Opinion
DOCKET NO. A-4464-11T3
06-10-2013
DOLPHIN FATHER, LLC, t/a STUDIO 57 R & B, Appellant, v. MUNICIPAL BOARD OF ALCOHOLIC BEVERAGE CONTROL OF THE CITY OF NEWARK, Respondent.
Neil J. Dworkin argued the cause for appellant. Angela G. Foster, Acting Chief Municipal Prosecutor, argued the cause for respondent Municipal Board of Alcoholic Beverage Control of the City of Newark (Anna P. Pereira, Corporation Counsel, attorney; Ms. Foster, on the brief). Jeffrey S. Chiesa, Attorney General, attorney for respondent Division of Alcoholic Beverage Control (Lorinda Lasus, Deputy Attorney General, on the statement in lieu of brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Parrillo, Sabatino and Fasciale.
On appeal from the Department of Law & Public Safety, Division of Alcoholic Beverage Control, Docket Nos. ABC 03102-2009N, ABC 13537-2009N, and ABC 09357-2010N.
Neil J. Dworkin argued the cause for appellant.
Angela G. Foster, Acting Chief Municipal Prosecutor, argued the cause for respondent Municipal Board of Alcoholic Beverage Control of the City of Newark (Anna P. Pereira, Corporation Counsel, attorney; Ms. Foster, on the brief).
Jeffrey S. Chiesa, Attorney General, attorney for respondent Division of Alcoholic Beverage Control (Lorinda Lasus, Deputy Attorney General, on the statement in lieu of brief). PER CURIAM
Appellant Dolphin Father, LLC, the holder of a liquor license in the City of Newark, appeals from a March 26, 2012 final agency decision of the Division of Alcoholic Beverage Control ("ABC" or "the Division") requiring appellant to relocate its liquor store business as a special condition of the renewal of its license. The Division's Acting Director imposed the special condition in light of strong community opposition to the liquor store being reopened on premises that are in close proximity to schools, churches, and a playground, and where there had been prior incidents of violence, drug dealing, prostitution, and other harmful activities when the business was operated there by a previous licensee. Appellant contends that the community opposition was untimely, that it has been wrongfully deprived of an opportunity to recoup a return upon its investment in renovating the premises, and that the Division's ruling is arbitrary and capricious.
Applying our limited scope of review in deference to the Division's regulatory expertise, and recognizing the Division's well-settled legal authority to impose a special condition of relocation in certain circumstances, we affirm the March 26, 2012 final decision. However, we do so without prejudice to appellant presenting to the Division, in connection with its upcoming license renewal application, evidence that it is infeasible for the liquor business to be relocated elsewhere in the City of Newark, and arguing that the special condition therefore should be reconsidered.
I.
Dolphin Father is a limited liability company. Its managing member, Rafael Rodriguez, has worked in the alcoholic beverage industry for many years. Before the present matter arose, Rodriguez had owned and operated a liquor store under a different license on Elizabeth Avenue in Newark.
Appellant is currently the holder of Plenary Retail Consumption License No. 0714-32-698-006, for the sale and consumption of alcoholic beverages at the premises of 945 Bergen Street in Newark. The building on the premises of 945 Bergen Street was constructed in approximately 1912. A liquor store and bar operated at the premises under a prior owner between June 1979 and March 2003. Although the previous store stopped operating in March 2003, the former licensee filed renewal petitions every year through February 2007, all of which were granted.
Within a three-block radius of 945 Bergen Street, there are six houses of worship, two elementary schools, and a community center with a daycare school. Additionally, there is a playground for the daycare school directly across the street from the liquor store.
We note that the record contains inconsistent testimony with regard to the precise number of nearby community institutions. However, appellant has not disputed the numbers above, which correspond to the factual recitation in the Director's decision.
