Opinion
No. 100217/2014.
08-21-2014
In the Matter of the Application of BARFREEBEDFORD, Thomas Kearney, Sara Kearney, Richard Keiser, Christine Ruggiero, Tom Blancato, Elizabeth Goodall, Richard Burger, Louisa Nolte, Decision and Judgment Paulina Nolte, Astrid Nolte, Curtis Houghland, Debra Bosniak, Shoshana Brown, Dr. Katherine Ender, Idamis Regan, Joseph D. Regan, Bianca Regan, Robin Shepard, Walter Donway, John Peterson, Cela Peterson, Rachel Lipson, George Schultz, Jessica Schultz, Andrew Marber, Brian Porzak, Christina Raccuia, Forrest Williams, Frazier Moore, Harry Lines, Heimata Rutgers, Ian Manger, Janis Donnaud, Jennifer Strent, Jenny Pen, John Alexander Suzko, Kyle Langenbach, Lisa Paolella, Mariagiovanna Guatteri, Moltrasio Massimo, Peter McKie, Joan Richardson, Robert Blacker, Robert Strent, Tommy Naples, Weiman Seid, Willard Cook, Petitioners, v. The NEW YORK STATE LIQUOR AUTHORITY, and Chumley'S 86 LLC, d/b/a “Chumley's”, Respondents.
Barry Mallin, Esq., Mallin & Cha, P.C., New York, NY, for petitioners. Margarita Marsico, Esq., Mark D. Frering, Esq., Jacqueline Flug, Albany, NY, for the Authority. William M. Poppe, Esq., Law Offices of William M. Poppe, PLLC, New York, NY, for Chumley's.
Barry Mallin, Esq., Mallin & Cha, P.C., New York, NY, for petitioners.
Margarita Marsico, Esq., Mark D. Frering, Esq., Jacqueline Flug, Albany, NY, for the Authority.
William M. Poppe, Esq., Law Offices of William M. Poppe, PLLC, New York, NY, for Chumley's.
Opinion
BARBARA JAFFE, J.
Petitioners bring this Article 78 proceeding seeking an order aning respondent The New York State Liquor Authority's October 24, 2013 conditional approval of an on-premises liquor license to respondent Chumley's 86 LLC, d/b/a “Chumley's,” and for attorney fees and costs. Respondents oppose.
I. FACTS
Chumley's, a bar and restaurant located at 86 Bedford Street in Manhattan's West Village, has been in existence since the 1920s. (Chumley's Ans., dated Mar. 21, 2013, Exh. 3). In 2007, due to structural deficiencies on the premises requiring repairs and renovations, Chumley's ceased operation and its permit for a non-conforming use was revoked by the NYC Department of Buildings. (Authority Ans., dated Mar. 6, 2014, Exh. 7).
On May 10, 2012, Chumley's notified Manhattan Community Board 2 of its intent to reopen and apply for an on-premises liquor license. (Reply Affirmation and Memorandum of Law of Barry Mallin, Esq., dated Apr. 7, 2014 [Reply Aff.], Exh. A).
Chumley's thereafter appeared before the Board, presented its application for a 2,000–square–foot restaurant with a maximum capacity of 74 persons, including 58 table seats, and a standing bar, and stated that there would be no outdoor seating or backyard garden, and that it would play recorded music at background levels. (Authority Ans., Exh. 2). Chumley's also stipulated that it would close by 1 a.m., Sunday through Wednesday, and by 2 a.m., Thursday through Saturday, obtain all required certificates, permits and related documents including a revised certificate of occupancy, keep its windows and doors closed at all times, keep the kitchen open until an hour before closing, maintain security in front of the premises and post a doorman inside, and provide an approved certificate of occupancy on the completion of renovations. It also advised the Board that it had reached out to neighboring residents, and it submitted a supporting petition of over 300 signatures, stating that granting Chumley's a liquor license at the specified times would be in the public's best interest. (Id., Exh. 6).
On June 21, 2012, the Board unanimously resolved that it would recommend denial of the application unless all of the stipulations were incorporated into the method of operation on the Authority's On Premise License (Authority Ans., Exh. 2), and by letter dated June 27, 2012, the Board notified the Authority of its resolution (Chumley's Ans., Exh. 6).
