February 20, 2008
IN THE MATTER OF THE APPLICATION FOR RELIEF PURSUANT TO N.J.S.A. 33:1-12.18 FOR THE 2004-2005, 2005-2006 AND 2006-2007 LICENSE TERMS.
BILLY'S SPORTS BAR, INC.
On appeal from the New Jersey Division of Alcoholic Beverage Control, No. 09-06-4799.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued November 15, 2007
Before Judges Parker, R. B. Coleman and Lyons.
Petitioner Columbus Liquors, LLC appeals from a September 27, 2006 order of the Director of the Division of Alcoholic Beverage Control (ABC) denying petitioner's application for a plenary retail consumption license, based upon petitioner's failure to comply with the statutorily mandated renewal scheme. For the reasons set forth below, we affirm.
On September 14, 2006, petitioner filed a verified petition with the Director requesting that the ABC issue petitioner a new license to replace its expired license, or alternatively, that the ABC reinstate the license. In denying petitioner's application, the Director accepted the following facts as presented by petitioner:
Gerald Taufield, a member of Columbus Liquors, LLC, states the following. The subject license has been inactive since June 1, 2002. In November 2003, Columbus Liquors, LLC, applied to the municipal issuing authority*fn1 for a person-to-person transfer of the subject license. On April 20, 2004, the municipal issuing authority approved the transfer of the license from Billy's Sports Bar, Inc., to Columbus Liquors, LLC. Mr. Taufield heard nothing further about the license until March 2006, when he requested that his former attorney inquire as to its status. His former attorney inquired and was told that the ABC Board Secretary at the time of the transfer never provided the resolution transferring the license to the State ABC. Therefore, the State ABC's records still indicate that Billy's Sports Bar, Inc., is the owner of the license. Billy's Sports Bar, Inc., never renewed the license and the license expired. Renewal applications were never provided to Columbus Liquors, LLC.
Petitioner also submitted the Certification of Maynard Woodson, Assistant Director of Jersey City's Division of Commerce. He states the following. In April 2004, the ABC Board Secretary was an employee of the Division. Columbus Liquors, LLC, applied for a transfer of the subject license, which was approved by the ABC Board on April 20, 2004. The then-ABC Board Secretary was newly appointed, inexperienced and only remained in that position for a few months. She did not prepare and send to the State ABC a resolution memorializing the transfer from Billy's Sports Bar, Inc., to Columbus Liquors, LLC. She also did not update the computer system to reflect the transfer. Thus, Columbus Liquors, LLC, did not receive renewal applications for the 2004-2005, 2005-2006 and 2006-2007 license terms. It was not until a recent inquiry by an attorney for Columbus Liquors, LLC, that it was discovered that the ABC Board Secretary never sent a resolution memorializing the transfer to the State ABC and that the license had been retired by the State ABC. On March 22, 2006, the Division advised Columbus Liquors, LLC, that the State ABC retired the license. [(footnote omitted).]
The Director determined that the ABC had no jurisdiction to grant a "new" license because petitioner did not file a timely renewal, as required by N.J.S.A. 33:1-12.13, N.J.S.A. 33:1-12.18 and N.J.A.C. 13:2-42.1. The Director also concluded that petitioner did not establish the elements of substantial compliance that would have excused petitioner's lack of strict compliance with the statute.
Upon denial, petitioner filed this appeal and presents the following arguments:
POINT I: THE DIRECTOR OF THE STATE DIVISION OF ABC HAS JURISDICTION TO ISSUE A NEW LICENSE UNDER THE CIRCUMSTANCES.
POINT II: APPELLANT SUBSTANTIALLY COMPLIED WITH THE LICENSING LAWS.
POINT III: THE DIRECTOR OF THE STATE DIVISION OF ABC HAS THE AUTHORITY TO ISSUE A NEW LICENSE NUNC PRO TUNC.
POINT IV: THE APPLICATION OF THE NEW JERSEY LIQUOR LICENSE LAWS BY THE JERSEY CITY ABC BOARD IN FAILING TO PROVIDE NOTICE OF THE FORFEITURE OF THE APPELLANT'S LICENSE CONSTITUTES A TAKING OF THE APPELLANT'S PROPERTY WITHOUT DUE PROCESS OF LAW IN VIOLATION OF APPELLANT'S FOURTEENTH AMENDMENT RIGHTS.
"On appeal from the decision of an administrative agency the standard of appellate review is to examine the proofs to determine whether there is sufficient or substantial credible evidence in the record to support the agency's determination." In re Heller, 73 N.J. 292, 309 (1977). The Court has further summarized the applicable standard of review as follows:
We will not reverse an agency's decision unless: (1) it was arbitrary, capricious, or unreasonable; (2) it violated express or implied legislative policies; (3) it offended the State or Federal Constitution; or (4) the findings on which it was based were not supported by substantial, credible evidence in the record.