On August 9, 2006, appellant entered into a thirty-year commercial lease for the first floor of the subject premises which was conditioned upon appellant's successful acquisition of the liquor license. In October 2006, appellant published a notice in a newspaper indicating that it was seeking approval of a license transfer from the then-current owner of the license. The Newark Alcoholic Beverage Control Board ("Newark ABC") did not receive any objections to the proposed transfer. Consequently, after a February 5, 2007 hearing before the Newark ABC, the proposed transfer was approved.
In April 2007, appellant applied for a construction permit to remodel the premises at 95 Bergen Street. The permit was approved on April 13, 2007. The renovation work proceeded and, according to appellant, was completed in May 2008. As part of the renovation, appellant installed awnings with advertisements for beer, wine, sodas, cigarettes, juices, candies, and snacks. Appellant had previously considered also using the premises as a tavern and a cash checking location. However, appellant contends that it presently intends to confine its use of the premises solely as a packaged goods and convenience store.
In late May 2008, appellant attempted to obtain a Certificate of Occupancy. However, it asserts that City inspectors failed to perform the inspections needed for the certificate.
Meanwhile, on May 16, 2008, a civil lawsuit was filed in the Superior Court by several local community organizations seeking to prevent Rodriguez from opening his business. The complaint named as defendants the City of Newark, various City agencies and officers, Rodriguez, and several other defendants, alleging that various provisions of the Municipal Land Use Law, N.J.S.A. 40:55D-1 to -163, and the Alcoholic Beverage Control Act ("the ABC Act"), N.J.S.A. 33:1-1 to -97, had been violated.
Although these objectors did not voice their opposition during the license-transfer process, they were apparently galvanized upon seeing the construction progress on the premises and learning of its intended use.
On June 28, 2008, the trial court issued an order staying the civil litigation. The court also compelled the plaintiffs in that case to serve upon the Newark ABC written objections to appellant's recently filed renewal application for the 2008-2009 license term, which they did.
As discussed infra, liquor licenses are issued for one-year terms beginning July 1 of each year, and must be renewed annually. N.J.S.A. 33:1-26.
The controversy over appellant's license renewal initially was set for a hearing before the Newark ABC in November 2008, but was subsequently adjourned and not rescheduled. As a result, appellant's license renewal was deemed denied, due to the Newark ABC's failure to act within the ninety-day time period prescribed by N.J.A.C. 13:2-2.10.
This regulation provides: "If no action is taken on an application for renewal of a license within [ninety] days after the expiration of its term, the applicant may file an appeal with the Director from such failure to act on the renewal application." N.J.A.C. 13:2-2.10(b). Subsection (a), although referring to applications for new licenses, states that "[f]ailure to act may be deemed a denial of application by the applicant for the purpose of allowing the applicant to appeal to the Director." N.J.A.C. 13:2-2.10(a).
In February 2009, appellant filed an appeal with the then-Director of the State ABC, seeking relief pursuant to N.J.A.C. 13:2-17.1. The Director issued an order to show cause, which extended appellant's license for the 2008-2009 year, pending a de novo hearing in the Office of Administrative Law ("OAL"). On June 5, 2009, appellant filed a renewal application for the 2009-2010 term.
N.J.A.C. 13:2-17.1 sets forth the process for "[a]ll appeals from the actions taken by a municipal issuing authority concerning the issuance, denial, renewal, transfer, suspension or revocation of a retail license[.]"
In June 2009, appellant again sought to obtain a Certificate of Occupancy from Newark. However, its request was refused shortly thereafter on the basis that the premises were located in the city's re-zoned Redevelopment District, which prohibits the sale of liquor. In response, appellant applied to the City's Zoning Officer to declare the premises a preexisting non-conforming use. After appellant's request for such a declaration was denied, it appealed to the Newark Board of Adjustment. That appeal was denied after a hearing in October 2009, in which community residents expressed their opposition to the store as well as their belief that the premises had previously been abandoned. Appellant then sought review of the Board of Adjustment's adverse decision through an action in lieu of prerogative writs filed in the Law Division.
In December 2008 the neighborhood was rezoned to a classification that does not permit the sale of alcohol.
