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North Star Saddle Brook Management, L.L.C v. Governing Body of the Township of Saddle Brook


March 22, 2011


On appeal from a Final Agency Decision of the Director, Division of Alcoholic Beverage Control, Appeal No. 7245.

Per curiam.


Submitted February 15, 2011 --

Before Judges Yannotti and Skillman.

North Star Saddle Brook Management, L.L.C. (North Star), appeals from a final determination of the Director of the Division of Alcoholic Beverage Control (Director), which affirmed the denial by the Township of Saddle Brook (Township) of its application for issuance of a new plenary retail liquor consumption license. We affirm.

The relevant facts are essentially undisputed. Saddle Brook Hospitality, L.L.C. (SBH), is the owner of a hotel in the Township. North Star is an affiliate of SBH and is responsible for day-to-day management of the hotel. North Star entered into an agreement with Saddle Brook Hobevco, Inc. (Hobevco), under which Hobevco provides alcoholic beverage service at the hotel through Hobevco's liquor license.

On October 14, 2005, North Star submitted an application to the Township for a new plenary retail liquor consumption license. On December 12, 2006, the Township's Council conducted a hearing in the matter and voted to deny the application. The Council's action was memorialized in a resolution that the Council approved on December 14, 2006.

North Star appealed the Township's action to the Division, which referred the matter to the Office of Administrative Law for a hearing before an Administrative Law Judge (ALJ). On June 23, 2009, the ALJ issued an initial decision in which he concluded that the Township's determination was unreasonable and should be reversed.

In his decision, the ALJ found that the Township had not established that there were too many liquor licenses in the municipality; the Township had failed to show that denial of the application was warranted in the interest of the public's safety or welfare; North Star had adequately explained its need for a new license because it had no ownership interest in Hobevco's license; and the Township had improperly considered Hobevco's future use of its license in rendering its decision.

The Director issued a final determination in the matter on February 2, 2010, rejecting the ALJ's initial decision and affirming the Township's denial of North Star's application. The Director found that, under the circumstances, the Township had no legal obligation to consider North Star's application.

In his decision, the Director stated that, before a new license is issued, the municipality must determine, by ordinance or resolution, that it is in the public interest to do so. Then, the Township is required to afford all interested parties an opportunity to apply for the license or bid upon the license at a public sale. Because the Township had not passed a resolution calling for the issuance of the license, and had not sought applications or bids for the license, the Township had no obligation to consider North Star's application or grant it a license.

The Director also stated that, assuming the Township had the authority to consider North Star's application, it acted properly in denying it. The Director noted that Hobevco has a license for the proposed license location. The Director stated that, "[i]f a new license were granted, the existing license would be deactivated and 'pocketed' until such time as the present owner is able to sell it." The Director concluded that, under the circumstances, North Star did not show that it needed the license, or that the Township needs another license.

On appeal, North Star argues that it was entitled to the issuance of the new license under the hotel/motel exception in N.J.S.A. 33:1-12.20. North Star also argues that the Township acted arbitrarily, capriciously and unreasonably in denying its application for the license because there was no evidence indicating that issuance of the license would not be in the public interest.

The scope of our review in an appeal from a final decision of an administrative agency is strictly limited. Circus Liquors, Inc. v. Governing Body of Middletown Twp., 199 N.J. 1, 9 (2009). We must sustain the agency's action in the absence of a "'clear showing' that it is arbitrary, capricious, or unreasonable or that it lacks fair support in the record[.]" Ibid.

In reviewing a final decision of an administrative agency, we must consider whether: 1) the agency followed the law; 2) there is sufficient credible evidence in the record to support the agency's factual findings; and 3) whether the agency clearly erred in rendering a decision that could not have been reasonably made based on the relevant factors. Id. at 10. Furthermore, we must give "substantial deference" to the Director's actions in enforcing the State's liquor regulations. Ibid.

