Baltimore County Licensed Beverage Ass'n v. Kwon

BYRNES, Judge. The Board of Liquor License Commissioners for Baltimore County (“the Board”) denied an application by Lee S. and Hea S. Kwon and Yorktowne Liquors, Inc., appellees, to transfer a Class A (Beer, Wine, Liquor) off-sale alcoholic beverages license to a new location. The Circuit Court for Baltimore County reversed that decision. The Baltimore County Li ¹⁸² censed Beverage Association, Inc. (“BCLBA”) appealed, presenting the following questions for review, which we have rephrased and renumbered: I. Did the Board properly consider the issue of public accommodation in the Kwons’ application to transfer their liquor license to a new location, and, therefore, did the circuit court err in ruling that public accommodation inquiry was impermissible?

II

Did the circuit court err in ruling that evidence that the numerical and population requirements of the Board’s Rule 19 were satisfied establish, in and of itself, that the transfer was necessary for public accommodation at the proposed new license site?

III

Was the Board’s denial of the Kwons’ application proper, within the Board’s expertise and sound discretion on a factual issue, and in the public’s best interest, and, therefore, did the circuit court err in substituting its judgment and reversing the Board’s decision? All of the questions presented by the BCLBA ask, at least in part, whether the circuit court erred in its decision. Yet, “our function in reviewing an administrative decision, ‘is precisely the same as that of the circuit court.’ ” Carriage Hill Cabin John, Inc., v. Maryland Health Resources Planning Comm’n, 125 Md.App. 183, 211 , 724 A.2d 745, 759 (1999) (quoting Department of Health & Mental Hygiene v. Shrieves, 100 Md.App. 283, 303-04 , 641 A.2d 899 (1994)); Department of Human Resources v. Thompson, 103 Md.App. 175, 188 , 652 A.2d 1183 (1995). We review the agency’s decision itself.

Therefore, to the extent that the questions presented ask whether the circuit court erred, we will not address the point, but will focus instead on the propriety of the agency’s action. Because questions I and II are interrelated, we will discuss them together. FACTS AND PROCEEDINGS Mr. and Mrs. Kwon are the individual licensees on the liquor license in question, for the benefit of Yorktowne Li ¹⁸³ quors, Inc., a corporation that they own. 1 For seven years, the Kwons owned and operated a liquor store in the Yorktowne Shopping Center, at 114 Cranbrook Road, in Cockeysville, in the 8th election district in Baltimore County. During the last several years, Giant Foods, the major tenant of the shopping center, moved and many other stores closed.

As a consequence, there was a substantial decrease in customer traffic to the shopping center, and a consequent decline in the Kwons’ business. In addition, in early 1998, the shopping center’s landlord told the Kwons that, to accommodate planned renovations to the shopping center, they would have to relocate their business to a storefront situated in an area of the center with even lower customer traffic. At that point, the Kwons decided that it would be best for them to move their business to another shopping center within the 8th election district. Accordingly, they filed an application with the Board to transfer their liquor license from the Yorktowne Shopping Center address to the Fairgrounds Plaza Shopping Center, at 41 West Aylesbury Road, in Timonium.

The Fairgrounds Plaza Shopping Center is a new shopping center that includes a Super Fresh grocery store and other specialty shops. It is located 1.8 miles from the Yorktowne Shopping Center. On June 21, 1999, the Board held a hearing on the Kwons’ application to transfer their liquor license from the Cockeysville location to the Timonium location. At the hearing, the Kwons presented both lay and expert testimony on the “need” for the liquor license at the new site.

Richard Darrell, the leasing agent for Fairgrounds Plaza Shopping Center, testified as an expert on real estate and commercial development in the area. Gerard Patnode also testified for the Kwons as an expert in demographics, marketing, and economics. Messrs. Darrell and Patnode indicated that Fairgrounds Plaza Shopping Center would draw patrons from a three-mile radius and that the surrounding area was heavily populated and easily ¹⁸⁴ accessible.

Mr. Patnode explained that, while the population in the area had grown substantially in the preceding decade, the number of liquor licenses had remained unchanged. He opined that the new location for the Kwons’ liquor store would serve the public better than had the old location because of changes in the center of population and in traffic flow. The Kwons also produced a petition signed by area residents who supported the liquor store at the new location. 2 The BCLBA presented the testimony of liquor license holders in the vicinity of the Fairgrounds Plaza Shopping Center along the York Road corridor. The general tenor of this testimony was that a liquor store at the new location was not needed because the current license holders were able to adequately serve the public, i.e., customers were not left waiting in long lines.