On May 14, 2010, Hon. Thomas R. Vena reversed the Newark Board of Adjustment, finding that the establishment at 945 Bergen Street is a preexisting nonconforming use. Appellant was subsequently issued in June 2010 a Certificate of Occupancy, a Fire Safety Permit, and a Sanitary Inspection Report.
Meanwhile, on October 5, 2009, as per the Director's prior order, a pre-hearing conference concerning the 2008-2009 renewal of appellant's liquor license was held before an Administrative Law Judge ("ALJ"), at which over twenty objectors, including residents and community leaders, testified. Five people, including members of Rodriguez's family and former employees, testified in favor of renewing appellant's license. With regard to appellant's pending application for the 2009-2010 term, the Newark ABC had again not scheduled a hearing within the prescribed time period. As a result, appellant filed a Notice and Petition of Appeal with the Director seeking interim relief. On November 13, 2009, the Director issued another order to show cause, extending appellant's license for the 2009-2010 term, pending the outcome of the de novo hearing with the OAL.
Pursuant to the Director's interim November 2009 decision to approve appellant's 2009-2010 license, as well as the City's June 2010 issuance of the Certificate of Occupancy, appellant began selling liquor on the premises for the final ten days of June 2010. Appellant then obtained from the Director a thirty-day ad interim permit, which permitted the premises to remain open through the end of July 2010.
The objectors conducted a protest in front of the store shortly before its opening.
On July 8, 2010, the Newark ABC conducted a hearing regarding the re-issuance of the ad interim permit. Appellant asserts that it was not notified of this session, and, consequently, did not attend. Appellant then applied to the Director for another ad interim permit, but was denied. As a result, appellant ceased operation on or about July 30, 2010.
On August 17, 2010, the Newark ABC held a hearing to consider renewal of appellant's liquor license for the 2010-2011 term. After hearing testimony from dozens of objectors, as well as testimony from Rodriguez's daughters in support of renewal, the Newark ABC voted two-to-one to deny renewal of appellant's license for the 2010-2011 term.
Appellant then filed another administrative appeal with the Director, and also requesting that its license be extended pending the outcome of that appeal. On August 31, 2010, the Director issued an order to show cause, which extended the license for the 2010-2011 license term pending appeal, but prohibited operation of the license until further order, and referred the matter to the OAL. Appellant moved for leave to appeal the Director's interlocutory decision to this court, which we denied in November 2010.
Appellant moved to consolidate all three appeals for each of the license terms before the ALJ. In February 2011, the two appeals seeking renewal for the 2008-2009 and 2009-2010 license terms were dismissed by the ALJ as moot. Appellant then appealed the ALJ's dismissal of those two appeals to the Director. On June 23, 2011, a Deputy Attorney General for the State issued a letter relaying the Director's decision to defer ruling on the 2008-2009 and 2009-2010 license terms until his review of the then-forthcoming Initial Decision from the ALJ on the 2010-2011 application for license renewal.
After hearing the merits, the ALJ issued her Initial Decision on October 6, 2011, affirming the determination of the Newark ABC to deny, unconditionally, renewal of appellant's liquor license. In her decision, the ALJ noted parenthetically that nearly fifty objectors had testified at the two hearings she presided over, and that she had received a petition with over 1,000 signatures. Appellant filed exceptions to the ALJ's decision with the Director.
On March 26, 2012, the Director issued the final agency decision for the Division. First, he rejected the ALJ's procedural ruling of dismissal, and instead consolidated the administrative appeals regarding all three licensure terms. Second, the Director rejected the ALJ's recommendation to affirm the Newark ABC's decision. Instead, the Director ordered the renewal of appellant's license, but upon a special condition. The Director agreed with the ALJ and the Newark ABC that 945 Bergen Street is an unsuitable location for a liquor license, in light of the community opposition and the evidence of past problems at that location. The Director consequently imposed a special condition on appellant's license, preventing Dolphin Father from operating an alcoholic beverage establishment at 945 Bergen Street.
