J. MANDELL CORPORATION, d/b/a ) FOXXY LAIDY, )
vs. ) CASE NO. 82-525
Respondent. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, R. L. Caleen, Jr., held a formal hearing in this case on April 1, 1982, in Miami, Florida.
For Respondent: James N. Watson, Jr., Esquire
Whether petitioner's application for transfer of an alcoholic beverage license should be granted, or denied on the ground that there is a pending disciplinary action against the license holder.
This proceeding commenced when petitioner R. J. Mandell Corporation, d/b/a Foxxy Laidy ("petitioner") , requested a hearing on respondent Division of Alcoholic Beverages and Tobacco's ("DABT's") disapproval of its application for transfer of an alcoholic beverage license because [t]here is currently a pending and undetermined administrative case on this license.
On February 25, 1952, DABT referred this case to the Division of Administrative Hearings for assignment of a hearing officer. Hearing was thereafter set for April 1, 1952.
At hearing, petitioner called Captain John Harris and Gene Willner as its witnesses; DABT recalled Captain Harris and called Lazava Caram as its witnesses. Joint Exhibit 1/ Nos. 1 through 9 were received into evidence.
The parties submitted memoranda of law and proposed findings of fact by May 17, 1982. No transcript of the hearing has been prepared.
There are two underlying issues in this case: (1) whether petitioner is entitled to a transfer of the license by operation of law--because of DABT's alleged failure to act on the application within 90 days of its filing, and (2) whether there are sufficient grounds to deny the application for transfer.
FINDINGS OF FACT I.
On May 26, 1981, petitioner filed with DABT's Miami office an application for transfer of alcoholic beverage license No. 23-276, Series 4-COP. (Testimony of Harris, Caram; Ex. 1.)
Upon discovering that the fingerprints of Richard J. Mandell, chief corporate officer of petitioner, were not on file and did not accompany the application, DABT notified Mr. Mandell, no later than June 24, 1981, that his fingerprints would be required. 2/ (Testimony of Harris, Caram.)
In response, Mr. Mandell furnished the requested fingerprints to DABT on June 24, 1981. At that time, DABT treated the license application as complete. (Testimony of Harris, Caram.)
By letter dated September 22, 1981, DABT notified petitioner that its application was disapproved because of a pending administrative case against the license. (Ex. 2A.)
II.
Denial of Petitioner's Application
When petitioner filed its application for transfer of the alcoholic beverage license in question, administrative proceedings to revoke or suspend the license had been instituted and were pending against the licensee, Astral Liquors, Inc., d/b/a "Foxxy Laidy," a bar and lounge. (Prehearing Stipulation.)
These disciplinary proceedings were instituted because of the conviction of Eugene Willner--Astral Liquors, Inc.`s sole stockholder--of a federal felony unrelated to operation of the Foxxy Laidy bar and lounge. (Testimony of Willner.)
By written contract dated April 10, 1981, petitioner agreed to purchase from Astral Liquors, Inc., the Foxxy Laidy, located at 6507 Southwest 40th Street, Miami, Florida, for $175,000. Closing was contingent upon DABT approving transfer of the alcoholic license to petitioner. (Ex. 3.)
DABT disapproved petitioner's application to transfer the license solely on the ground that there were pending proceedings against the license holder. DABT does not question whether the sale of Foxxy Laidy to petitioner is a bone fide, arms-length transaction or the qualifications of petitioner to hold an alcoholic beverage license. (Testimony of Harris; Ex. 2A, Ex. 8, Ex. 9.)
DABT presented no evidence in support of denying petitioner's application other than there were pending administrative proceedings against the licensee. It did not explain or offer any reasons why, in this case, it should exercise its discretion by denying petitioner's application. To the extent its decision rests on non-rule policy considerations, it did not explicate them or subject them to scrutiny at hearing.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this proceeding. Section 120.57(1), Fla. Stat. (1951).
Section 561.32, Florida Statutes (1981), provides for the transfer of alcoholic beverage licenses under specified conditions:
Licenses issued under the provi- sions of the Beverage Law shall not be transferable except as follows:
When a licensee has made a bona fide sale of the business which he is so
licensed to conduct, he may obtain a trans- fer of such license to the purchaser of the business, provided the application of the purchaser is approved by the division in accordance with the same procedure provided for in ss. 561.17, 561.18, 561.19, and
561.65.
No one shall be entitled as a
matter of right to a transfer of a license or interest in a license or to a change of executive officers or directors when the division has notified the licensee in writ- ing that revocation or suspension proceed- ings have been or will be brought against the license; and the transfer of such license or financial interest in such license or the change of executive officers or directors in such case shall be within the discretion of the division. (e.s.)
