Rojas v. Board of Liquor License Commissioners

Opinion by Wright, J. This appeal arises from a judgment of the Circuit Court for Baltimore City entered on June 23, 2015, which affirmed the decision of appellee, the Board of Liquor License Commissioners for Baltimore City (“Liquor Board”), finding that appellants, Pedro Almazo Rojas, Carlos Navarro Sotelo, and Amigos Bar, Inc. t/a Amigos Bar violated Rule 4.05(a) “Prohibited Hours” and Rule 4.18 “Illegal Conduct” of the Rules and Regulations for the Baltimore City Liquor Board (“Liquor Board Rules”). Accordingly, the circuit court upheld the sanctions imposed by the Liquor Board, which included a four-day suspension, a $3,000.00 fine, and a $125.00 administrative fee. 1 On July 10, 2015, appellants timely appealed. Questions Presented Appellants ask: 1. Did the Liquor Board err in finding [appellants] guilty of violating Liquor Board Rule 4.05(a) Prohibited Hours, where [appellants were] not open past 1:00 a.m.

Eastern Standard Time on November 2, 2014? 2. Did the Liquor Board err in finding [appellants] guilty of violating Liquor Board Rule 4.18 Illegal Conduct, where two patrons were dancing together on November 2, 2014? ⁴⁷⁷ 3. Did the Liquor Board deny [appellants] a fair hearing by reviewing letters ex parte from two city councilmen and a community association official requesting that the Liquor Board impose the maximum penalty allowed? We answer “no” to the first and third questions, and as to the second question, the Liquor Board concedes that it erred in finding that appellants violated Rule 4.18.

As such, we uphold the Liquor Board’s finding of a Rule 4.05(a) violation, reverse its finding of a Rule 4.18 violation, and remand the case to the circuit court with instructions to remand to the Liquor Board so that it can reassess the sanctions accordingly. Facts Amigos Bar is a tavern business located at 400 South Eaton Street, Baltimore, Maryland 21224, for which Rojas and Sotelo served as the liquor licensees. Appellants 2 hold a Baltimore City Class D Liquor License authorizing the sale of beer, wine, and liquor at Amigos Bar. The liquor license permits alcohol sales “at any time except from [ ] 1:00 A.M. until 6:00 A.M. daily and no sales on Sunday from 1:00 A.M. until 6:00 A.M. Monday unless such hours shall be further extended or limited by law.” In addition, Amigos Bar has a Certificate of Occupancy specifying that it may “continue to use 1st [floor] of premises for a tavern with out [sic] live entertainment ....” On November 2, 2014, at 1:23 a.m.

Eastern Daylight Time (“EDT”), Baltimore City Police Lieutenant William Colburn and Baltimore City Liquor Inspector Tommy Karanikolis were conducting random checks of liquor licenses throughout the Southeastern District of Baltimore City when they noticed that Amigos Bar appeared to be open. Lt. Colburn knew the time restrictions on Amigos Bar’s license from previous experience, 3 and both men knew that on that night, Daylight ⁴⁷⁸ Saving Time would end at 2:00 a.m. EDT, at which time Eastern Standard Time (“EST”) would resume. 4 Inspector Karanikolis approached Amigos Bar first.

He saw a bouncer outside and a sign indicating that the tavern was open. Upon entering the building, Inspector Karanikolis observed about 13 or 14 people with drinks. Although he did not see anyone actually drinking their beverages, he noted that the patrons had drinks inches away from them, and he saw people paying for drinks as they left the bar. Lt.

Colburn entered the tavern approximately two minutes later and observed the same: numerous alcoholic drinks on the bar and in the bar area, about 12 to 15 patrons seated around the bar or standing, many with drinks inches away from them. He also saw two individuals dancing together to loud music. 5 ⁴⁷⁹ Lt. Colburn then “ordered the establishment to close, turn the music off and have patrons exit the establishment.” By notice dated November 4, 2014, the Liquor Board cited appellants with violation of Rule 4.05(a), for being open and operating Amigos Bar past 1 a.m., and Rule 4.18, for having “live entertainment” (ie., “2 people dancing on the first floor area of the establishment while music was being played”), on November 2, 2014. The Liquor Board held a hearing on December 11, 2014, at which time appellants, represented by counsel, were tasked with showing why its liquor license should not be suspended or revoked.

With regard to Rule 4.05(a), counsel for appellants argued that Amigos Bar complied with the code because the statute “makes [no] clarification” regarding Daylight Saving Time and “as long as they close by the second one o’clock they have complied with the statute.” Counsel further argued that there was no violation of Rule 4.18 because patron dancing, as opposed to a “dance performance,” did not fall within the definition of “live entertainment.” Following the hearing, the chairman of the Liquor Board rejected appellants’ arguments, “rule[d] that the facts are clear” and “found the licensee responsible,” thereby recommending a “closing of four days” and a “$3,000 fine because ... it’s a subsequent offense.” 6 The remaining two commissioners on the Liquor Board agreed. One commissioner noted that despite Amigos Bar being located in a district that allows dancing and live entertainment, appellants did not “get approval from zoning to have dancing at the location.” In addition, the other commissioner stated that, with regard to the daylight saving time issue, “it’s a clever argument, but ... it’s clear that there was a violation.” ⁴⁸⁰ Counsel for appellants argued for mitigation of the penalty, prompting the Liquor Board to refer to three letters that it had received on the day of the hearing, over appellants’ objection. Two of the letters were from Baltimore City Councilmen Brandon M. Scott and James B. Kraft, respectively, and one was from Kevin L. Bernhard, a Liquor Board member, on behalf of the Highlandtown Community Association, Inc. All three letters asked the Liquor Board to consider or impose the maximum penalty, which at that time included revocation or suspension of the license, and/or “a fine of not more than $3,000.” See Md. Code (1957, 2011 Repl. Vol.) Art. 2B, §§ 10-401(a)(2) & 16-507; Liquor Board Rule 1.01 et seq.