Balancing the community's concerns against appellant's lack of culpability, the Director determined that "a different remedy [than denial] should be fashioned," and consequently ordered: "the license shall be renewed subject to the following special condition: The license shall be prohibited from operating at 945 Bergen Street[.]" Additionally, the Director ordered that a later application to the Newark ABC for a transfer of the license to a suitable location "shall not be unreasonably denied."
In reaching this conclusion, the Director observed that "there is overwhelming community sentiment in opposition to the sale of alcoholic beverages at the licensed location," and that such sentiment is "widespread, longstanding and reasonably related to public welfare and safety." Specifically, the Director found that the evidence reveals that "[u]nder previous ownership, the store's location had been the site of drug activity, prostitution, violence[,] and loitering by unscrupulous individuals." Additionally, he noted that litter from the store was frequently found on adjacent lots and that the testimony indicated that there had previously been at least one shooting inside the store.
However, the Director also found that this sentiment was "based upon the negative impact [that] a prior licensee had on the quality of life in the neighborhood." (Emphasis added). By contrast, he noted that appellant had owned the license "without incident . . . since February 5, 2007." The Director explained that he was troubled by the circumstances of this case because: (1) Dolphin Father had been granted its license without objection; (2) there is nothing in the record to show that the premises had been operated in a violative manner; and (3) the community's sentiment opposing retail alcohol sales is based on "the negative impact a prior licensee and prior business had on the neighborhood." As a result, the Director reasoned that he could not "in all fairness, confirm denial of renewal."
In fashioning his ultimate remedy, the Director relied upon the Supreme Court's decision in Ishmal v. Division of Alcoholic Beverage Control, 58 N.J. 347 (1971). In Ishmal, the appellant's tavern was found to have been a hangout for drug dealers and addicts, thereby constituting a nuisance. Id. at 349. As a result, the Newark ABC revoked the appellant's license, and that decision was affirmed on appeal by the Director and then this court. Id. at 349, 352.
The Supreme Court, however, overturned the revocation of the license, reasoning that the appellant had met her "responsibility . . . for precluding offensive and unlawful conduct" by making "good faith efforts to control the drug problem[.]" Id. at 351-52. Such efforts, the Court reasoned, "preclude[d] a finding that [the appellant] was guilty of wrongdoing[.]" Id. at 352. Rather, the Court reasoned that the tavern's character as a trouble spot of narcotics activity "was due to its physical location rather than culpable conduct on [the appellant's] part." Ibid. (emphasis added). Nevertheless, the Court explained that the absence of culpability on the part of a license-holder does not deprive "the licensing authorities [from] protect[ing] the public interest by [taking] appropriate action." Id. at 351-52. The Court's key conclusion — which the Director followed in the present case — is that "where the problem . . . inheres in the location, rather than the quality of the licensee's performance, the licensee in fairness should be offered a chance to secure another location." Id. at 352.
II.
A.
We begin our analysis by repeating the Legislature's recognition that "[t]he retail alcoholic beverage industry is one of the most highly regulated industries of the State[.]" N.J.S.A. 33:1-12.40(a). "It is the public policy of this State . . . to strictly regulate alcoholic beverages to protect the health, safety and welfare of its citizens[.]" N.J.S.A. 33:1-12.40(b).
Given these public policies, the ABC Act vests the Director of the Division with the duty to "supervise the manufacture, distribution and sale of alcoholic beverages in such a manner as to fulfill the public policy and legislative purpose of this act[.]" N.J.S.A. 33:1-3. The Director also has the authority to adopt regulations to carry out the provisions of the ABC Act. N.J.S.A. 33:1-12.38.
Despite the ultimate supervisory authority vested in the Director, the Act explicitly intended to allow municipalities to maintain primary control over the retail sale of alcoholic beverages. N.J.S.A. 33:1-3.1(b)(9). Municipal authorities have the initial duty to issue licenses and to "perform, take and adopt all other acts, procedures and methods designed to insure the fair, impartial, stringent and comprehensive administration" of the ABC Act. N.J.S.A. 33:1-24.