The license holders admitted, however, that they were concerned about increased competition that might result if the transfer application were granted. Moreover, there was evidence that two of the license holders had themselves inquired about leasing space at the Fairgrounds Plaza Shopping Center. The BCLBA also presented the testimony of two members of the community. The first, Edward Kaufman, stated that he did not believe there was a need for a liquor store at the new location because there were several stores in the area and there was not a long wait in these stores.

The second community'member, Thomas Ragsdale, provided advertising services for one of the local licensees who was protesting the transfer. He stated that a liquor store was not needed at the new location because lines were short and he always was waited on in a quick manner. The only other testimony presented by the BCLBA came from James Boyer, who testified in his capacity as President of the Lutherville Timonium Recreation Council (“Recreation ¹⁸⁵ Council”). 3 He testified that the Recreation Council had formally and unanimously voted to oppose the license transfer based on a lack of need for such a license. After hearing all of this testimony, the Board ruled that, while the Kwons had satisfied the other requirements for the transfer of their license, they had not shown that the transfer was necessary for the accommodation of the public.

For this reason, the Board denied the Kwons’ application. The Kwons filed a petition for judicial review in the Circuit Court for Baltimore County. While the case was pending in the circuit court, the Kwons learned that the Lutherville-Timonium Recreation Council had not formally voted to oppose the application. The circuit court reviewed affidavits on this issue from the parties and reviewed the minutes of the Recreation Council.

It concluded that Mr. Boyer’s testimony before the Board was “patently false.” As we have indicated, the circuit court reversed the decision of the Board. It concluded that the Board had applied an incorrect standard for determining whether the transfer was necessary for the accommodation of the public. Although we do not agree with the circuit court’s analysis in its entirety, we shall affirm its judgment for the following reasons. DISCUSSION STANDARD OF REVIEW The standard of review for an appeal from a local liquor licensing board is governed by Md.Code (1957, 1998 Repl.Vol., 2000 Supp.) Art. 2B, § 16-101(e), which provides, in relevant part: Upon the hearing of such appeal, the action of the local licensing board shall be presumed by the court to be proper and to best serve the public interest.

The burden of proof shall be upon the petitioner to show that the decision ¹⁸⁶ complained of was against the public interest and that the local licensing board’s discretion in rendering its decision was not honestly and fairly exercised, or that such decision was arbitrary, or procured by fraud, or unsupported by any substantial evidence, or was unreasonable, or that such decision was beyond the powers of the local licensing board, and was illegal. 4 We have stated in the past that judicial review of a decision by the Board is similar to the review of the decisions of most other agencies. Blackburn v. Board of Liquor License Commissioners for Baltimore City, 130 Md.App. 614, 623 , 747 A.2d 725, 729 (2000). If the Board’s decision is supported by substantial evidence and it committed no error of law, we must ¹⁸⁷ affirm that decision. Board of Liquor License Comm’rs for Baltimore County v. J.R. Bros., Inc., 119 Md.App. 308, 312 , 705 A.2d 16, 18 (1998); see also United Parcel Serv. v. People’s Counsel for Baltimore City, 336 Md. 569, 577 , 650 A.2d 226, 230 (1994).

If the Board’s decision is not supported by substantial evidence or if it committed an error of law, we must reverse the Board. See Art. 2B, § 16-101(e)(4) (the court may only affirm, reverse, or modify the action of the Baltimore County liquor licensing board, a court can not remand the case to that board). I. & II. The BCLBA maintains that the Board properly considered whether the transfer of the Kwons’ liquor license was “necessary for the accommodation of the public.” The Kwons reply that “necessity” is not a requirement for the transfer of a liquor license.

Section 10-503 of Article 2B of the Maryland Code sets out the requirements to transfer a liquor license. Section 10-503(a)(2) provides that a transfer, may be permitted, ... but only if: (i) An application for the transfer or sale has been made; (ii) All retail sales, amusement, admission, and withholding taxes have been paid to the Comptroller of the Treasury of the State; (iii) A bulk transfer permit is obtained if the stock of alcoholic beverages is to be transferred whether by sale, gift, inheritance, assignment, or otherwise, and irrespective of whether or not consideration is paid; and (iv) The new location or assignee is approved as in the case of an original application for such a license. Md.Code (1957, 2000 Supp.) Art. 2B § 10-508 (emphasis added). It is clear that section 10-503(a)(2) does not, on its face, require that the applicant prove that the transfer is necessary.

Subsection (a)(2)(iv) states, however, that, in order to be approved, the transfer applicant must meet the same requirements as an applicant for a new license. An applicant for a new liquor license must meet the requirements found in section 10-202. Subsection (a)(2) of ¹⁸⁸ that section states, inter alia, that the Board shall refuse an application for a new license if it determines that “[t]he granting of the license is not necessary for the accommodation of the public.” Md.Code (1957, 1998 Repl.Vol., 2000 Supp.) Art. 2B § 10-202(a)(2)(i). Thus, by requiring that a transfer applicant meet the same preconditions as a new license applicant, section 10-503 incorporates, by reference, a requirement that a transfer applicant show that the transfer is “necessary” for public accommodation.

Therefore, to obtain their transfer application, the Kwons were required to show that the transfer was “necessary for the accommodation of the public.” The BCLBA further submits that the Board applied a proper standard for determining that the Kwons’ requested transfer was not “necessary for the accommodation of the public.” The Kwons counter that the Board interpreted “necessity” incorrectly, and, therefore, did not properly apply the law to the facts in deciding against their application. In rendering its decision, the Board stated, Now we get to need and public accommodation. And [sic] after conferring with the Board, the Board feels that with the people coming in and protesting, and with the liquor license available, we feel need has not been shown. Although it is not clear from this excerpt what standard the Board used to determine whether the Kwons’ requested transfer was “necessary,” it appears, from the transcript of the hearing, that the Board employed a standard that focused, at least in part, on the effect the transfer would have on other licensees who are competitors of the Kwons.

Although the proper exercise of the Board’s power may produce a secondary effect of limiting economic competition, its power must be used for the primary purpose of protecting the public and promoting general welfare, and not to benefit and protect individual license holders. Md.Code, (1957, 1998 Repl.Vol.) Art. 2B § 1-101(a)(3), (b)(1). See also J.R. Bros., Inc., 119 Md.App. at 320 , 705 A.2d at 22 . Accordingly, the Board may not subvert the “necessity” standard to use it to shield license holders from increased competition. ¹⁸⁹ Regardless of what the precise standard was that the Board applied, on review, the Board’s interpretation of an issue of law ordinarily is not afforded any deference.

Liberty Nursing Center, Inc. v. Department of Health and Mental Hygiene, 330 Md. 433, 443 , 624 A.2d 941, 946 (1993); Food Lion v. McCall, 122 Md.App. 429, 433 , 712 A.2d 581, 582-83 (1998); Patten v. Board of Liquor License Commissioners for Baltimore City, 107 Md.App. 224, 230 , 667 A.2d 940, 943 (1995). Questions of statutory interpretation are questions of law, and an agency’s interpretation of a statute normally is given little weight in determining the judicial construction of that statute. Baltimore Bldg. & Constr. Trades Council AFL-CIO v. Barnes, 290 Md. 9, 14 , 427 A.2d 979, 982 (1981) (holding that a labor union council is not an “interested person” within the meaning of Md.Code (1957, 1979 Repl.Vol.) Art. 100, § 101(c), pertaining to a hearing before the Commissioner of Labor and Industry); Food Lion, 122 Md.App. at 433 , 712 A.2d at 582-83 .

Generally, an agency’s determination on a question of law is subject to the substituted judgment test—the reviewing court substitutes its judgment for that of the agency if the court’s analysis of the legal issue is different from the agency’s analysis. Carnage Hill Cabin John, 125 Md.App. at 214-15 , 724 A.2d at 761 . The agency’s interpretation of a statute is given consideration, however, if the agency’s interpretation has been consistent and long-standing, was contemporaneous with the passage of the statute, and was the product of a reasoned and focused analysis. Baltimore Gas & Elec.

Co. v. Public Service Comm’n, 305 Md. 145, 161 , 501 A.2d 1307, 1315 (1986); see also McCullough v. Wittner, 314 Md. 602, 612 , 552 A.2d 881, 886 (1989). Here, the structure of the liquor board system—a network of local, independent boards—militates against consistency of interpretation and instead creates a substantial likelihood that differing interpretations of the term “necessary” by various local boards will result. Furthermore, there is reason to conclude from the