Opinion
No. A04-728.
Filed March 8, 2005.
Appeal from the City of Minneapolis.
Donald G. Clapp, Clapp Erickson, (for relator).
Jay M. Heffern, Minneapolis City Attorney, Michael J. Rugani, Assistant City Attorney, (for respondent).
Considered and decided by Hudson, Presiding Judge; Peterson, Judge; and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Relator Deep Dish, Inc., d/b/a/ Café Bicko, applied to the Minneapolis City Council for a Class E liquor license. The city council denied Deep Dish's application, and this court granted a writ of certiorari to review the denial. Because the denial of the liquor license was not arbitrary and capricious and did not violate Deep Dish's rights to due process and equal protection, we affirm.
FACTS
Relator Deep Dish, Inc., d/b/a/ Café Bicko (Deep Dish), is a restaurant located at 4501 France Avenue South in Minneapolis, Minnesota. On August 11, 2003, Deep Dish applied for a liquor-license upgrade from an On Sale Wine Class E and Strong Beer license to an On Sale Liquor Class E with Sunday Sales license.
Inspector Phil Schliesman investigated Deep Dish's application and issued a "license inspector's report." Schliesman noted in his report that the Department of Regulatory Services Licenses Consumer Services Division (Licenses Division) sent notices of a public hearing to the 113 owners and residents living or owning property within 600 feet of the restaurant. On October 1, 2003, the Licenses Division held a public hearing at which 14 persons signed a document indicating they opposed the liquor license and eight persons signed in support of the liquor license. After the hearing, the owner of Deep Dish gave Schliesman an undated petition consisting of approximately 50 pages of signatures. Schliesman did not make the petition part of the license inspector's report.
On February 10, 2004, the Licenses Division sent a "Request for City Council Committee Action" to the Public Safety Regulatory Services Committee (committee) of the Minneapolis City Council. The request stated that the Licenses Division's recommendation "is neutral," and noted that Deep Dish's application meets the minimum qualifications of the Minneapolis Code of Ordinances.
On February 18, 2004, the committee held a hearing to consider Deep Dish's application for a liquor-license upgrade. James Moncur, Director of the Licenses Division, testified that Deep Dish applied for a liquor-license upgrade in 2002, which the city council denied. Moncur testified that the previous application for a liquor-license upgrade was for a full liquor license with entertainment permitted, whereas the current application excludes entertainment. Moncur also testified that the 14 people opposing the current liquor-license upgrade raised "significant objections," such as "trash, increased activity in the neighborhood, fears of parking on the residential streets, and past non-compliance with both ordinances and agreements." Moncur testified that Deep Dish met the minimum requirements for the liquor license sought, but that because of the residents' concerns regarding the neighborhood, his staff had no recommendation.
Tom Bicanich, the owner of Deep Dish, testified that the restaurant has ample parking spaces and that he has a petition with approximately 950 signatures supporting the liquor license upgrade. Finally, Bicanich testified that he needs a liquor-license upgrade to be able to compete with franchises that serve liquor.
Four persons testified in opposition, three of whom live directly behind the Deep Dish restaurant. These persons testified that Deep Dish's application should be denied because Bicanich has mismanaged the restaurant and broken promises with the community by keeping trash in the alley and installing outdoor seating. The residents testified that there is inadequate parking in the neighborhood, traffic congestion, and children in the streets. Additionally, the residents testified that other restaurants in the neighborhood are successful without hard-liquor licenses.
The committee noted that Deep Dish wanted the liquor-license upgrade to create economic opportunity for the business, but that the neighbors opposed it because it would create "intensity of use" in the neighborhood. The committee further stated:
Now, at the public hearing, the people whose lives would be directly affected by the proposed license did, in fact, raise very specific concerns, and according to the neighbors, this intensity, increase in intensity of use means more customers, more cars, more noise, more parking problems, more litter, and more activity later into the night. They raised the concern that the restaurant is directly adjacent to this otherwise residential area, and they raised the concern, as you've heard here today, of compatibility with the use and the family oriented character of the immediate neighborhood.
Further, the committee noted that a "beer and wine license . . . is absolutely critical for any restaurant to survive in today's market," but that "hard alcohol" with meals is not necessary to survive.