Municipalities with more than 15,000 inhabitants may establish a separate board to fulfill its duties. N.J.S.A. 33:1-5. The City of Newark has taken advantage of this statutory prerogative, and its Municipal Code provides that all licenses "shall be issued by the Board of Alcoholic Beverage Control[.]" Newark, N.J., Code § 4:2-2.
Liquor licenses granted under the ABC Act "shall be for a term of one year from July 1 in each year." N.J.S.A. 33:1-26. Licenses issued to replace an expiring license "shall be deemed to be a renewal," provided that the procedures of the licensing application are followed and the license is of the same class and type as the expiring license. N.J.S.A. 33:1-12.26; see also N.J.A.C. 13.2-1.5 (discussing the relaxed notice requirements for renewal applications).
Applications for new and renewed licenses must conform with various notice and distance requirements, none of which are at issue in this case. Newark, N.J., Code § 4:2-7.1. When an objection to the issuance or renewal of a license is made, a hearing must be held to afford the objectors an opportunity to be heard on all charges. Newark, N.J., Code § 4:2-7.4(a). Beyond these procedural requirements, and the acknowledgment that the application process and Board decisions must be in accordance with the ABC Act and the Division's regulations, Newark, N.J., Code § 4:2-1, the Code does not set forth additional criteria for the review of applications for new licenses.
The Newark Code does, however, require that when an application for a person-to-person transfer is made, the Board "shall inquire as to the reasons and purposes for such transfer and into the character, qualifications and fitness of the person to whom the license is intended to be transferred." Newark, N.J., Code § 4:3-1.1.
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Once a license is issued, N.J.A.C. 13:2-23.1 to -23.33 sets forth the standards for the conduct of licensees and the use of licensed premises. These regulations prohibit, among other things, serving underaged persons and "allow[ing], permit[ting], or suffer[ing]" lewdness, immoral activity, acts of violence, disturbances, unnecessary noises, and nuisances. N.J.A.C. 13:2-23.1, -23.6. Moreover, a licensee is responsible for conduct that "is contrary to the public health, safety and welfare." N.J.A.C. 12:2-23.6(b).
With respect to renewal of licenses, Newark's Code provides that "[a]ll licenses qualified for renewal are subject to renewal at the discretion of the local issuing authority annually as of the first day of July in each year." Newark, N.J., Code § 4:3-6.2 (emphasis added). "[R]enewal of . . . license[s] shall be made only after an investigation of the application and the approval of the application by the local issuing authority." Newark, N.J., Code § 4:3-6.4.
In the event that an objection is filed in opposition to a renewal application, a hearing must be set "in order that the applicant may be afforded an opportunity to show cause why the application should be granted." Newark, N.J., Code § 4:3-6.5 (emphasis added); see also N.J.S.A. 33:1-32 (allowing issuing authorities to "impose any condition or conditions to the issuance of any license deemed necessary and proper to accomplish the objects" of the Act).
B.
With this regulatory framework in mind, we next consider the pertinent standards of appellate review. The ABC Act "'vests the Director or other license-issuing authority with extensive regulatory and investigative power over the liquor industry.'" Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 10 (2009) (quoting In re C. Schmidt & Sons, Inc., 79 N.J. 344, 353 (1979)).
"A municipality has the original power to pass on an application for a [liquor] license or the transfer thereof, but that power is broadly subject to appeal to the Director." Ibid. (internal quotation marks omitted).
When an appeal from a municipal decision is pursued, such actions are first appealed to the OAL; the ALJ then issues an Initial Decision, and the Director then has the authority to adopt, reject, or modify that decision. In re Kallen, 92 N.J. 14, 20 (1983) (citing N.J.S.A. 52:14B-10(c)); see also N.J.S.A. 33:1-22 (setting forth the procedure to appeal from decisions of the issuing authority with regard to a license). "[T]he Director's review is de novo as to all necessary factual and legal determinations." Circus Liquors, supra, 199 N.J. at 11.