On or about January 3, 2013, Chumley's filed its application with the Authority. Although acknowledging that 86 Bedford Street is within 500 feet of at least three other establishments that serve liquor, Chumley's provided no written explanation of why granting the license would be in the public interest. (Reply Aff., Exh. A).
The Authority scheduled a hearing to be held on January 24, 2013. By letter dated January 4, 2013, the Authority notified the Community Board of the hearing and offered it an opportunity to submit a position statement. (Authority Ans., Exh. 3).
At the hearing, Chumley's submitted an affidavit dated January 24, 2013 from its manager, James Miller, who stated that the granting of the liquor license “promotes public convenience and advantage and is in the public interest” as it would have no noticeable effect on traffic or parking in the location, and would not increase the existing noise level at the premises. He denied that the neighborhood was saturated with liquor-licensed establishments, and also relied on the absence of any on-premises history of violations of the liquor law or reported criminal activity. (Authority Ans., Exh. 3). In another affidavit of the same date, Miller reaffirmed his commitment to adhere to the stipulation with the Board. (Authority Ans., Exh. 4). No opposition to the application was registered, and the Board did not appear. (Authority Ans., Exh. 3).
By letter dated October 24, 2013, the Authority informed Chumley's that as a condition of approval, it must comply with any conditions stipulated to with the Board, and, in pertinent part, provide documentation for the DOB that an order to vacate had been removed. (Petition, dated Feb. 21, 2013, Exh. A).
By letter dated January 21, 2014, the DOB, based on Chumley's submissions to it, rescinded its objection to the reactivation of the non-conforming use and stated that the permit is eligible for reinstatement for the reasons set forth therein. (Authority Ans., Exh. 7).
II. CONTENTIONS
A. The petition
Petitioners are composed of a community association whose members live in the vicinity of 86 Bedford Street, and 47 individual residents of Bedford, Barrow, Grove, and Commerce Streets. They claim that Bedford Street is a quiet, residential block, near two schools, and that five restaurants there close at 11 p.m. during the week, and at midnight on weekends. (Pet.).
While petitioners acknowledge that there are no bars on the block, they allege that there are 21 liquor-licensed establishments within 500 feet of the premises on nearby commercial streets, and assert that granting Chumley's application would threaten the balance between residential and commercial uses on Bedford Street. They allege that before it closed, Chumley's was a major destination for tourists and partygoers, and report that “late-night bars in the area” expose them to “unruly, drunk, and extremely loud groups of young patrons congregating on the streets, smoking and littering and disrupting pedestrian traffic.” (Id. ).
Petitioners allege that the Authority violated the Alcoholic Beverage Control Law (ABCL) in failing to find specifically that granting a license to Chumley's would further the public interest in accordance with statutory criteria, and in failing to state and file in its office the reasons for its decision to grant the license. They also fault the Authority for not conducting an independent investigation or review as to whether the proposed application would increase existing noise levels on Bedford Street. For these reasons, petitioners contend that there is no legitimate basis for the Authority's determination, thereby rendering it arbitrary and capricious, an abuse of discretion, and not based on substantial evidence. (Id. ).
B. The Authority's answer
In its answer with annexed exhibits, all of which are verified by one of its attorneys, the Authority submits a document dated March 5, 2014, outlining the arguments in support of and against the application, and adding that the application is “approved.” (Authority Ans., Exh. 1). In support, it lists the Community Board's unanimous recommendation that the license conditionally issue and Chumley's agreement to incorporate the Board's stipulations into the method of operation, Chumley's undertaking to renovate and occupy the vacant and dilapidated building, the previous on-premises liquor license and the absence of any previous liquor law violations or criminal activity, the “substantial community support” for the license as represented by the petition of some 250 people, and the prospective creation of jobs. It also lists the arguments in opposition, namely, that the re-opening of the bar would disturb neighborhood peace and quiet, and the applicable zoning regulations do not permit a commercial establishment on the premises, and cites its own records reflecting that there exist 21 businesses with on-premises liquor licenses within approximately 500 feet of the proposed premises, although none are on the same block. The Authority relies on this document in support of its first affirmative defense to the petition, and claims that it moots the proceeding. (Id. ).
As its second affirmative defense, the Authority relies on the DOB's January 2014 letter in response to petitioner's allegation that the proposed re-use of the building was not permitted.