The Administrative Procedure Act ("APA), Chapter 120, Florida Statutes (1981) , enforces its discipline on all state agencies, unless specifically exempted. Section 120.60(2) imposes minimum requirements on the licensing process:
(2) When an application for a license
is made as required by law, the agency shall conduct the proceedings required with reason- able dispatch and with due regard to the rights and privileges of all affected par- ties or aggrieved persons. Within 30 days after receipt of an application for a license, the agency shall examine the appli- cation, notify the applicant of any apparent
errors or omissions, and request any addi- tional information the agency is permitted by law to require. . . Every application for license shall be approved or denied within 90 days after receipt of the origi- nal application or receipt of the timely requested additional information or correc- tion of errors or omissions unless a shorter period of time for agency action is provided
by law. . . . Any application for a license not approved or denied within the 90-day or shorter time period, within 15 days after conclusion of a public hearing held on the application, or within 45 days after the recommended order is submitted to the agency and the parties, whichever is latest, shall
be deemed approved and, subject to the sat- isfactory completion of an examination, if required as a prerequisite to licensure, the license shall be issued. .
APA Section 120.57(1) proceedings are de novo in nature; they are "intended to formulate final agency action, not to review action taken earlier and preliminarily." McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1977); Department of Transportation v. J.W.C. Company, Inc. , 396 So.2d 778 (Fla. 1st DCA 1981)
Moreover, in Section 120.57 proceedings, an "agency's nonrule policy is fair game for a party's challenge both in the public and in his private interest," McDonald, supra at 583; such proceedings serve to "expose, inform and challenge agency policy and discretion. "Id. 3/ And they culminate in issuance of agency orders which explicate "policy within the agency's exercise of delegated discretion." Id. In McDonald, supra at 584, the court cited, with approval, the principle that there are three due process checks in the APA which prevent arbitrary agency action:
. . . the requirements that reasons be stated for all action taken or omitted, that reasons be supported by "the record", and that specific judicial review proce- dures allow the courts to remedy defects of substance.
Failure of an agency to expose and elucidate its reasons for discretion action will result in remand or reversal by the appellate court. Id. at 554.
When an agency withholds its policy from rulemaking, as DABT has done here, it is required to "explain the policy behind each decision," Albrecht v. Department of Environmental Regulation, 353 So.2d 883, 886-887 (Fla. 1st DCA 1977) , cert. den., 359 So.2d 1210 (Fla. 1978); it must "explicate and defend [its] policy repeatedly" in individual adjudicatory proceedings. Hill v. School Board of Leon County, 351 So.2d 732, 733 (Fla. 1st DCA 1977), cert. den., 359 So.2d 1215 (Fla. 1978); it must create a record foundation of evidence supporting the accuracy of every factual premise and the rationality of every policy choice. Anheuser-Busch, Inc. v. Department of Business Regulation, 393 So.2d 1177, 1152 (Fla. 1st DCA 1951).
Finally, while applicants normally have the burden of proving entitlement to the requested license, J.W.C. Company, supra at 787, the opposing party also has a burden to maintain. A license denial must have an evidentiary basis. 4/
Measured by these standards, it is concluded: (1) that petitioner is not entitled to the license because of alleged untimely agency action; but (2) that the application should be approved because of the failure of DABT to expose and elucidate reasons for its discretionary denial of the application.
Timeliness of Agency Action.
The record establishes that DABT denied the application within 90 days after the application was complete. Consequently, petitioner is not entitled to a license, by default, pursuant to Section 120.60(2), Florida Statutes (1981).
Lack of Evidentiary Basis for DABT's Exercise of Discretion and Any Underlying Non-Rule Policy.
Section 561.32(1) grants DABT discretion to approve or disapprove the transfer of a license when there are charges pending against the licensee. Instead of adopting standards by rule, to guide the exercise of its discretion, DABT has chosen to implement its policy through adjudicatory orders. But here, it has not presented the required "record foundation" for its exercise of discretion; it has not shown the rationality of its choice, the reasons why the application should be denied, rather than issued--when either action is permissible under the statute. See, Anheuser-Busch, Inc. supra.
Petitioner relies on a prior DABT adjudicatory decision, Division of Alcoholic Beverages and Tobacco v. Singapore J.V. , Inc., Case No. 80-2174 (Final Order dated Jan. 21, 1982) , to support its claim to transfer of the license. (Ex. 4A-B.) It contends that in Singapore, DABT allowed the licensee-
-whose qualifications had become impaired--to sell his interest in the license prior to hearing, thereby mooting the issues in the pending disciplinary proceeding; but that here, DABT takes a different position.
DABT's action in Singapore does not dictate the result in this case. An agency may deviate from its prior practice or precedent as long as its action is adequately explained. See, Section 120.68 (12)(b) , Fla. Stat. (1981) . But explanation of the agency's exercise of discretion is what is missing in this case.
Here, petitioner presented a prima facie case in support of its application. The evidentiary burden then shifted to DABT to justify its proposed denial: that burden was not sustained. See, J.W.C. Company, supra. The application for transfer should, therefore, be granted.
To the extent the parties' proposed findings of fact are incorporated in this recommended order, they are adopted; otherwise, they are rejected as unsupported by the evidence or unnecessary to resolution of the issues presented.