Importantly for the present case, the Director "may make . . . such special rulings . . . as may be necessary for the proper regulation and control of the . . . sale and distribution of alcoholic beverages and the enforcement of [the ABC Act.]" N.J.S.A. 33:1-39 (emphasis added).
This "procedural structure saves to the local body the first determination of the grant of the license, while upholding the legislative aim that the Director exercise a broad supervisory power in this delicate area." Circus Liquors, supra, 199 N.J. at 11 (internal quotation marks omitted).
"When evaluating an action of the Director of Alcoholic Beverage Control, substantial deference is owed to the Director." Id. at 10. On review, "the rulings of the Director encompassing his findings of fact and conclusions must be accepted unless unreasonable or illegally grounded." Great Atl. & Pac. Tea Co. v. Point Pleasant Beach, 220 N.J. Super. 119, 130 (App. Div. 1987) (citing Lyons Farms Tavern, Inc. v. Mun. Bd. of Alc. Bev. Control, 55 N.J. 292, 303 (1970)).
Like other administrative agencies, review of decisions by the ABC Director is limited in scope. Circus Liquors, supra, 199 N.J. at 9 (citing In re Herrmann, 192 N.J. 19, 27 (2007)). "Without a clear showing that it is arbitrary, capricious, or unreasonable, or that it lacks fair support in the record, an administrative agency's final quasi-judicial decision should be sustained, regardless of whether a reviewing court would have reached a different conclusion in the first instance." Id. at 9-10; see also 270 Club, Inc. v. Mun. Bd. of Alc. Bev. Control, 73 N.J. Super. 15, 21 (App. Div. 1962) (noting that "[t]he renewal of a liquor license rests in the sound discretion of the licensing authority, and unless the evidence clearly indicates an abuse of that discretion a reviewing court should not interfere").
However, despite the similarities to other areas of administrative law, "[b]ecause of the 'sui generis nature and significance' of the State's liquor regulations, 'it is a subject by itself, to the treatment of which all the analogies of the law, appropriate to other administrative agencies, cannot be indiscriminately applied.'" Circus Liquors, supra, 199 N.J. at 10 (quoting Blanck v. Mayor & Borough Council of Magnolia, 38 N.J. 484, 490 (1962)).
C.
We next consider the standards particularly applicable to renewal applications. N.J.S.A. 33:1-26 states that "[a]ll licenses shall be for a term of one year from July 1 in each year" and that "[u]nder no circumstances . . . shall a license, or rights thereunder, be deemed property[.]" As such, "[i]t is well accepted that ownership of a liquor license is a privilege and not a property right; they are only 'annual licenses which may be renewed annually.'" Cavallaro 556 Valley St. Corp. v. Div. of Alc. Bev. Control, 351 N.J. Super. 33, 40 (App. Div. 2002) (emphasis added) (citation omitted) (quoting Lubliner v. Bd. of ABC, 33 N.J. 428, 442 (1960)); see also In re Schneider, 12 N.J. Super. 449, 456 (App. Div. 1951) ("[A] license to vend intoxicating liquor is not a contract. It is not property. . . . [I]t is merely a temporary permit or privilege to pursue an occupation otherwise illegal."); Boss Co. v. Bd. of Comm'rs, 40 N.J. 379, 384 (1963) ("A liquor license in New Jersey vests a personal right in the licensee to conduct a business otherwise illegal. As such, it is merely a temporary permit or privilege.")
Once a license is granted, however, "[a] license is protected against arbitrary revocation, suspension or refusal to renew." Boss Co., supra, 40 N.J. at 384, quoted in In re Xanadu Project at Meadowlands Complex, 415 N.J. Super. 179, 196 (App. Div.), certif. denied, 205 N.J. 96 (2010).