The New Jersey Alcoholic Beverage Control Act (the ABC Law), N.J.S.A. 33:1-1 to -97, governs the manufacture, distribution and sale of liquor in this State. In 1947, legislation was enacted which limits the number of new plenary or seasonal retail consumption licenses that may be issued in a municipality. L. 1947, c. 94, §§ 1 to 9 (codified at N.J.S.A. 33:1-12.13 to -22). These statutory provisions have since been revised in certain respects not relevant to this dispute.

N.J.S.A. 33:1-12.14 presently limits the number of new plenary and seasonal retail consumption licenses that may be issued in a municipality, according to its population, as determined by the "most recent estimates" of the federal census bureau or the "official federal decennial counts." If the governing body of the municipality is authorized to issue the license, and determines to do so, it must adopt a resolution authorizing the issue of the license. N.J.S.A. 33:1-19.1.

Accordingly, a municipality may not issue a new plenary or seasonal retail license until its governing body first determines that such a license should be issued and adopts a resolution so stating. Because the Township's governing body never adopted a resolution calling for the issuance of the license, the Township was not required to consider North Star's application or establish a factual basis for its denial.

The fact that North Star was seeking a license for use in a hotel does not compel a contrary result. Although N.J.S.A. 33:1-12.20(a) provides that "[n]othing in this act" precludes a municipality from issuing a new license to a person who operates a hotel, the "act" referred to in this statute is the legislation initially enacted in 1947 and codified in N.J.S.A. 33:1-12.13 to -12.22, rather than the entire ABC Act.

Indeed, the phrase "[n]othing in this act" appears in N.J.S.A. 33:1-12.15 to -12.20 and each of these statutes provides an exception to the limitations on the number of retail consumption licenses in N.J.S.A. 33:1-12.14. Moreover, L. 1947, c. 94, § 10 states that "[t]his act" shall take effect May 15, 1947, providing a further indication that the "act" referred to in N.J.S.A. 33:1-12.20 is L. 1947, c. 94.

Therefore, the hotel/motel exemption does not relieve a municipality of the statutory duty to pass a resolution finding that the issuance of a new license is warranted. Furthermore, the fact that a license could be issued to a hotel or motel does not mean that the application or bid process required by N.J.S.A. 33:1-19.1 and N.J.S.A. 33:1-19.4 would be impractical or unnecessary. The operators of other hotels or motels in the Township might be interested in obtaining the license if it were issued. Alternatively, other persons or entities might be interested in constructing a new hotel or motel if it could be operated with a liquor license.

North Star argues, however, that the Township acted unreasonably and without sufficient evidence when it denied its application. North Star contends that the record is "completely devoid" of any facts upon which the Township could conclude that the denial of the license was necessary to protect the public health, safety or welfare. North Star further contends that it established that it was fully qualified for the license.

These contentions are without merit. Because the Township did not have legal authority to act on the application, its action cannot be challenged on the ground that there was insufficient evidence to support it. Moreover, even if the Township had been required to consider the application on its merits, the Director correctly determined that the Township had a sufficient basis for refusing to issue the license to North Star.

Under the ABC Act, municipalities have been vested with "very broad measures of discretion in passing upon applications for" liquor licenses, subject to review by the Director. Borough of Fanwood v. Rocco, 33 N.J. 404, 412-14 (1960). The Legislature invested local governing bodies "with a high responsibility" and "wide discretion" in the field of liquor control, intending that "their principal guide [would] be the public interest." Lyons Farms Tavern, Inc. v. Mun. Bd. of Alcoholic Beverage Control of Newark, 55 N.J. 292, 303 (1970).

It is undisputed that Hobevco was selling alcoholic beverages at North Star's hotel pursuant to a management agreement. Therefore, North Star did not establish that it required the license for its operations. The Director properly determined that, under the circumstances, the Township did not act arbitrarily or unreasonably in refusing to issue the license to North Star.

We have considered North Star's other contentions and find them to be of insufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).



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