Generally, courts afford substantial deference to an agency's interpretation of a statute that it is charged with enforcing. R & R Mktg. L.L.C. v. Brown-Forman Corp., 158 N.J. 170, 175, 729 A.2d 1 (1999). An appellate court, however, is "in no way bound by the agency's interpretation of a statute or its determination of a strictly legal issue." In re Taylor, supra, 158 N.J. at 658, 731 A.2d 35 (quoting Mayflower Sec. Co. v. Bureau of Sec., 64 N.J. 85, 93, 312 A.2d 497 (1973)). [Univ. Cottage Club of Princeton N.J. Corp. v. Env. Protection, 191 N.J. 38, 48 (2007).]
We previously discussed the authority of the Director of the ABC in Cavallaro 556 Valley Street Corp. v. Div. of Alcohol Beverage Control, 351 N.J. Super. 33 (App. Div. 2002). In Cavallaro, we noted that a liquor license is valid from July 1 of one year to June 30 of the following year. It automatically expires on June 30. Id. at 36; N.J.S.A. 33:1-26. N.J.S.A. 33:1-12.13 provides a thirty-day grace period to allow a licensee to file a renewal application with the municipal issuing authority. Ibid. Therefore, a licensee must file a renewal application no later than July 30 of the year beginning the term for which renewal is sought. Ibid.
If a licensee does not file for a renewal with the municipal issuing authority within the thirty-day grace period, the licensee may submit a late application to the Director between July 30 and September 28, pursuant to N.J.S.A. 33:1- 12.18. The pertinent language of N.J.S.A. 33:1-12.18 states that the Director may issue a new license "to a person who files an application therefor within 60 days following the expiration of the license renewal period." In order to approve such a license, the Director must determine that the applicant's failure to apply for renewal of his license was "due to circumstances beyond his control." N.J.S.A. 33:1-12.18.
In Cavallaro, we held the following:
This scheme thus provides for a renewal period up to July 30th and an additional fail safe period from July 30th to September 28th to pick up those hardship cases that could not have been filed during the regular renewal period . . . . Thus, when an application is made between July 30th and September 28th, the provision permits a new license to be issued, but the legislation does not permit renewal to occur after July 30th of the new license year. [351 N.J. Super. at 42.]
We added, however, "[o]nce the extended sixty-day period expires on September 28, and assuming there are no Constitutional implications present, the Director has no legislative authority to consider either a renewal license under N.J.S.A. 33:1-25 and N.J.S.A. 33:1-12.13 or a new license under N.J.S.A. 33:1-12.18." Id. at 43. We concluded that the Director lacks jurisdiction "[n]o matter what excuses for failing to renew in a timely fashion are asserted." Ibid.
Based on our holding in Cavallaro, supra, the Director properly determined that he lacked jurisdiction to renew or to issue what amounts to a "new" license. Petitioner argues, however, that the holding of Cavallaro is inapplicable to this case because constitutional implications permeate. More particularly, petitioner asserts that it did all that it could to effectuate the transfer of the license from Billy's Sports Bar to Columbus Liquors, LLC and that it retained a property interest in the license, forfeiture of which constitutes a taking in violation of petitioner's Fourteenth Amendment rights. Both of petitioner's assertions lack merit.
Petitioner does not explain, and we do not see, how the failure by Jersey City ABC to properly memorialize the transfer of the license from Billy's Sports Bar to Columbus Liquors, LLC implicates petitioner's Fourteenth Amendment rights. Petitioner's complaint is that as a result of the failure of the Secretary to Jersey City ABC to update its computer system, the renewal application was incorrectly sent to the previous owner, Billy's Sports Bar, rather than the new and rightful owner, petitioner. As a further result, petitioner contends its license was allowed to expire.
First, we note that the statute itself provides notice that the licensee must renew with the municipal issuing authority each year by July 30, the end of the grace period. Thereafter, it must apply within sixty days to the Director for renewal and establish that the failure to timely renew was beyond its control. The legislature gave no authority to the Director to renew after that sixty-day period.
Petitioner does not present and we do not find any authority, either in case law or statute, that requires a municipal ABC to remind a licensee that it must annually renew its license. Acknowledging that no such duty exists, petitioner contends that Jersey City ABC's action of forwarding renewal applications to each licensee, absent an obligation to do so, created a duty to send the applications with due care. In support of this position, petitioner cites Dawson v. Bunker Hill Plaza Assocs., 289 N.J. Super. 309, 327 (App. Div. 1996).
In Dawson, we stated "[t]he law is well-settled that one who undertakes to render services to another, even absent a contract, may be found liable in tort for negligently performing or failing to perform the service gratuitously assumed." Assuming arguendo that the Jersey City ABC undertook a duty to notify licensees of the renewal date and that it breached that duty such that an appropriate action might lie against it in tort, that still does not mean that an aggrieved licensee may compel the Director to renew an expired or retired license or issue a new license.