It also alleges that as the license remains contingent on all necessary governmental approvals, the license has not yet issued. For all of these reasons, it requests that the petition be dismissed. (Authority Ans.).
C. Chumley's answer
In its answer, Chumley's argues that the stipulation demonstrates its commitment to work with the community and ameliorate any negative impact caused by resuming operations, which the Board recognized by unanimously recommending its application. It attests to the overwhelming community support for its application, submitting letters from civic and community organizations. (Chumley's Ans.).
Chumley's asserts the following affirmative defenses to the petition: The Authority's March 5 response renders this proceeding moot, petitioners' opposition to the license is based in part on the erroneous assumption that re-use of the premises is not permitted by the applicable zoning regulations, that petitioners fail to state a claim for which relief may be granted, that the petition is equitably and collaterally estopped, and alternatively, that in light of the ongoing repair work, the license has not yet issued. (Id. ).
D. Petitioners' reply
Petitioners contend that the Authority should not have considered the petition in support of Chumley's application, submitting an affidavit dated April 3, 2014 from a petitioner who claims that of those who signed it, only 50 reside on Bedford Street or on adjacent Barrow and Grove Streets. (Reply Aff., Exh. E). Another petitioner, who also signed Chumley's petition, claims by affidavit dated April 3, 2014, that in signing it, he relied on a false oral assurance that Chumley's would close no later than 10:30 or 11:00 p.m., explaining that he did not see a possibly obscured sentence at the top of the petition indicating that Chumley's would close at 1 a.m. and 2 a.m.(Reply Aff., Exh. D).
Petitioners also claim that as residents saw no posted announcements of the Community Board hearing, and were not notified of Chumley's application, the Authority should not have relied on the Board's resolution. They also observe that the Authority's March 5 response is not only unsigned and not on Authority letterhead, but it contains no factual support for its conclusions, and that the Board should not have accepted Miller's self-serving statements as to the public interest without performing an independent inquiry. For all of these reasons, petitioners argue that the Authority acted in an arbitrary and capricious manner. (Reply Aff.).
At oral argument, petitioners conceded that they “are not against Chumley's per se,” and that “[t]here would be no problem with Chumley's reopening” if it were to close at midnight during weekends and 11 p.m. on weekdays. (Transcript, dated June 25, 2014, at 18, lines 6–11).
III. DISCUSSION
A. Standard of review
The deference given by a court to the determination of an administrative agency is reflected in the court's limited review of it. Thus, the only questions that may be raised in an article 78 proceeding, as pertinent here, are whether the determination “was made in violation of lawful procedure, was affected by an error of law or was arbitrary and capricious or an abuse of discretion ...” (CPLR § 7803[3] ). In reviewing an agency determination as to whether it is arbitrary and capricious, the test is whether the determination “is without sound basis in reason and is generally taken without regard to the facts.” (Matter of Pell v. Bd. of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 N.Y.2d 222, 231 [1974] ). The court must defer to the agency's rational interpretation of its own regulations in its area of expertise (Matter of Peckham v. Calogero, 12 N.Y.3d 424, 431 [2009];Consolation Nursing Home, Inc. v. Commr. of New York State Dept. of Health, 85 N.Y.2d 325, 331 [1995] ), and is limited to a review of the record before the agency (Matter of Drizin v. Commr. of D.H.C.R., 140 A.D.2d 605, 606, 528 N.Y.S.2d 864 [2d Dept 1988] ). The petitioner bears the ultimate burden of proving that an agency determination is without sound basis in reason and that the agency action was arbitrary and capricious. (Mosher v. Ward, 218 A.D.2d 626, 627, 631 N.Y.S.2d 29 [1st Dept 1995] ).
B. Governing law
The regulation of the sale of alcoholic beverages advances the public policy of “promoting temperance in their consumption and respect for and obedience to law.” (ABCL § 2 ). Thus, the Authority is empowered to determine “whether public convenience and advantage will be promoted by the issuance of licenses to traffic in alcoholic beverages, the increase or decrease in the number thereof and the location of premises licensed thereby, subject only to the right of judicial review ...” (Id. ). And, it is vested with wide discretion as to whether a license should be issued or withheld, although that discretion is not absolute but must be exercised fairly and without bias or discrimination according to the needs of the community concerned. (3 N.Y. Jur 2d, Alcoholic Beverages § 64, and cases cited therein).