Public sentiment can be an important factor in granting or denying a licensee's renewal application. The case law applying these principles recognizes that "[t]he municipal authority may respond to public sentiment as grounds for its action." Great Atl., supra, 220 N.J. Super. at 128 (citing Lyons, supra, 55 N.J. at 306-07). "Service of the public interest in licensing, in transferring of licenses and in controlling this exceptional business requires an attentive and sympathetic attitude toward the sentiments of substantial numbers of persons in the locality, whether they be residents . . . or representatives of a nearby church, [or] school[.]" Lyons, supra, 55 N.J. at 306— 07 (emphasis added).
In addition to being widespread, public sentiment must also be "reasonably associated with dangers to the public health, safety, morals and general welfare commonly recognized as incidents of the sale and consumption of alcohol[.]" Id. at 307; see also Fanwood v. Rocco, 33 N.J. 404, 414 (1960) (finding that "widespread local sentiment favor[ed] keeping the area free of taverns and package stores . . . and in honoring [that sentiment] the governing body did not act at all unreasonably").
Appellant seeks to distinguish the case at hand by arguing that in Lyons Farms, supra, and Fanwood, supra, the licensees were seeking approval for something new; by contrast, appellant contends that it has acquired a "protected property interest because of an approval it had been given and on which it had a right to rely[.]" Appellant relies primarily on three cases to support its argument that community sentiment is not a sufficient basis to deny renewal of its existing license at 945 Bergen Street. These cases do not, however, compel a reversal of the Director's decision in this case.
First, appellant relies on Boss Co., supra, to support its position that it had a protected property interest. In Boss Co., 40 N.J. at 384, the Court stated that, "in light of the property characteristics incident to the legal interest created by our statute, we conclude that the liquor license in New Jersey constitutes 'property' within the meaning of the [Internal Revenue Code ("IRC")]." This case is distinguishable because the Court's holding in Boss Co. was limited to how a license should be treated under the IRC; it did not alter the limited rights afforded to a license holder. Indeed, this point was expressly made by the Court at the end of the opinion, when it noted that:
Our decision . . . in no way marks a departure from the principles which have guided our courts in liquor license litigation. The liquor license, although transferable, is still to be considered a temporary permit or privilege, and not property, as it always has been . . . [and] the sound discretion of the issuing authority to issue, renew or transfer liquor licenses will not be disturbed [by this decision.]
[Id. at 387-88 (emphasis added).]
Second, appellant relies on Great Atlantic, supra, 220 N.J. Super. at 129, in which this court stated that "[n]either the public sentiment nor the rationale for transfer denial may be based on the desire to eliminate an existing liquor license, see T[w]p. Committee of Lakewood T[w]p. v. Brandt, 38 N.J. Super. 462, 466 (App. Div. 1955)[.]" The Lakewood case cited to qualifies what was intended by that quoted statement. In Lakewood, 38 N.J. Super. at 466, this court found that the committee that denied license renewal "was not really concerned with the question [of] whether there was any public necessity for having a tavern at the proposed location." Rather, "the committeemen [had] looked upon [the review of the proposed transfer] as a chance to eliminate a license" because the committeemen felt there were too many licenses in Lakewood. Ibid. Similarly, in Great Atlantic, supra, 220 N.J. Super. at 130, this court affirmed the Director's decision to reverse the issuing authority's denial of an application to relocate a license, because the Director found that "the Council [had] improperly sought to protect existing licensees against economic competition[.]"
Reading these cases together, they signify that there must be an independent and legitimate basis to take action with respect to a particular license, not just a desire to capitalize on the fact that a license requires a review prior to renewal or transfer. Such a reading is consistent with Lyons, supra, 55 N.J. at 306-07, in which the Court required that community sentiment must be "reasonably associated" with "dangers . . . commonly recognized as incidents of the sale and consumption of alcohol."
