Kozal v. Neb. Liquor Control Comm'n

297 Neb. 938

902 N.W.2d 147

Stuart KOZAL, doing business as Jumping Eagle Inn, et al., appellees and cross-appellees,

v.NEBRASKA LIQUOR CONTROL COMMISSION, appellant, and Abram Neumann et al., appellees and cross-appellants.

No. S-17-441.

Supreme Court of Nebraska.

Filed September 29, 2017.

Douglas J. Peterson, Attorney General, James D. Smith, and Milissa D. Johnson-Wiles, Lincoln, for appellant.

David A. Domina, of Domina Law Group, P.C., L.L.O., Omaha, for appellees Abram Neumann et al.

Andrew W. Snyder, of Chaloupka, Holyoke, Snyder, Chaloupka & Longoria, P.C., L.L.O., Scottsbluff, for appellees Stuart Kozal, doing business as Jumping Eagle Inn, et al.

Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy, Kelch, and Funke, JJ.

Wright, J.

NATURE OF CASE

The often unremarkable process of renewing a liquor license has involved considerable controversy for the four beer retailers in this case. These retailers are located in the unincorporated border town of Whiteclay, Nebraska, which is just across the state line from the Pine Ridge Indian Reservation in South Dakota, where the sale and consumption of alcohol is prohibited. The Nebraska Liquor Control Commission (Commission) denied the retailers' license renewal applications. Pursuant to the Administrative Procedure Act (APA),¹ the retailers petitioned for review to the Lancaster County District Court, which vacated the Commission's order. The Commission and some of the citizen objectors appealed.

Our decision today does not address the merits of the parties' respective positions, but rests solely on jurisdictional grounds. To obtain judicial review of an administrative agency's order under the APA, a party must include all "parties of record"² from the agency proceeding. Under the Nebraska Liquor Control Act,³ local residents who formally object to the issuance of a liquor license (citizen objectors) are "parties of record" in the licensure proceeding before the Commission. In this case, when they sought review in the district court, the retailers failed to include the citizen objectors. Thus, the retailers did not comply with the requirements for judicial review under the APA and the district court lacked jurisdiction over the retailers' petition for review. Because the district court lacked jurisdiction, its order is void and we lack jurisdiction over this appeal from the district court. We vacate the district court's order and dismiss this appeal.

BACKGROUND

The appellees, Stuart Kozal, doing business as Jumping Eagle Inn; Arrowhead Inn, Inc., doing business as Arrowhead Inn; Clay Brehmer and Daniel Brehmer, doing business as State Line Liquor; and Sanford Holdings, L.L.C., doing business as D & S Pioneer Services (collectively the retailers), held Class B liquor licenses, authorizing them to sell packaged beer for consumption off the premises.⁴ The Commission required the retailers to submit "long form" applications to renew their liquor licenses rather than allowing them to use the "short form" automatic renewal process.

After the retailers submitted their applications, the Commission received 13 written objections from citizens of Sheridan County, protesting the renewal of the retailers' licenses. That number was later reduced to 12 when the Commission determined in a prehearing order that one of the objectors was not a resident of Sheridan County. Under § 53-133(1)(h), the filing of "objections in writing by not less than three persons residing within such city, village, or county, protesting the issuance of the license" triggers a requirement that the Commission hold a hearing on the contested applications.

The hearing was held on April 6, 2017. On April 19, the Commission voted to deny the retailers' applications and issued a written order detailing its findings of fact and conclusions of law on April 24.

The following day, the retailers filed a petition, pursuant to § 84-917 of the APA, in the Lancaster County District Court.⁵ The retailers argued that the Commission's requirement that they file "long form" applications and the denial of those applications was arbitrary and capricious and contrary to the Nebraska Liquor Control Act and the rulings of this court. But in seeking review in the district court, the retailers failed to make the citizen objectors parties to the petition for review under the APA.

The retailers simultaneously filed a motion to stay the Commission's order during the pendency of the review, which order was set to go into effect on April 30, 2017. A hearing was scheduled and held on April 26 in the Lancaster County District Court. Notice of the hearing was given only to the assistant attorney general representing the Commission. The only attorneys appearing at the hearing were those for the retailers and the Commission. The citizen objectors were not included at any point in the district court proceedings.

On April 27, 2017, the district court entered an order. In spite of holding a hearing and receiving arguments on the motion to stay, the district court ruled on the merits of the case. The district court, relying on this court's holdings in Pump & Pantry, Inc. v. City of Grand Island⁶ and Grand Island Latin Club v. Nebraska Liq. Cont. Comm. ,⁷ vacated the Commission's order and remanded the cause to the Commission with instructions to allow the retailers to renew their licenses through the "short form" automatic renewal process.

On April 27, 2017, the same day as the district court's order, the Commission appealed the order. We moved the appeal from the Nebraska Court of Appeals' docket to this court's docket.⁸

On May 26, 2017 (more than 30 days after the Commission's order but less than 30 days after the district court's order), four of the citizen objectors, represented by counsel, filed a notice of appeal from the district court's order. These citizen objectors argued that they were "parties of record" in the Commission's licensure proceeding, but were not made parties to the APA review in the district court. We docketed this appeal together with the Commission's appeal, designating the citizen objectors as appellees and cross-appellants.

ASSIGNMENTS OF ERROR

The Commission and the citizen objectors claim the district court lacked subject matter jurisdiction to enter its order vacating the Commission's order.

STANDARD OF REVIEW

Determination of a jurisdictional issue which does not involve a factual dispute is a matter of law which requires an appellate court to reach its conclusions independent from a trial court.⁹

ANALYSIS

Before reaching the legal issues presented for review, it is the duty of an appellate court to determine whether it has jurisdiction over the matter before it.¹⁰ Where a lower court lacks subject matter jurisdiction to adjudicate the merits of a claim, issue, or question, an appellate court also lacks the power to determine the merits of the claim, issue, or question presented to the lower court.¹¹ When an appellate court is without jurisdiction to act, the appeal must be dismissed.¹² However, an appellate court has the power to determine whether it lacks jurisdiction over an appeal because the lower court lacked jurisdiction to enter the order; to vacate a void order; and, if necessary, to remand the cause with appropriate directions.¹³

Under the Nebraska Liquor Control Act, an order of the Commission "granting, denying, suspending, canceling, revoking, or renewing or refusing to suspend, cancel, revoke, or renew a license" may be appealed "in accordance with the [APA]"¹⁴

Under the APA, "[a]ny person aggrieved by a final decision in a contested case" may obtain judicial review in district court.¹⁵ An APA proceeding in district court for review of a decision by an administrative agency is not an "appeal" in the strict sense of the term, meaning "the power and authority conferred upon a superior court to reexamine and redetermine causes tried in inferior courts," but, rather, is "the institution of a suit to obtain judicial-branch review of a nonjudicial-branch decision."¹⁶ In an APA review proceeding, the district court reviews the agency's decision "de novo on the record of the agency" and "may affirm, reverse, or modify the decision of the agency or remand the case for further proceedings."¹⁷

The APA provides that a party initiating review in the district court must do so "by filing a petition in the district court of the county where the action is taken" within 30 days of service of the agency's final decision.¹⁸ It further provides that "[a]ll parties of record shall be made parties to the proceedings for review."¹⁹

Where a district court has statutory authority to review an action of an administrative agency, the district court may acquire jurisdiction only if the review is sought in the mode and manner and within the time provided by statute.²⁰ We have held that the APA's requirement that a petitioner make all "parties of record" in the agency proceeding parties to the proceeding for review is necessary to confer subject matter jurisdiction on the district court.²¹

Here, the citizen objectors were "parties of record" in the Commission's proceeding. The retailers failed to include the citizen objectors in the district court's review. The result is that the district court never acquired subject matter jurisdiction to review the Commission's order.

The citizen objectors were "parties of record" in the Commission's hearing on the retailers' license applications. While the APA provides some guidance for when an agency is considered a "part[y] of record" that must be included in APA review of that agency's decision,²² it provides no guidance for when a nonagency party is a "part[y] of record." Nor does it include an all-encompassing definition of "parties of record," applicable to every type of administrative proceeding. Because the APA is a procedural statute that applies to a variety of agencies and types of agency proceedings, determining which parties qualify as "parties of record" requires looking at the nature...