On December 12, 2014, appellants filed a petition for judicial review. Following a hearing on June 11, 2015, the circuit court affirmed the Liquor Board’s decision. This appeal followed. Standard of Review Judicial review of the decision of a local licensing board is governed by Md. Code (2016), § 4-901 et seq. of the Alcoholic Beverages Article (“AB”). 7 Pursuant to AB § 4-905(a), “the court shall presume that the action of the local licensing board was proper and best served the public interest.” In addition, the petitioner has the burden of proof to show that the decision of the local licensing board being reviewed was against the public interest and either not honestly and fairly arrived at, arbitrary, procured by fraud, unsupported by substantial evidence, unreasonable, beyond the powers of the board, or illegal.

AB § 4-905(b); see also Bd. of License Comm’rs For Prince George’s Cnty. v. Glob. Exp. Money Orders, Inc., 168 Md.App. 339, 346 , 896 A.2d 432 (2006). We have “consistently explained that judicial review of a decision by the Board is similar to review of decisions by most other administrative agencies.” Blackburn v. Bd. of Liquor License Comm’rs for Baltimore City, 130 Md.App. 614 , ⁴⁸¹ 623, 747 A.2d 725 (2000) (citations omitted).

When reviewing administrative decisions, we look through the circuit court, although applying the same standard of review, and evaluate the decision of the agency. Cnty. Council of Prince George’s Cnty. v. Zimmer Dev. Co., 444 Md. 490, 553 , 120 A.3d 677 (2015) (citation omitted).

In so doing, we are limited to determining if there is substantial evidence in the record as a whole to support the agency’s finding and conclusions, and to determine if the administrative decision is premised upon an erroneous conclusion of law. Stated differently, [o]ur primary goal is to determine whether the agency’s decision is in accordance with the law or whether it is arbitrary, illegal, and capricious. In applying the substantial evidence test, we must decide whether a reasoning mind reasonably could have reached the factual conclusion the agency reached. Matthews v. Hous.

Auth. of Baltimore City, 216 Md.App. 572, 582 , 88 A.3d 852 (2014) (internal citations omitted). Moreover, “[w]hen reviewing factual issues, we must review the agency’s decision in the light most favorable to the agency since its decision is prima facie correct and carries with it the presumption of validity.” Bd. of License Comm’rs for Prince George’s Cnty., 168 Md.App. at 345 , 896 A.2d 432 (citation omitted). “When deciding issues of law, ... our review is expansive, and we may substitute our judgment for that of the agency if there are erroneous conclusions of law,” employing a de novo standard of review. Matthews, 216 Md.App. at 582 , 88 A.3d 852 . But, [e]ven with regard to some legal issues, a degree of deference should be accorded the position of the administrative agency.

Therefore, an administrative agency’s interpretation and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts. As the [Court of Appeals] noted, the expertise of the agency in its own field should be respected. Similarly, we defer to an agency’s interpretation of its own regulations. ⁴⁸² Young v. Anne Arundel Cnty., 146 Md.App. 526, 569 , 807 A.2d 651 (2002) (internal citations omitted). Only “when statutory language is clear and unambiguous” should a reviewing court give no weight to an agency’s interpretation and application of the statute it administers.

Macke Co. v. Comptroller of the Treasury, 302 Md. 18, 22-23 , 485 A.2d 254 (1984). Discussion I. Prohibited Hours Appellants do not dispute that Amigos Bar was open at 1:23 a.m. on November 2, 2014, and that Daylight Saving Time ended on that day. 8 Appellants argue, however, that because their liquor license and the applicable statute “speak in terms of when the Licensee must close as opposed to when the Licensee may remain open,” then Amigos Bar was “in compliance ... so long as it closes by 1:00 A.M. (eastern standard time).” Accordingly, they ask us to answer this “purely legal question” by determining, de novo, that appellants were required to stop selling alcohol only “by the second 1:00 A.M.,” or during the changeover from Daylight Saving Time to standard time, at 1 a.m. EST, The Liquor Board found that appellants violated Liquor Board Rule 4.05, which at that time provided that “[n]o licensee shall permit any person to consume alcoholic beverages on the licensed premises during hours when such sales are prohibited by law.” In turn, appellants’ liquor license permitted alcohol sales “at any time except from [ ] 1:00 A.M. until 6:00 A.M. daily and no sales on Sunday from 1:00 A.M. until 6:00 A.M. Monday ” At the time of the incident at ⁴⁸³ issue, Eastern Daylight Time was the standard time in effect and, thus, alcohol sales were prohibited beginning at 1 a.m.

EDT, on November 2, 2014. Because it is undisputed that Amigos Bar remained open for at least 23 minutes past that time, and that there was evidence of the sale, service, or on-premises consumption of alcohol during that time, we agree with the Liquor Board that appellants violated Rule 4.05. We explain further. Under Maryland law, “[t]he standard time in the State shall be that of the 75th meridian of longitude west from Greenwich,” better known as the Eastern Time Zone.

Md. Code (2014), § l-301(a) of the General Provisions Article; 49 C.F.R. § 71.4 (establishing the boundaries of the