In this case, rather than randomly selecting appellant in pursuit of a more generalized desire to reduce licenses, the community's sentiment was focused on the specific harms attributable to selling liquor at 945 Bergen Street. The community's sentiment was factually and reasonably grounded in the previous history of 945 Bergen Street being a trouble spot, as well as its desire to keep the surrounding area — which is comprised of a high density of churches and schools — free from the incidental harms of a liquor store. Aside from the fact that the community's sentiment was aimed at specific harms, Lakewood and Great Atlantic are also inapplicable here because appellant's license was ultimately never revoked, but instead renewed on a special condition of relocation.
Finally, appellant relies on Board of Commissioners v. B&L Tavern, Inc., 42 N.J. 131 (1964). B&L concerned the appeal of a license-holder who had successfully renewed his license every year between 1950 and 1961. Id. at 132. In early 1961, a fire burned the building down. Ibid. The storeowner began rebuilding the store; however, after members of the community expressed objections, the governing body of Bayonne denied renewal of the appellant's license in 1961. Ibid. The store owner appealed to the Division of ABC, which reversed the Bayonne governing body because the Director found a lack of justification for the local board's refusal to renew the license. Id. at 133.
According to the Supreme Court's factual recitation in B&L, the Director based his decision to reverse the board and renew the appellant's license on three factors: (1) over the considerable duration the license had been held, there had never been any formal complaints or disciplinary action taken; (2) there was insufficient proof to connect the tavern to the unfavorable conditions that existed on the outside premises; and (3) the new building plans sought to incorporate improvements. Id. at 133-34.
On appeal, the Director's decision to reverse the governing body — thereby renewing B&L's license — was affirmed by this court and the Supreme Court. Id. at 134. The Court reasoned that "the record reveals substantial evidence in support of the Director's conclusion . . . we are satisfied [that] the findings [by the Director] were not unwarranted. Of considerable influence in that connection is the marked improvement in the physical condition of the premises." Ibid.
The Court's opinion in B&L does not compel a reversal in the present case. B&L simply reflects the familiar principle that there must be "substantial evidence" in the record to support an agency decision. Nothing in the B&L opinion suggests that the Court believed the Director was compelled as a matter of law to reach his decision. If there is "substantial evidence" for the Director's decision, as there manifestly is here, then the Director's decisions should not be disturbed.
Moreover, the holding of B&L also is plainly limited by Ishmal, supra, 58 N.J. at 347, which was relied upon by the Director in this case and was decided ten years after B&L. As we have already noted, in Ishmal, the Court held that a special condition could be imposed on a previously renewed license — even if the license-holder is not at fault — if the location is found to be inappropriate for such a license. That finding was made here, and there was more than ample support in the record for that finding.
That said, we are certainly cognizant of appellant's difficult circumstances, its lack of blameworthiness concerning past incidents at the site, and the investments made in upgrading the physical condition of the premises. We suspect that the renovations to the property may be adapted in some fashion to other non-liquor retail uses, which the community and the City evidently do not oppose. In addition, the liquor license itself may have some value on the market. The Director fairly attempted to balance the overall equities involved by reversing the administrative denial of a renewal, but upon a special condition of relocation. See Lyons, supra, 55 N.J. at 307 (the Court's "study of the record" satisfied it "that the board's finding that the paramount equities favored the objectors was reasonably grounded").
At oral argument on appeal, we were advised by counsel that appellant will soon be filing an application to renew its license for the 2013-2014 term. Nothing in our present decision to affirm the Director's ruling concerning licensure for earlier periods precludes appellant from presenting evidence in the renewal proceeding that no other locations to operate its license within the City limits are feasible or available, and that, as appellant's counsel suggested at oral argument, the market for a transfer of appellant's license is poor. Counsel for the City acknowledged to us that such proofs are not foreclosed from the upcoming renewal proceeding, and that appellant is free to argue that continuation of the special condition is unreasonable or unfair in light of such additional proofs. We trust that the Director will consider such contentions and proofs with an open mind if such issues are presented to him in a subsequent administrative appeal.
The balance of appellant's remaining arguments raised on appeal lack sufficient merit to warrant discussion in this opinion. R. 2:11-3(e)(1)(D) and (E).
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION