Parrish v. Bd. of Liquor License Commissoners for Balt. City

IAN PARRISH, et al. v. BOARD OF LIQUOR LICENSE COMMISSONERS FOR BALTIMORE CITY

No. 2647

COURT OF SPECIAL APPEALS OF MARYLAND

September Term, 2015

June 29, 2018

Circuit Court for Baltimore City

Case No. 24C15002297

UNREPORTED

Berger, Reed, Salmon, James P. (Senior Judge, Specially Assigned), JJ.

Opinion by Reed, J.

*This is an unreported opinion, and it may not be cited in any paper, brief, motion, or other document filed in this Court or any other Maryland Court as either precedent within the rule of stare decisis or as persuasive authority. Md. Rule 1-104.

In this appeal, Ian and Charles Parrish (collectively "Appellants") challenge the decision of the Circuit Court for Baltimore City, which affirmed a decision of the Board of Liquor License Commissioners for Baltimore City ("the Board") to nullify an application to transfer a liquor license. Appellants' application to transfer a liquor license was conditionally approved; however, when the transfer was not completed, as directed by what is currently MD. CODE ANN., ALCO. BEV. §12-1705, the transfer application was nullified and the liquor license was thereby considered expired. Appellants filed a Petition for Judicial Review in the Circuit Court for Baltimore City, where the decision was affirmed. They filed a timely appeal and present three questions for our review, which we rephrase for clarity:

1. Did the Board err in its interpretation of Article 2B §10-503(d)(4)?

2. Did the Board err in concluding that the license had expired pursuant to Article 2B §10-504(d)?

3. Did the Board err in failing to recuse Commissioner Moore from the proceedings?

We answer each question in the negative and affirm the decision of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

Appellants Ian Parrish and Charles Parrish, applicants on behalf of Baltimore Eagle, LLC, applied for a transfer of ownership of a class BD-7 liquor license¹ to be operated at the same location as the previous owners: 2020/2022 North Charles Street, Baltimore, MD, 21201. The transfer application was conditionally approved on December 6, 2012, subjectto obtaining inspections, approvals, and permits from various governmental agencies necessary to open and operate the tavern.

After purchasing the property, Appellants closed the business and undertook extensive renovations necessary for the business to operate. By letter dated February 22, 2013, Appellants notified the Board that due to the necessary repairs the transfer could not be completed within 180 days. Thereafter, Appellants met with the Board over two dozen times over the next two years to apprise the Board of the status of the project. On March 12, 2015, the Board conducted a hearing regarding the pending transfer of the license. Appellant, Ian Parrish, testified that they had spent over $150,000 in repairs and advised the Board of the timeline of the various stages and hurdles to re-opening the business. Several witnesses testified both in support and opposition of Appellants' business, including members and presidents of community associations.

At the hearing, the Board informed Appellants that Article 2B §10-503(d)(4)² would be interpreted such that a license transfer must be completed within 180 days of approval, and if not, the application would be nullified. Given that the business had been closed for over two years, the Board also questioned whether the underlying license had expired. After some debate, the Board agreed to postpone a finding on that issue so that Appellants could submit a memorandum of law on the appropriate interpretation of §10-503(d)(4) -whether the statute is mandatory or directory. The Board continued the hearing to April 9, 2015.

Appellants submitted the memorandum, arguing that the statute should be interpreted as directory, not mandatory, in light of the practice and policy of previous Boards. Appellants cited five cases from the prior liquor board and eight cases from the current Board, where the Board granted extensions to complete liquor license transfers beyond the 180-day deadline. The memorandum urged the Board to continue the practice of granting extensions when the applicants have shown efforts toward completing the transfer.

The April 9, 2015, hearing began with Appellants moving for Commissioner Moore to be recused, alleging that she made comments on social media regarding the pending matter. Commissioner Moore explained that she had not discussed the merits of the issues in front of the Board, and that her comments were limited to a separate policy issue not involved in Appellants' case. Later during the hearing, the Board admitted into evidence testimony by State Senator George Della, in an unrelated hearing, for the purpose of establishing the legislative history of §§10-503 and 10-504. This testimony included the fact that Senator Della sponsored the bill adding the 180-day rule to the statute and that, in his view, the 180-day transfer deadline was intended to be mandatory.

