Opinion
No. 695 C.D. 2013
10-25-2013
JMQ1, Inc. v. Pennsylvania Liquor Control Board, Appellant
BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE RENÉE COHN JUBELIRER, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY PRESIDENT JUDGE PELLEGRINI
The Pennsylvania Liquor Control Board (Board) appeals the order of the Court of Common Pleas of Allegheny County (trial court) sustaining JMQ1's (Licensee) appeal of the Board's denial of Licensee's request for reinstatement of Restaurant Liquor License No. R-3721 (license) and ordering the Board to renew the license upon the payment of all appropriate fees. We affirm.
Licensee acquired the license via a double transfer in July 2006 from Rosa Villa Café, Inc. at 106-108 East General Robinson Street in the City of Pittsburgh (City) to Licensee's premises at 1021-1023 East Carson Street in the City's South Side neighborhood. The property is a three-story building consisting of two commercial storefronts on the first floor and two apartments on the second and third floors. A tavern was to occupy the first floor and the other floors were to be occupied by residential tenants. On November 27, 2006, Licensee applied for an occupancy permit and a building permit with the City. At that time, in a campaign against the proliferation of taverns on the South Side, the City refused to issue occupancy permits to any additional taverns to be located on East Carson Street. As a result, the City's Department of Planning did not permit Licensee to file full applications because of possible changes to the City's zoning laws. On May 23, 2007, the Board formally granted the license to Licensee.
In July 2007, the City Council enacted an ordinance limiting the number of restaurants/bars that could be operated on East Carson Street in the South Side. Licensee again attempted to apply for permits with the City and was again denied. As a result, in December 2008, Licensee filed a Complaint for a Writ of Mandamus and an Action in Declaratory Judgment in the trial court seeking to compel the City to issue the permits and to declare the ordinance unlawful and void. In December 2009, the trial court determined that the ordinance was invalid and granted the requested relief, ordering the City to issue the permits. In March 2011, on appeal, this Court affirmed the trial court's determination that the ordinance was invalid, but reversed the trial court's order directing the City to issue the permits and stated that Licensee may, without prejudice, reapply for such permits. In January 2012, the Supreme Court denied the City's petition for allowance of appeal. See Aboud v. City of Pittsburgh Department of Planning, 17 A.3d 455 (Pa. Cmwlth. 2011), appeal denied, 614 Pa. 706, 37 A.3d 1197 (2012).
While the foregoing litigation was pending, Licensee placed the license into safekeeping with the Board for a three-year period, from March 26, 2008, through March 26, 2011, pursuant to Section 474.1 of the Liquor Code. Licensee obtained an additional one-year extension of safekeeping until March 26, 2012. As time dragged on, Licensee's principal, James Quinn (Quinn), became frustrated with the process and told his family that he was abandoning his efforts to open the tavern. However, Quinn's son, Jared, was interested in continuing with the project so Quinn sold Licensee to Jared for $1.00. No notice of Licensee's sale was given to the Board and no corporate formalities were observed.
Act of April 12, 1951, P.L. 90, added by the Act of December 9, 2002, P.L. 1653, as amended, 47 P.S. §4-474.1. That section provides, in relevant part:
(a) A restaurant, eating place retail dispenser, hotel, importing distributor and distributor licensee whose licensed establishment is not in operation for fifteen consecutive days shall return its license for safekeeping with the board no later than at the expiration of the fifteen-day period. The license may only be reissued from safekeeping in the manner set forth by the board through regulation.
(b) The board may hold the license in safekeeping for a period not to exceed three consecutive years. Any license remaining in safekeeping for more than three consecutive years shall be immediately revoked by the Bureau of Licensing unless a transfer application or request for reissue from safekeeping has been filed prior to the expiration of the three-year period or unless the board has approved a request to extend the safekeeping for an additional year as set forth in subsection (g). In addition, the board shall extend the period for an additional year if, at the end of the three-year period, the licensed premises are unavailable due to fire, flood or other similar natural disaster; no further extension beyond one additional year shall be granted by the board regardless of whether the licensed premises are unavailable due to fire, flood or other similar natural disaster unless an application is made as set forth in subsection (g).
* * *
(g) (1) A licensee whose license is subject to this section may, upon written request, apply to the board to allow the license to remain in safekeeping for an additional one year. The written request must be accompanied by a five thousand dollar ($5,000) fee for licenses placed in safekeeping from counties of the first class, second class, second class A, third class and fourth class and a fee of two thousand five hundred dollars ($2,500) for licenses placed in safekeeping from counties of the fifth through eighth classes. The board shall approve the request unless the license or licensee no longer meets the requirements of this act or the board's regulations. The fee collected shall be paid into the State Treasury through the Department of Revenue into the State Store Fund.
(2) A licensee whose license remains in safekeeping after the expiration of an approved additional one-year period may submit a written request for additional one-year periods; however, each such request must be accompanied by a five thousand dollar ($5,000) fee for licenses placed in safekeeping from counties of the first class, second class, second class A, third class and fourth class and a fee of two thousand five hundred dollars ($2,500) for licenses placed in safekeeping from counties of the fifth through eighth classes.
On January 20, 2012, the Board notified Quinn that the license's safekeeping period was set to expire on March 26, 2012; that Section 474.1 permits a licensee whose license is subject to revocation due to the expiration of the safekeeping period to apply to the Board to allow the license to remain in safekeeping for an additional year; and that an application and the required fee must be submitted to continue the license in safekeeping for an additional year. (Reproduced Record (R.R.) at 61a). Quinn, having divested himself of the corporation, ignored the letter and did not tell Jared about it, so nothing was done. On April 12, 2012, the Board notified Quinn that the license's safekeeping period expired on March 26, 2012, and that the license was revoked by operation of law in accordance with Section 474.1 of the Liquor Code. (Id. at 63a). The Board also notified Quinn that he could request a hearing on the matter within 20 days in accordance with Section 464 of the Liquor Code. On May 2, 2012, Licensee requested a Board hearing. (Id. at 65).
47 P.S. §4-464. Section 464 states, in pertinent part:
The board ... shall upon the written request of any applicant for ... restaurant liquor license, ... or for renewal or transfer thereof, ... whose application for such license, renewal or transfer, ... has been refused, fix a time and place for hearing of such application for license or for renewal or transfer thereof, ... notice of which hearing shall be mailed to the applicant at the address given in his application. Such hearing shall be before a hearing examiner designated by the board. At such hearing, the board shall present its reasons for its refusal or withholding of license, renewal or transfer thereof.... The hearing examiner shall thereafter report, with the examiner's recommendation, to the board in each case. The board shall thereupon grant or refuse the license, renewal or transfer thereof.... If the board shall refuse such license, renewal or transfer ... following such hearing, notice in writing of such refusal shall be mailed to the applicant at the address given in his application. ... Any applicant who has appeared at any hearing, as above provided, who is aggrieved by the refusal of the board to issue any such license or to renew or transfer any such license ... may appeal ... within twenty days from date of refusal or grant, to the court of common pleas of the county in which the premises or permit applied for is located. ... Such appeal shall be upon petition of the aggrieved party, who shall serve a copy thereof upon the board, whereupon a hearing shall be held upon the petition by the court upon ten days' notice to the board. ... The court shall hear the application de novo on questions of fact, administrative discretion and such other matters as are involved, at such time as it shall fix, of which notice shall be given to the board. The court shall either sustain or over-rule the action of the board and either order or deny the issuance of a new license or the renewal or transfer of the license....
A hearing was held before a Board hearing examiner. Quinn testified that he paid $242,000.00 for Licensee's building and $36,000.00 for the license and that he had a $200,000.00 mortgage on the building that he continued to pay while trying to acquire the permits from the City. He stated that he filed for the initial three-year safekeeping period and that he extended that period by one year in 2011 by filing an application for an extension and paying the $5,000.00 fee. He testified that around Christmas 2011, he became discouraged with the prolonged wait in getting the permits from the City and turned control of Licensee over to his son Jared. He acknowledged that he received the notice that Licensee had the option of extending the safekeeping period in 2012, but that he had already turned over control of the license to Jared at that point. He stated that he decided not to pursue an extension of the safekeeping period and did not submit an application to transfer the license. (R.R. at 29a-30a). Quinn testified that his attorney advised him that he could not sell or transfer the license because Licensee had never opened and that he never opened because he could not get the permits from the City, and that he was in a "catch-22" and that he was "going broke." (Id. at 30a). He testified that at the time of hearing, he was leasing the downstairs area of the building to a tenant to operate a pizza shop and was remodeling the upstairs for apartments.
Jared Quinn testified that he was aware that the Board's records show that his father was still Licensee's owner and that he was required to notify the Board of the change in ownership, but that he never got around to it because it was an intra-family transaction. He stated that he did not know he was required to extend Licensee's safekeeping period until late April 2012. He testified that on January 20, 2012, his father controlled Licensee "on paper," but that Licensee's actual control had been turned over to him at Christmas 2011. (R.R. at 38a). He stated that his father owns all of Licensee's stock, but that he paid his father $1.00 to "seal the deal" and that it was "sort of a joke." (Id. at 39a-40a). He testified that he has not filed any paperwork with the Department of State regarding Licensee and that he did not see the Board's January 20, 2012 letter before the hearing. He stated that he is prepared to file the application to extend Licensee's safekeeping period, pay the $5,000.00 safekeeping fee, and file the renewal and validation applications that are due. (Id. at 36a-37a).
On October 18, 2012, after considering the record evidence, the Board refused to reinstate Licensee's license nunc pro tunc. The Board again noted that the license must be revoked by operation of law under Section 474.1 of the Liquor Code because Licensee failed to apply for a one-year extension of the safekeeping period before the safekeeping period expired on March 26, 2012. Citing Cook v. Unemployment Compensation Board of Review, 543 Pa. 381, 671 A.2d 1130 (1996), the Board also determined that Licensee was not entitled to reinstatement of the license nunc pro tunc because it had failed to comply with the conditions/restrictions to which licensees must adhere by submitting an application and fee for extension of the safekeeping period. Licensee appealed to the trial court.
As the Supreme Court explained in Cook:
[W]here an appeal is not timely because of non-negligent circumstances, either as they relate to appellant or his counsel, and the appeal is filed within a short time after the appellant or his counsel learns of and has an opportunity to address the untimeliness, and the time period which elapses is of very short duration, and appellee is not prejudiced by the delay, the court may allow an appeal nunc pro tunc.
On de novo review, the trial court determined that while Quinn ignored the Board's January 20, 2012 letter, the request for a Board hearing was filed within 20 days and the Board was not prejudiced by his inaction and that Quinn had been prejudiced by the payment of $35,000.00 to keep the license alive during the protracted five years of litigation. The trial court also noted that Quinn learned of the revocation because his lawyer had received the Board's April 12, 2012 letter informing him of the license's revocation, but that the Board did not send his attorney the critical January 20, 2012 letter informing him of the safekeeping period's expiration and the far-reaching consequences of failing to respond to it even though he had been Quinn's lawyer throughout the proceedings. Citing 1 Pa. Code §31.26, the trial court concluded that there was a breakdown in Board procedure because Quinn's attorney was not notified of the license's pending expiration and that, therefore, Cook was not controlling. Thus, on April 2, 2013, following argument and based on the Board's record, the trial court found against the Board and ordered the Board to renew the license on the payment of all appropriate fees and the Board filed the instant appeal.
1 Pa. Code §31.26 states:
In a proceeding where an attorney has filed a submittal on behalf of a client or has filed an appearance under §31.24(b) (relating to notice of appearance), a notice or other written communication required to be served upon or furnished to the client shall also be served upon or furnished to the attorney (or one of the attorneys if the client is represented by more than one attorney) in the same manner as prescribed for his client, notwithstanding the fact that the communication may be furnished directly to the client.
"This Court's scope of review in a liquor license case is limited to determining whether the trial court's findings of fact are supported by substantial evidence and whether the trial court committed an error of law or an abuse of its discretion." In re Application for Liquor License of Thomas, 829 A.2d 410, 413 n.3 (Pa. Cmwlth. 2003), appeal denied, 577 Pa. 699, 845 A.2d 819 (2004).
In this appeal, the Board claims that the trial court erred in ordering a nunc pro tunc renewal of the license because Licensee did not to show that: (1) its failure to timely file the application for extension of the safekeeping period was caused by non-negligent circumstances such as circumstances involving fraud or a breakdown in Board operations; (2) it acted quickly once it realized it had missed the application deadline to extend the safekeeping period; and (3) the Board was not prejudiced by the delay.
By order dated September 27, 2013, Licensee was precluded from arguing or filing a brief because it failed to file a brief by the date it was due. --------
As noted above, 1 Pa. Code §31.26 states, in pertinent part, that "a notice or other written communication required to be served upon or furnished to the client shall also be served upon or furnished to the attorney." In addition, the Board's regulations, at 40 Pa. Code §17.4(d), state that "[w]hen a legal representative represents an appellant, appellee or applicant, notices of the date of hearing and of the decision, and other communications relating to the case, shall be directed to the legal representative...." (Emphasis added). Moreover, 40 Pa. Code §17.4(e) states that "[s]ubsection (d) supplements 1 Pa. Code §§31.26, 33.31 and 33.33 (relating to service on attorneys; service by the agency; and effect of service upon an attorney)."
The Board followed the regulations in this case as the record shows that the Board's September 24, 2008 letter informing Licensee that the license had been granted the initial three-year safekeeping period was sent to both Quinn and to Licensee's counsel. (R.R. at 53a-54a). The Board's July 1, 2009 letter informing Licensee of its approval of the renewal application for the licensing period effective June 1, 2009, was sent to both Quinn and to Licensee's counsel. (Id. at 55a-56a). The Board's November 29, 2010 letter informing Licensee of its approval of the application for license validation and that the license would be continued in safekeeping was sent to both Quinn and to Licensee's counsel. (Id. at 57a-58a). Finally, the Board's April 12, 2012 letter informing Licensee that its license had been revoked by operation of law effective March 26, 2012, based on its failure to extend the safekeeping period was sent to both Quinn and to Licensee's counsel. (Id. at 63a-64a).
However, the Board failed to send the January 20, 2012 letter regarding the safekeeping period's expiration and the impending license revocation to Licensee's counsel as required by its own regulation. Even though it sent a notice to Quinn, this failure to follow its own regulation and send notice to Licensee's counsel constitutes a breakdown in Board procedure warranting nunc pro tunc relief. 1 Pa. Code §31.26; 40 Pa. Code §17.4(d). See, e.g., City of Philadelphia v. Workers' Compensation Appeal Board (Operacz), 706 A.2d 1292, 1294-95 (Pa. Cmwlth. 1998) ("Even if the Employer had been properly served, ... [b]ecause 1 Pa. Code §31.26 applies, any notice of a decision must also be sent to any attorney who has entered an appearance in the proceeding. Because Employer's attorney entered an appearance on behalf of Employer before the date of the WCJ's decision and was not given notice of that decision, this lack of notice constituted a breakdown in the operation of the agency so as to require the grant of a nunc pro tunc appeal....") (footnote omitted).
The Board next argues that Licensee did not act quickly once it learned that it had missed the application deadline to extend the safekeeping period. However, as noted above, Licensee timely submitted its request for a Board hearing within 20 days of receiving the Board's April 20, 2012 revocation letter as directed by the Board in the letter and as required by Section 464 of the Liquor Code. Moreover, Section 470(a) of the Liquor Code outlines the requirements for nunc pro tunc license renewals and states, in pertinent part:
[T]he board, in its discretion, may accept nunc pro tunc a renewal application filed less than sixty days before the expiration date of the license with the required fees, upon reasonable cause shown and the payment of an additional filing fee of one hundred dollars ($100.00) for late filing: And provided further, ... after such expiration date, but before the board has received a renewal application nunc pro tunc within the time prescribed herein the board, in its discretion, may, after hearing, accept a renewal application filed within two years after the expiration date of the license with the required fees upon the payment of an additional filing fee of two hundred fifty dollars ($250.00) for late filing. Where any such renewal application is filed less than sixty days before the expiration date, or subsequent to the expiration date, no license shall issue upon the filing of the renewal application until the matter is finally determined by the board and if an appeal is taken from the board's action the courts shall not order the issuance of the renewal license until final determination of the matter by the courts....47 P.S. §4-470(a). Thus, the Board is expressly empowered to accept nunc pro tunc a renewal application, as directed by the trial court, within a two-year period of time.
Finally, the Board vaguely argues that there are numerous ways in which it could be prejudiced by a licensee's inaction, depending on the circumstances of a particular case, and that the licensing system would essentially break down because it would be required to accept a licensee's late filing in clear contradiction to the Liquor Code's express time limitations. However, as noted above, Section 470(a) specifically empowers the Board to accept Licensee's nunc pro tunc license renewal application, as directed by the trial court, within a two-year period of time. Thus, the licensing system breakdown contemplated by the Board is not present in this case.
Moreover, as explained by the trial court:
Of interest to me is the concept of prejudice expressed in Cook. As noted above, the Board cannot be prejudiced by inaction while an employer or claimant in an unemployment context can be. Thus, Cook isn't as all-encompassing as the Board would think. Further, after 5 frustrating years of seeing the wheels of justice clank ever so slowly and the payment of $35,000 merely to keep the license alive, after paying $36,000 for it, I see prejudice to Quinn by the course of events here, particularly when a matter of 20 days or less is involved. Further, due to the pending petition for allocatur, Quinn was in "never-never" land with respect to the use of the building.(R.R. at 185a-186a). In sum, the trial court did not err in sustaining Licensee's appeal of the Board's denial of its request for its license reinstatement and ordering the Board to renew the license upon the payment of all appropriate fees.
Accordingly, the trial court's order is affirmed.
/s/_________
DAN PELLEGRINI, President Judge ORDER
AND NOW, this 25th day of October, 2013, the order of the Court of Common Pleas of Allegheny County dated April 2, 2013, at No. SA 12-1000, is affirmed.
/s/_________
DAN PELLEGRINI, President Judge
Id. at 384-85, 671 A.2d at 1131. See also In re Howells, 20 A.3d 617, 621-22 (Pa. Cmwlth.), aff'd, 611 Pa. 559, 28 A.3d 915 (2011) ("In general terms, situations in which nunc pro tunc relief is properly allowed include those where untimeliness is due to non-negligent circumstances, either as they relate to a party or his counsel, and filing is accomplished within a short time after the party or his counsel learns of and has an opportunity to address the untimeliness, the time period which elapses is of very short duration, and the opposing party is not prejudiced by the delay. See [Cook]."). The question of whether a party has established entitlement to nunc pro tunc relief is a legal conclusion drawn from the evidence of record and is fully reviewable by this Court on appeal. H.D. v. Department of Public Welfare, 751 A.2d 1216, 1219 (Pa. Cmwlth. 2000).