Petitioner also relies on language from Colalillo v. Malloy v. Div. of Alcoholic Beverage Control, 2 N.J.A.R. 360, 367 (Div. of Alcoholic Beverage Control 1980), where it was observed that the purpose of the present statute is not to forfeit licenses which had good cause for not being presently active but that the purpose is to require a preliminary hearing in order to ascertain whether or not there was good cause for the non-use of the license. There, as here, the objector urged that the license should not be forfeited due to an error on the part of the local issuing authority and such a forfeiture would be contrary to the statutory intent. Colalillo does not support petitioner's claim. Colalillo concerned the renewal of a license after years of non-use, not the failure to renew for a current renewal period. The statute at issue in Colalillo was not N.J.S.A. 33:1-12.18, but rather N.J.S.A. 33:1-12.39. The latter statute precludes renewal of a Class C license that has not been actively used in connection with the operation of a licensed premises within two years prior to the commencement date of the license period unless the Director "for good cause and after a hearing, authorizes a further application for one or more renewals within a stated period of two years." Under the circumstances presented in Colalillo, the Director is expressly authorized to conduct a hearing and, for good cause, renew the license in spite of the protected inactivity. The Director is not similarly authorized to grant relief from a failure to renew in a timely fashion. The holding of Colalillo is not relevant to the present case.
Petitioner's assertion that the ABC's failure to grant it a license constitutes a taking is incorrect. As the ABC notes, the expiration of the license is not a forfeiture; instead, the license was retired when it was not renewed. Moreover, petitioner's argument that it is a due process violation for the municipal ABC to have failed to notify it that the license would lapse if not renewed is incorrect. Not only is there nothing in the statute expressly or implicitly requiring such notice, but N.J.S.A. 33:1-26 also gives the notice that "[a]ll licenses shall be for a term of one year from July 1 in each year." Thus, the statute itself provides notice to a licensee that his or her license expires on a yearly basis and each licensee is afforded an opportunity to apply for renewal within the ninety days between July 1 and September 28, authorized by statute.
Petitioner further argues that a failure to notify a licensee to renew its license deprives the licensee of a valuable property right upon expiration. Although some courts have found that a liquor license gives rise to a property right protected by due process, see, e.g. Sea Girt Rest. and Tavern Owners Assoc., Inc. v. Borough of Sea Girt, 625 F. Supp. 1482, 1487-88 (D.N.J. 1986) and The Boss Co., Inc. v. Bd. of Comm'rs of Atl. City, 40 N.J. 379, 384-85 (1963), this property right is not permanent or immutable. In order to maintain this property right, the licensee must adhere to the requirements set forth in Title 33. Moreover, as the Court has recognized, a liquor license is truly a "temporary permit or privilege to pursue an occupation which is otherwise illegal." Mazza v. Cavicchia, 15 N.J. 498, 505 (1954), superseded on other grounds, N.J. Civil Serv. Assoc. v. State of New Jersey, 88 N.J. 605 (1982). Therefore, an individual that once held a license no longer retains a property right in that license if he or she fails to renew it in accordance with N.J.S.A. 33:1-12.13 and -12.18.
Having determined that the Director lacked authority to issue a license to petitioner and that the ABC did not violate his due process rights, we are left with petitioner's argument that the Director should have issued a license based on petitioner's substantial compliance with the statute. Occasionally, the Director has used substantial compliance to excuse a party's failure to strictly comply with the terms of license renewal. In re Application of Virgo's, Inc., 355 N.J. Super. 590, 594-95 (App. Div. 2002). In order for the substantial compliance doctrine to apply, the following elements must be satisfied:
(1) a lack of prejudice to the opposing party; (2) a series of steps taken to comply with the statute involved; (3) general compliance with the purpose of the statute; (4) reasonable notice of the party's claim; and (5) a reasonable explanation of why there was not strict compliance with the statute. [Virgo's, supra, 355 N.J. Super. at 595.]
Petitioner does not demonstrate any measures taken to substantially comply with N.J.S.A. 33:1-12.13 or -12.18. The measures taken to complete the transfer of the license from Billy's Sport's Bar to petitioner are not relevant to this analysis. Neither are the mistakes made by the Jersey City ABC. Petitioner must demonstrate that it took affirmative steps to substantially comply with the renewal statute. Petitioner made no inquiry and took no steps to ascertain or to enforce its status as the licensee until March 2006, nearly two years after it had purchased the license. That belated act is certainly not sufficient to qualify as "a series of steps taken to comply with the statute involved." Ibid. Petitioner has not provided sufficient evidence that he substantially complied with the statute. As a result, the Director rightfully found that petitioner did not establish the elements set forth in Virgo's, supra.