Although it is presumed that a liquor license should be granted absent good cause for its denial (ABCL § 64[1] ), the Legislature created a rule prohibiting the issuance of a license when three or more existing licensed premises exist within 500 feet of the proposed licensee unless the Authority finds, after consultation with the municipality or community board, that granting the license would be in the public interest. And before the license may issue, the Authority must conduct a hearing, on notice to the applicant and the municipality or community board, and must “state and file in its office its reasons” for issuing a license. (ABCL § 64[7][f] ). Pursuant to the rule, notice to the community board must be in writing, and mailed at least 15 days before the hearing. (ABCL § 64[7][f] ).
In determining whether the granting of a license is in the public interest, the Authority may consider the following factors:
(a) The number, classes and character of licenses in proximity to the location and in the particular municipality or subdivision thereof.
(b) Evidence that all necessary licenses and permits have been obtained from the state and all other governing bodies.(c) Effect of the grant of the license on vehicular traffic and parking in proximity to the location.
(d) The existing noise level at the location and any increase in noise level that would be generated by the proposed premises.
(e) The history of liquor violations and reported criminal activity at the proposed premises.
(f) Any other factors specified by law or regulation that are relevant to determine the public convenience and advantage and public interest of the community.
(ABCL § 64[6–a] ).
The Legislature codified these guidelines in 1993 in response to Matter of Circus Disco v. New State Liq. Auth., 51 N.Y.2d 24, 431 N.Y.S.2d 491, 409 N.E.2d 963 (1980), wherein the Court of Appeals prohibited the Authority from denying a license based on noise, parking, or traffic. The 1993 amendment thus empowers the Authority, in consultation with community leaders, businesses, and residents, to consider the quality of life impact arising from the over saturation of a neighborhood with bars. (Mem. of Assembly member Koppell, reprinted in 1993 Legis Ann, at 515–516; see Cleveland Place Neighborhood Ass'n v. New York State Liq. Auth., 268 A.D.2d 6, 10, 709 N.Y.S.2d 12 [1st Dept 2000] [Legislature imposed guidelines on Authority “to assure that quality of life impacts are fully incorporated into the responsible state decision-making apparatus.”] ). Accordingly, the Authority's public interest finding may not be perfunctory. (Matter of Waldman v. New York State Liq. Auth., 281 A.D.2d 286, 722 N.Y.S.2d 142 [1st Dept 2001] ).
C. Analysis
The Authority's failure to state and file in its office its reasons for finding that the issuance of the license is within the public interest is not fatal, as the license has not yet issued, but is contingent on Chumley's obtaining all necessary DOB approvals, and petitioners cite no authority as to when the reasons must be filed. In any event, the Authority, through its attorneys, now provides in its answer the reasons why the issuance of the licence would be in the public interest, which reasons are consistent with the criteria set forth in ABCL § 64(6–a), and it indicates that the license will be approved.Petitioners offer no evidence that the Authority failed to consult with the Community Board within the meaning of the statute. Rather, the evidence reflects that the Authority adequately and timely notified the Board of the hearing and offered it an opportunity to be heard. (See Matter of Soho Alliance v. New York State Liq. Auth., 32 A.D.3d 363, 821 N.Y.S.2d 31 [1st Dept 2006] [rule does not require further consultation with community board beyond giving it notice and opportunity to be heard] ). And, even if the Board did not sufficiently solicit input from community residents, a proposition that petitioners do not in any event establish, petitioners offer no authority that imposes a duty on the Authority to ensure that it do so.
The Authority went beyond consultation with the Board by considering its unanimous resolution recommending the conditional granting of Chumley's application, with stipulations incorporated. If that were not enough, the Authority also considered Miller's sworn assurances that Chumley's would abide by the stipulations, that the granting of the application would have no noticeable effect on traffic or parking in the location nor would it increase existing noise level at the premises, and that Chumley's had no history of liquor violations or criminal activity. Although self-serving, Miller's assertions are not rebutted beyond complaints set forth in the petition that the neighborhood has changed and that unruly patrons and street noise emanate from late-night bars in the neighborhood. And even if the petition submitted by Chumley's is disregarded, it is not the sole basis for the Authority's determination. That Chumley's arguments and representations were credited by the Authority, moreover, is unremarkable, as no opposition was presented at the hearing.