The committee voted to recommend that the city council deny Deep Dish's application. The city council did so. Deep Dish petitioned for a writ of certiorari to the court of appeals.
DECISION I
Deep Dish argues that the city council's decision to deny it a liquor license was arbitrary and capricious.
The city council is vested with broad discretion in determining whether to issue or renew a liquor license. Wadja v. City of Minneapolis, 310 Minn. 339, 343, 246 N.W.2d 455, 457 (1976). A court's scope of review of such a determination is narrow, and the determination should be reviewed cautiously. Id. But the licensing authority must not act arbitrarily or capriciously. Id. The applicant bears the burden of proving that the city council acted in an arbitrary manner. Country Liquors, Inc. v. City Council of the City of Minneapolis, 264 N.W.2d 821, 824 (Minn. 1978).
Deep Dish argues that the city council's decision to deny its application based on citizens' complaints violates the Wadja decision. In Wadja, the supreme court held that the city council acted arbitrarily and capriciously in denying an application based on the misconduct of former licensees who operated the tavern while under Wadja's ownership. Wadja, 310 Minn. at 345-46, 246 N.W.2d at 458-59. In so holding, the supreme court noted, among other things, that the neighbors' complaints were all connected with conduct of the previous licensees; not Wadja. Id. at 346, 246 N.W.2d at 459 (emphasis added). Contrary to Deep Dish's contention, nothing in Wadja suggests that residents' complaints may not be considered by a city council in determining whether to approve or deny a license application. Indeed, the Minnesota Supreme Court has since explicitly rejected the argument that Wadja stands for the proposition that denial of a liquor license may not be predicated upon residents' complaints in the nature of projected ill effects on their neighborhood. Country Liquors, 264 N.W.2d at 824-25. Thus, Wadja "did not establish a rule of general application curtailing the evidentiary weight to be accorded citizen complaints in these proceedings." Id. at 825.
Here, the city council's decision was based on specific objections raised by community residents whose lives would be directly affected by the liquor-license upgrade. The committee balanced Deep Dish's desire for increased economic opportunity with the residents' "intensity of use" concerns. On these facts, the city council's decision to deny Deep Dish's liquor-license application was not arbitrary and capricious.
Deep Dish also asserts that the "City of Minneapolis is in possession of a number of items that were not in the file given to the Committee and now not certified to [this court]": (1) petitions for and against relator's application; (2) an alleged investigative parking report dismissing the residents' parking concerns; (3) law enforcement information allegedly indicating no police calls or DWI arrests have been attributed to Deep Dish for 17 years and that Deep Dish has passed police-sanctioned under-age drinking tests; (4) results of a survey letter allegedly sent by Schliesman to Deep Dish's neighbors; (5) Deep Dish's letter to the lawyers board of professional responsibility protesting resident David Porter's statements at the public hearing; and (6) Schliesman's investigative report. Respondent maintains that the record submitted to this court is the official record, and, at oral argument, respondent's counsel said he could neither confirm nor deny the existence of items (2), (3), (4), and (5).
We note first that Deep Dish's letter to the lawyers board of professional responsibility protesting David Porter's statements at the public hearing and Schliesman's investigative report are part of the record and are under this court's review. In addition, Deep Dish's undated petition is irrelevant because Deep Dish's counsel acknowledged at oral argument that the petition was created in connection with Deep Dish's earlier, 2002 liquor-license application. Furthermore, Deep Dish has cited no authority requiring such petitions to be considered by the committee or the city council when deciding whether to approve a liquor-license application. With respect to Deep Dish's contention that the alleged parking report, law-enforcement information, and results of Schliesman's alleged survey letter are not in the city clerk's file, Deep Dish cites no authority that would require such documents, if they exist, to be submitted to the committee or city council. On this record, we conclude that the city council's denial of relator's liquor-license application was not arbitrary and capricious. See Montella v. City of Ottertail, 633 N.W.2d 86, 88 (Minn.App. 2001) ("review is confined to the record before the city council at the time it made its decision").
