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In re Fleming

May 7, 1996


On appeal from the Division of Alcoholic Beverage Control.

Approved for Publication May 7, 1996.

Before Judges Dreier and Kestin. The opinion of the court was delivered by Kestin, J.A.D.

The opinion of the court was delivered by: Kestin

The opinion of the court was delivered by KESTIN, J.A.D.

Petitioners appeal from a decision of the Director of the Division of Alcoholic Beverage Control denying them further authorization to apply for renewal of their Class C liquor license after several extensions had been granted beyond the two-year period of inactivity established by law. N.J.S.A. 33:1-12.39. We affirm.

The license, issued by the Township of North Brunswick, has been inactive since November 25, 1985, when a prior licensee sold the building in which the license had been used. Petitioners are real estate brokers who had initially listed the license for sale before purchasing it themselves, in its inactive state, on March 9, 1988, for a price of $105,000. One of the petitioners testified that they had intended to use the license in their own establishment, a plan that was abandoned when construction of the shopping center in which the business was to be located was delayed and general economic conditions adversely affected financing. Petitioners then began to market the license actively.

Because the license had already been inactive for the two-year statutory period when petitioners purchased it, they were required immediately to petition the Director for permission to apply for renewal of the inactive license. They did so, and were granted such authorization for the 1988-89 license term. Subsequent authorizations were also granted for the 1989-90 and 1990-91 license terms.

After receiving a fourth application for authorization, for the 1991-92 license term, the Director, "directly and individually", N.J.S.A. 52:14F-8b, held a hearing on the matter on June 11, 1991. A March 10, 1992 ruling granted the application with a special condition to be placed on the license renewal that "no further renewals of the license shall be granted unless the license is being actively used at an approved site on or before June 30, 1992." Notwithstanding this condition, petitioners submitted yet another petition for the 1992-93 license term. This application was referred to the Office of Administrative Law for a hearing as a contested case pursuant to the Administrative Procedure Act, N.J.S.A. 52:14B-10(c). Because the end of the 1992-93 license term was approaching as closure of the hearing record neared, petitioners and the Division agreed that the administrative law Judge could also consider whether authorization should be granted for the 1993-94 license term as well.

In his initial decision, the administrative law Judge made findings on the basis of which he concluded that activation of the license by the end of the 1993-94 license term was reasonably to be anticipated. He held that petitioners had, therefore, demonstrated good cause for further renewal authorizations for both the 1992-93 and 1993-94 license terms, but that no further authorization for renewal beyond those terms should be granted.

The Director in his final agency decision, dated September 20, 1993, rejected the Conclusions reached by the administrative law Judge, N.J.S.A. 52:14B-10(c) and (d), while accepting the "basic factual findings." The Director specifically rejected the Conclusion that activation of the license by the end of the 1993-94 license term was likely. He saw as lacking adequate evidential support in the circumstances, the finding upon which this Conclusion was based, i.e., that petitioners had "entered into a contract for the sale of the liquor license with a purchaser who has a reasonable expectation of opening its premises within the 1993-94 license term [and that petitioners had thus] established a set of circumstances leading toward activation which are substantial and not speculative." The Director saw the record, instead, to establish more significantly that while there was a contract of sale for $135,=S

" ... the sale [was not to] take place ... [until the buyer obtained] all approvals necessary to open and operate a restaurant in a mall to be constructed .... " Additionally, [petitioner] advises that "the contract is also contingent upon the developer obtaining all approvals for its applications which are pertinent to the buyer's ownership and operation of the restaurant."

The shopping mall not only has not yet been built, construction has not even commenced as of this date. Additionally, the landlord is still searching for an "anchor tenant;" furthermore the Township is limiting access only from Route 1 and, since the developer "... would like to have access from North Oaks Boulevard as well, ... it is negotiating for that approval with the Township and the Department of Transportation." The contract purchaser of this license states that "he thinks " that the anchor tenant will be found by the landlord in just a few months. "Ground then will be broken for the shopping center ...." Moreover, he opines that "once construction begins, the shopping center will be competed in six to eight months." Significantly, however, he advises that "... he is negotiating with second choice locations for the liquor license in case an anchor tenant is not found and the shopping center is not built." [Citations to record omitted.]

The Director concluded that the opportunity for actual sale and use of the license was essentially speculative and that petitioners had failed to establish good cause for further renewal authorizations, especially in the light of the limiting condition embodied in the last authorization they had received. The Director noted specifically, in this regard, the Division's long-established standard that good cause for license renewal authorization was "usually evidenced by steps taken to activate the license, rather than demonstrating 'a good faith effort to sell' it."

The Director, accordingly, determined that petitioners had not satisfied the explicit requirement to activate the license by June 30, 1992, and that there was no reasonable expectation they would do so by June 30, 1994. The petition was ...

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