Far different facts were addressed in Matter of SoHo Community Council v. New York State Liq. Auth. There, the Authority was confronted with near unanimous community opposition to granting a license to a nightclub, including opposition from the community board and numerous affidavits from residents and civic leaders, along with evidence that the applicant had made material misrepresentations at the hearing. As the Authority had failed to address the evidence and issued a brief finding that granting the license would be in the public interest as it would increase employment and tax revenue, the court found that its determination was baseless, and that the Authority's exclusive reliance on a jobs and revenue rationale would eviscerate the rule. (173 Misc.2d 632, 635–639, 661 N.Y.S.2d 694 [Sup Ct, New York County 1997] ; see also Waldman, 281 A.D.2d at 286, 722 N.Y.S.2d 142 [Authority's only reason, that applicant would operate premises as “bona fide restaurant featuring Cuban cuisine,” held insufficient] ).
Here, by contrast, Chumley's agreed to operate not a bar but a restaurant-bar with a capacity of 74 people, and closing times earlier than the regular city-wide closing times, and it has secured the Community Board's unanimous conditional approval, notwithstanding petitioners' sincere opposition which falls short of constituting overwhelming community opposition.
Also distinguishable is Cleveland Place, supra, where the petitioners submitted at a license transfer meeting evidence that the applicant sought to operate a “full-fledged nightclub, with no dining facilities, but with loud music .... [and] room for 350 people,” and that the premises had been cited by the Department of Environmental Protection for noise violations. (268 A.D.2d at 8, 709 N.Y.S.2d 12). As the Authority made no record of the meeting, the Court held that it was impossible to determine whether the meeting “satisfied the hearing requirement of section 64(7)(f).” (Id. at 12, 709 N.Y.S.2d 12). Here again, by contrast, the Authority substantially discharged its duties.
And the circumstances set forth in Flatiron Community Ass'n v. New York State Liq. Auth., are likewise distinguishable as there, despite overwhelming community opposition, including the testimony of 13 witnesses, the Authority granted a liquor license which the court then vacated given the Authority's failure to address discrepancies in the evidence, and for parroting the applicant's affidavit in support. (6 Misc.3d 267, 784 N.Y.S.2d 823 [Sup Ct, New York County 2004] ).
IV. CONCLUSION
Over 40 years ago, although in another context, a justice of this court observed that:
It cannot however be said, no matter how desirable it might be, that everyone at all times has an established legal right to peace, tranquility and a tension-free atmosphere. In the modern world some degree of noise, tension and discomfort is the inevitable concomitant of urban life.... A person who chooses to reap the advantages of location in an urban society must expect the impingement of that crowded society upon his life.
(Celebrity Studios, Inc. v. Civetta Excavating, Inc., 72 Misc.2d 1077, 1080, 340 N.Y.S.2d 694 [Sup Ct, New York County 1973] ; Blair, Inc. v. 305–313 E.47th St. Assoc., 123 Misc.2d 612, 615, 474 N.Y.S.2d 353 [Sup Ct, New York County 1983] [same] ).
Those observations remain relevant today. Rowdy people continue to wander, partygoers continue to gather, all with the ensuing potential for noise, tension, and discomfort. This is not to say that petitioners' concerns are trivial or inconsequential, arising as they do from unpleasant experiences in the neighborhood that negatively impact their quality of life. The law provides, however, that the public interest may warrant permitting more than four establishments within 500 feet of one another to serve liquor after midnight.
For all of these reasons, and in light of the deference afforded the determinations of an administrative agency, petitioners have failed to sustain their burden of demonstrating that the conditional grant of the license is without sound basis in reason or without regard to the facts. (See Soho Alliance, 32 A.D.3d 363, 821 N.Y.S.2d 31 [insufficient basis for aning determination, when Authority conducted hearing and reviewed parties' arguments] ).Accordingly, and given the Authority's indication in its March 2014 submission that it would approve Chumley's application, it is hereby
ADJUDGED AND ORDERED, that the Authority file in its office exhibit one of its answer; it is further
ADJUDGED AND ORDERED, that the petition to annul respondent New York State Liquor Authority's October 24, 2013 conditional letter of approval for an on-premises liquor license to respondent Chumley's 86 LLC, d/b/a “Chumley's” is denied, and the proceeding is dismissed; and it is further
ADJUDGED AND ORDERED, that petitioners' request for fees and other expenses is denied.