II
Deep Dish next argues that the city council violated its due process rights because the committee provided no opportunity for rebuttal and failed to give Deep Dish notice that witness testimony would be permitted at its February 18, 2004 meeting. Additionally, Deep Dish argues that it was denied due process because the city council denied Deep Dish's request, made after the February 18 committee meeting, to address the city council.
"The requirements of procedural due process apply only to the deprivation of interests encompassed by the Fourteenth Amendment's protection of liberty and property." Board of Regents v. Roth, 408 U.S. 564, 569, 92 S. Ct. 2701, 2705 (1972). When protected interests are implicated, the right to some kind of prior hearing is required. Id. at 570, 92 S. Ct. at 2705. But under Minnesota law, there is no property right in a liquor license. Arens v. Village of Rogers, 240 Minn. 386, 401, 61 N.W.2d 508, 519 (1953). "No person has a vested property right to engage in or continue to engage in the liquor business." Id. Thus, there is no tacit property right in an existing license for due process purposes. See Country Liquors, 264 N.W.2d at 826.
Here, Deep Dish had neither a liberty nor property interest in the liquor-license upgrade. Deep Dish had no liberty interest because the city council's denial was "grounded on the characteristics of the neighborhood rather than appellants' specific qualifications or lack thereof." See Country Liquors, 264 N.W.2d at 825 (rejecting appellants' argument that their due process rights were violated because they did not receive notice of each meeting at which their application was considered and because they were not permitted to cross-examine the residents who opposed their liquor-license application). Likewise, Deep Dish had no property right in a liquor license. See Arens, 240 Minn. at 401, 61 N.W.2d at 519.
Deep Dish also argues that it was denied due process because two years and four months passed from the time it applied for a liquor-license upgrade in 2002 to the time the city council denied its current application. This argument lacks merit because this court is not considering the city council's earlier denial of a different liquor-license upgrade. This court is only reviewing the city council's February 27, 2004 denial of Deep Dish's current application for a Class E liquor-license upgrade.
Accordingly, we conclude that the city council's proceedings for the consideration of Deep Dish's liquor-license application did not violate Deep Dish's due process rights.
III
Finally, Deep Dish suggests that the city council denied it equal protection of the law. Deep Dish argues that neighboring businesses, Almstead Super Value and FRANCE 44, "were granted zoning variances that allowed them to greatly expand their businesses and open delis (restaurants) that directly compete with [relator]." Deep Dish also states that the city council granted a full liquor license to "Westrum Tavern" (sic) in southwest Minneapolis in 2002, "despite the fact that it needed zoning variances to qualify for a full liquor license upgrade." Deep Dish asserts that it is the "first restaurant (that met all legal requirements for a liquor-license upgrade without need for variance) in the known history of Minneapolis to be denied a liquor license upgrade."
"Assuming a classification scheme exists, we must uphold the classification if, under the familiar `rational basis' test, the classification is rationally related to the achievement of a legitimate governmental purpose." Bergmann v. City of Melrose, 420 N.W.2d 663, 667 (Minn.App. 1988). Here, Deep Dish has alleged no classification scheme. See id. at 667 (holding that the city did not violate appellant's right to equal protection by conditioning the issuance of a liquor license on the establishment of a family restaurant and limiting the number of liquor-only establishments to a particular area for law-enforcement reasons); Kayo Oil Co. v. City of Hopkins, 397 N.W.2d 612, 614 (Minn.App. 1986) (holding that the city did not violate appellant's right to equal protection by refusing to grant a liquor license to appellant gas station/convenience store, based on a distinction between grocery stores and combination grocery store/gas stations).
Deep Dish seems to suggest that the city council violated its constitutional right to equal protection by denying its application because nothing on the application disqualified it from obtaining a liquor license under city ordinances. But the city council is not required to grant a liquor license simply because the minimum requirements are met. "Where the minimum requirements are satisfied, the council must consider the application, but is by no means divested of its legislative authority and responsibility to pass upon the merits of the application." Country Liquors, 264 N.W.2d at 824.
Accordingly, we conclude that the city council did not violate Deep Dish's right to equal protection, nor did it act in an arbitrary or capricious manner in denying Deep Dish's application for a Class E on-sale liquor license.