tax revenue. Therefore, B.J. Alan must obtain an itinerant vendor license in order to conduct its temporary and transient business in this state.
B. Multiple licenses not required
Next, B.J. Alan argues that even if § 21-28 requires it to obtain "a" license as an itinerant vendor, it does not, by its plain language, require B.J. Alan to seek licenses for each of its locations. The court agrees that B.J. Alan need only obtain one license that lists each location it intends to sell consumer pyrotechnics. That single license must be posted at each of the temporary locations.
General Statutes § 21-28(a) provides in relevant part: "Each itinerant vendor . . . shall obtain a license from the [d]epartment of [c]onsumer [p]rotection prior to conducting business in this state . . ." (Emphasis added.) This statute regulates persons who engage in a "temporary or transient business in this state, either in one locality or in traveling from place to place . . ." § 21-27. This definition includes businesses in fixed locations that are open for "usual business hours" for less than nine months per year or businesses that travel "from place to place." § 21-27. In either case, only one license is needed per vendor because that license will either travel from place to place with the vendor or remain at the vendor's fixed location. B.J. Alan operates somewhat differently than those examples because it conducts business in multiple locations simultaneously for a short time period. On this basis, the state would have B.J. Alan obtain separate licenses for each location. Such a requirement, however, finds no support in the plain language of § 21-28(a), which simply requires the itinerant vendor to obtain "a" license prior to "conducting business in this state." Whether a vendor is operating one roadside fireworks tent or forty, the statute only requires that vendor to obtain one license. This result satisfies the major purposes of the itinerant vendor statutes — protecting consumers and facilitating municipal taxation — because a single license can list the names of each location where the vendor intends to sell its products.
The state argues that each of B.J. Alan's locations must obtain licenses because the fees generated by separately licensing each location augment the guaranty fund provided by General Statutes § 21-33b, which, in turn, helps consumers recover in the event of an itinerant vendor's fraud. Nothing in the itinerant vendor laws, however, explains why the burden of financing the guaranty fund should fall disproportionately on B.J. Alan or an itinerant vendor with a similar business model. Arguably, B.J. Alan is different than a vendor that travels "from place to place" because it maintains forty-one separate locations at one time, rather than shifting locations periodically. This is a distinction without a difference. The state has not explained why a vendor that operates forty-one separate locations at the same time over eight to ten days should pay more to be licensed than a vendor who may operate at forty-one different places over the course of one year. As both vendors are generally "conducting business in this state," they need only comply with the stated licensing requirements under § 21-27, which include obtaining "a" license.
To summarize, therefore, as B.J. Alan is engaged in temporary or transient business in which it sells pyrotechnics in a structure, it is an itinerant vendor for purposes of § 21-27. B.J. Alan need not, however, obtain separate licenses for each of its locations under § 21-28. As a result, the state is ordered to return any funds deposited by B.J. Alan in escrow in anticipation of this litigation less $200, which reflects the fee for one itinerant vendor license for 2009 under § 21-28.
C. Sovereign immunity bars "refund"
In addition to seeking the resolution of these issues, B.J. Alan requests the return of $8,200 it deposited with the Department of Consumer Protection "under protest" in 2008. To recover this money, B.J. Alan must overcome the doctrine of sovereign immunity. The Connecticut Supreme Court has "long recognized the validity of the common-law principle that the state cannot be sued without its consent . . . [and] that because the state can act only through its officers and agents, a suit against a state officer concerning a matter in which the officer represents the state is, in effect, against the state." (Citation omitted; internal quotation marks omitted.) Miller v. Egan, 265 Conn 301, 313, 828 A.2d 549 (2003). "[A] plaintiff seeking to circumvent the doctrine of sovereign immunity must show that: (1) the legislature, either expressly or by force of a necessary implication, statutorily waived the state's sovereign immunity . . . or (2) in an action for declaratory or injunctive relief, the state officer or officers against whom such relief is sought acted in excess of statutory authority, or pursuant to an unconstitutional statute." (Citation omitted.) Id., 314.
Although our Supreme Court has recognized an exception to sovereign immunity for actions seeking declaratory or injunctive relief against a state officer for conduct in excess of statutory authority, it has declined to apply this exception to claims against the state for money damages. Miller v. Egan, supra, 265 Conn. 315. A plaintiff seeking to assert any claim for money damages against the state must either show that the legislature waived sovereign immunity or must obtain authorization to sue from the claims commissioner pursuant to General Statutes §§ 4-141 through 4-165b. Id., 317.
In the present case, B.J. Alan claims a "refund" of an $8,200 deposit it made with the Department of Consumer Protection in order to obtain itinerant vendor licenses in 2008. An action seeking a "refund" of sales taxes "must be characterized as a claim for damages." DaimlerChrysler Corp. v. Law, 284 Conn. 701, 723, 937 A.2d 675 (2007). See also Owner-Operators Independent Drivers Ass'n. of America v. State, 209 Conn. 678, 691, 553 A.2d 1104 (1989) (truck drivers who sought refund of a registration tax had to seek relief from claims commissioner). It follows that an action to recover licensing fees, which are akin to a tax, is a claim for damages. As B.J. Alan did not obtain authorization to sue the state for money damages from the claims commissioner and does not assert that the legislature has waived sovereign immunity, its claim for a refund is barred by the doctrine of sovereign immunity.