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In re Application for Relief Pursuant to N.J.S.A.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


September 16, 2008

IN THE MATTER OF THE APPLICATION FOR RELIEF PURSUANT TO N.J.S.A. 33:1-12.18 FOR THE 2003-2004 LICENSE TERM MARY GODINA & JANE M. PIASCIK

On appeal from the Division of Alcoholic Beverage Control, Department of Law and Public Safety, State of New Jersey, Agency No. 09-03-3417.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: May 14, 2008

Before Judges Wefing, Parker and Kestin.

Mary Godina and Jane Piascik (licensees) were the named holders of a plenary retail consumption license for the sale of alcoholic beverages in the City of Garfield (City), last renewed for the 2000-2001 license term. Dennis P. Yackovetsky is the executor of the Estate of Mary Godina, who died on December 20, 1998.

The executor's application to the City for renewal of the license for the 2001-2002 term was not acted upon in a timely fashion. Following extensive communications between the attorney for the executor, officials of the City, and personnel of the Division of Alcoholic Beverage Control (the Division), the executor filed a renewal application for the 2002-2003 term as well, which was also not acted upon.

The Director of the Division, in his June 14, 2007 decision, from which this appeal is taken, referred extensively to the record in the matter as supplemented by customary State Police investigations. In addressing the issues, the Director characterized the municipality's failure to act timely upon the 2001-2002 and 2002-2003 applications as "de facto denial[s]" of the renewal applications, which could have been appealed to the Director, but initially were not. The Director, additionally in his decision, described a renewal application for the 2003-2004 license term as untimely filed.

The Director decided that "this license ceased to exist as of June 30, 2001 due to the Executor's failure to file timely, or indeed any, renewal applications for the 2004-2005, 2005- 2006, and 2006-2007 license terms[;]" and because the licensees did not appeal to the Director from the "de facto denial of renewal for the 2001-2002 and 2002-2003 license terms, [which they] had the option" to do. Moreover, the Director determined, the licensees had failed to obtain a Special Ruling from [him] pursuant to N.J.S.A. 33:1-12.39, due to inactivity, and also have the license extended to the Executor.

N.J.S.A. 33:1-26 and N.J.A.C. 13:2-6. The license[e] chose to follow neither of these paths. Instead, its attorney wrote letters and maintained that the license was active, while the licensee and/or Executor made statements and had evidence in their possession that it clearly was not. This choice, and not the acts of either the City or the Division, in combination with the Executor's failure to file renewal applications for the 2004-2005, 2005-2006, and 2006-2007 license terms, are what caused this license to lapse.

The Director made additional comments that, he stated, were not essential to his decision:

This licensee and/or Executor made false statements on several of its renewal applications, by stating that the license was active, when he admitted that the license was inactive, due to the City's failure to renew for several license terms. This is a violation of N.J.S.A. 33:1-25. The Executor stated that the license was active and operating from December 20, 1998, when Mary Godina died, until June 30, 2001, when its last renewal expired, although there had been no extension of the license to the Executor. This is a violation of N.J.S.A. 33:1-26 and N.J.A.C. 13:2-6. Finally, the Executor did not produce a single invoice from a wholesaler, although the Division requested that he do so. This failure, in combination with de minimis sales and de minimis sales tax paid for the years 1998-2000, leads me to the unmistakable conclusion that this license was not in fact active for those years either. Simply put, either the licensee misrepresented its volume of sales to the Division of Taxation or misrepresented that it was active on the license applications for those years.

Licensees appeal from the Director's dismissal of the executor's petition for license renewal for the years 2001-2002, 2002-2003, and 2003-2004. In their appeal, licensees rely primarily upon past administrative decisions of the Director disfavoring results that amount to forfeiture of a liquor license, and granting activation of a license even after extended periods of apparent inactivity. See also Carteret Properties v. Variety Donuts, Inc., 49 N.J. 116, 127 (1967) (quoting Lehigh Valley R.R. Co. v. Chapman, 35 N.J. 177, 188 (1961)). Citing In re Application of Virgo's, 355 N.J. Super. 590, 595 (App. Div. 2002), licensees also argue that the Director failed to apply concepts of substantial compliance in this case, or misapplied those principles.

Licensees argue that the primary fault for any license inactivity that occurred resides with the City: that licensees "wanted to spend money to renovate the licensed premises and sell the premises and the license but they were thwarted by the actions of the City of Garfield" in failing to renew the license on a timely basis. They impute bad faith and errors of omission to City officials, and refer to their frustration in seeking remedial action from the Division.

Without gainsaying any of the doctrinal bases of the Director's decision, we remand for reconsideration on the question of substantial compliance. We held, in the Virgo's case, that the "substantial compliance doctrine" applies in the context of liquor license renewals, id. at 594-97, as long as the well-accepted standards associated with application of that doctrine are met, id. at 595.

Our review of the record discloses that, while the Director applied pertinent legal concepts to the facts as he understood them, he did not expressly consider whether strict compliance with statutory requirements might be excused by the manner in which the licensees' efforts, through the executor and counsel, were dealt with by the City. The Director must also evaluate whether the conduct of licensees in pursuing their available remedies in the Division and in dealing with personnel of the Division, viewed in the substantial compliance sense, reasonably met the purposes of the statutory licensing scheme and its policy underpinnings. In sum, the Director must determine whether licensees - as a matter of fairness, even-handed administration and application of legal standards, and the avoidance of forfeiture - are entitled to an opportunity to take the practical steps necessary to realize the value of the license.

Licensees must have a suitable opportunity to be heard on any issues of fact that need to be determined before such a decision may be made. See Armstrong v. Manzo, 380 U.S. 545, 552, 85 S.Ct. 1187, 1191, 14 L.Ed. 2d 62, 66 (1965) (establishing, as a matter of due process, the right to be heard in a manner suited to the issues). The Director's decision presently before us embodies findings and conclusions of fact based on the written record. It is within the Director's province to make a first-instance determination how to effect licensees' opportunity to be heard on those remaining issues of fact that bear upon a substantial compliance determination.

Remanded for further consideration. We do not retain jurisdiction.

20080916

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