At the conclusion of the hearing, the Board voted unanimously that: (1) Article 2B §10-503(d)(4) is a mandatory provision and that because the license was not transferred within 180 days after the Board approved the transfer, the transfer application was nullified, (2) that as a result of the nullification of the transfer application, the liquor license hadexpired due to non-use under Article 2B §10-504(d), and (3) Commissioner Peterson-Moore would not be recused from the proceedings.

Appellants filed a Petition for Judicial Review of the Board's decision with the Circuit Court for Baltimore City. On December 22, 2015, the court affirmed the decision of the Board. Appellants timely filed this appeal.

DISCUSSION

A. Parties' Contentions

Appellants argue that Article 2B §10-503(d)(4) should be interpreted as directory, not mandatory, because the statute states: "A transfer of any license shall be completed not more than 180 days after the Board approves the transfer."³ Despite the use of the word "shall," Appellants contend that "from [the statute's] inception . . . all prior and the then current Liquor Board applied a directory construction." Specifically, Appellants cite advice of counsel dated April 12, 2006, in which the Assistant Attorney General advised the Board to apply the rule in a directory manner.⁴ Further citing the advice of counsel, Appellants argue that the statute should also be interpreted as directory because there is no sanction specified for non-compliance. See Woodfield v. West River Improvement Ass'n, Inc., 395 Md. 377 (2006).

Appellants also contend that the only issue before the Board was the validity of the pending transfer application, not the validity of the liquor license itself. Assuming the statute requires mandatory construction, Appellants insist that the only result would be nullification of the transfer application, not the license. Appellants maintain that nullification of the liquor license would require a factual determination of how long the premises has remained closed or ceased active alcoholic beverage business operations per Article 2B §10-504(d).⁵ Appellants conclude that since "no facts were made regarding this issue," the Board "exceeded its authority" in finding that the license had expired.

Lastly, Appellants argue that Commissioner Moore's failure to recuse herself requires a remand before an impartial Board. Appellants contend that Commissioner Moore's impropriety was evidenced by, among other things, her status as past president and current member of the Charles Village Civic Association, which opposed the transfer, and her social media activity. Appellants suggest that Commissioner Moore's participation "has so tainted the proceedings that a reasonable observer could not conclude that she avoided the appearance of impropriety." Regan v. Bd. Of Chiropractic Examiners, 335 Md. 397 (1999).

Conversely, the Board argues that §10-503(d)(4) is unambiguous and dictates a mandatory, not directive, deadline of 180 days. The Board urges this Court to begin and end our interpretation of the statute with its plain language and find that the word "shall" is mandatory. The Board asserts that "nothing in the language of the transfer provision orany related provision of Article 2B" suggests that the 180-day deadline is merely directory. Rather, the Board argues, "[w]hen the Legislature commands that something be done, using words such as 'shall' or 'must' . . . the obligation to comply with the statute or rule is mandatory." State v. Green, 367 Md. 61, 82 (2001). Even if past Boards allowed uncompleted transfers to extend beyond 180 days, the Board argues that "these informal accommodations do not supersede the clear language of the statute."

The Board contends that the underlying liquor license also expired by operation of law after the transfer application was nullified. Noting that a liquor license expires 180 days after a license holder closes the business or ceases active alcohol business operations, the Board argues that the license expiration was automatic. Art. 2B §10-504(d)(2).

The Board also maintains that Commissioner Moore should not have been recused from the proceedings because her online comments do not show any evidence of bias or impartiality. In fact, the Board contends that Commissioner Moore only discussed the "200-foot rule" which had no bearings on the issues in this case.⁶ Any other reason presented by Appellants that Commissioner Moore should have been recused, the Board asserts, is waived because Appellants failed to raise them before the Board at the hearing. Alternatively, the Board argues that if it did err in failing to recuse Commissioner Moore, the error was harmless.

B. Standard of Review

By statute, the action of a local liquor board is presumed to be proper and places the burden of proof upon the licensee to show that the decision complained of was arbitrary, fraudulent, unsupported by substantial evidence, illegal, or against the public interest. Art. 2B §16-101(e)(1)(i)....