vs. ) CASE NO. 84-4187
Respondent. )
Pursuant to notice a formal hearing was conducted on April 8, 1985, at Miami, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing as follows:
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
FOR RESPONDENT: Guy K. Stewart, Jr., Esquire
Subsequent to the hearing Liquid Assets, Inc., requested an extension of time within which to submit its proposed recommended order, which request was not opposed by the Division of Alcoholic Beverages and Tobacco (hereinafter "DABT"). Thereafter both parties filed proposed recommended orders containing proposed findings of fact and proposed conclusions of law. Careful consideration has been given to both of the proposed recommended orders in the preparation of this Recommended Order. 1/
This is a case in which the DABT proposes to deny an application for an alcoholic beverage license filed by Liquid Assets, Inc., on the grounds that Liquid Assets does not have, and never has had, a location for the license. Liquid Assets does not deny the fact that it has never obtained a location for the license, but asserts that the DABT is estopped from denying the license application because of certain representations made to Liquid Assets by agents or representatives of the DABT.
Based on the stipulations and admissions of the parties, on the exhibits received in evidence, and on the testimony of the witnesses at the hearing, I make the following findings of fact:
Liquid Assets, Inc., is a Florida corporation. The principals in the corporation are Lawrence Freedman and Joel Silverstein. Freedman is the president/secretary. Silverstein is the vice-president/treasurer. Freedman and Silverstein each hold 50 percent of the shares of Liquid Assets, Inc.
In September of 1981, Freedman and Silverstein filed a Preliminary Application For New Quota Alcoholic Beverage License in order to participate in a random selection public drawing for 30 additional quota alcoholic beverage licenses in Dade County, Florida, pursuant to Section 561.20, Florida Statutes. The application form for the preliminary application included language in the instructions which specifically advised the applicants that if they were successful in the drawing they would be required to file a second application in which they would have to show, inter alia, "proof of right" of occupancy."
The drawing was conducted on June 17, 1982, and Freedman and Silverstein were selected as number 22. The DABT notified them of this shortly thereafter. On October 28, 1982, Freedman executed an Application For Alcoholic Beverage License which was filed with the DABT on November 24, 1982. Between the time of the drawing and the time of the execution of the last mentioned application, the DABT advised Freedman that his proposed location was unsuitable because a large number of other applicants were proposing to use that same location. Accordingly, when Freedman filed the application on November 24, 1982, he showed a different location for the business than that which had appeared on the preliminary application. The application filed on November 24, 1982, also showed that Freedman did not have right of occupancy at the proposed premises because the premises were still under construction and Freedman did not have a lease commitment.
The DABT requested that Liquid Assets, Inc., waive the 180-day period within which the DABT is normally required to process an application and by letter dated November 10, 1982, which was received by the DABT on November 24, 1982, Freedman advised the DABT: "We hereby waive the 180 day period required for processing our application and grant you such additional time as you deem necessary to complete your examination of our applications."
A DABT investigator asked Freedman to send a written statement of the applicant's plans for opening the business, and by letter dated December 22, 1982, Freedman advised the DABT: "Our landlord plans to complete construction in August 1983 and the leasehold improvements should be complete by October 31, 1983. We anticipate to open our store on November 1, 1983."
In late April of 1983, Freedman had one or more discussions with DABT Investigator Oliva. During those discussions Freedman told Oliva about delays Freedman was experiencing with the construction of the proposed business location. Investigator Oliva told Freedman he did not think this would be a problem, but went on to suggest to Freedman that Freedman write to the DABT and request that his license be held in escrow pending completion of the construction of the proposed business location. On May 1, 1983, Freedman followed this advice and wrote to the DABT as follows: "pursuant to your request I hereby request that you place my license upon issuance into escrow until such time that you inspect and approve the location of my business."
Later in May someone from the DABT called Freedman regarding his fingerprints and on May 25, 1983, the DABT received Freedman's fingerprints. Shortly thereafter, on June 21, 1983, Oliva's supervisor, Sgt. Herrara, recommended that the application be approved with the license in escrow. This recommendation was reviewed by the DABT's Bureau of Licensing and Records. On July 20, 1983, the Assistant Chief of that Bureau wrote to the Miami area District Supervisor and stated that the Liquid Assets, Inc., license would not be issued until the building was completed and inspected and until the Bureau of Licensing and Records received an executed copy of the lease. The memorandum of July 20, 1983, concluded with a statement that the file was being "held in suspense."
The file was "held in suspense" because the DABT did not have any procedure for putting a new license application in escrow. The significance of being in "suspense" was that the application was at that time incomplete and was awaiting some further action by either the applicant or the DABT.
Sometime in September of 1983, Freedman spoke to Oliva and told him that due to construction delays, the proposed business premises would not be ready until May of 1984. He also advised Oliva that he still did not have a lease. This information was communicated by Telex to the Bureau of Licensing and Records on September 21, 1983. By memorandum dated November 8, 1983, the Assistant Chief of the Bureau of Licensing and Records advised the District Supervisor of the Miami area office as follows regarding the Liquid Assets, Inc., application: "The above referenced application is being held in suspense pending completion of the building and receipt of an executed lease. Please advise applicant."
In the meantime, on or about August 30, 1983, Freedman was advised by the manager of the development at the location of the proposed premises that due to further construction delays, it would be September of 1984 before the proposed premises would be ready for occupancy. Freedman intended to communicate this information to Oliva, but failed to do so. 2/
By letter dated November 21, 1983, the District Supervisor for the Miami area advised Freedman as follows regarding the Liquid Assets, Inc., application: "The above referenced application is being held in suspense pending completion of the building and receipt of an executed lease."
On May 22, 1984, an assistant to the District Supervisor telephoned Freedman to inquire about the status of the proposed business premises.
Freedman advised her that the building had final financing and that the building was expected to be completed by September of 1984. He also advised her that the landlord was not ready to sign a lease.
During June and July of 1984, Investigator Pfitzenmaier had several telephone conversations with Freedman about the status of the proposed business location. Each time she spoke to Freedman he told her that he still did not have a lease on a business location and that it would be another three or four months before he could have one. Investigator Pfitzenmaier spoke to the Chief of the Bureau of Licensing and Records about this matter and he told her that Freedman had better get a location within two or three weeks or the application would be denied. On July 11, 1984, Investigator Pfitzenmaier called Freedman to inquire about the status of the proposed business premises. Freedman advised her that the premises he had been planning to use were still under construction and that the owners were not yet ready to issue leases. He also stated that those premises would not be ready until at least October 1, 1984. Freedman also stated that he had another location in mind that he would probably switch to. That location was also under construction and would not be ready for a few
months. Investigator Pfitzenmaier told Freedman that the Chief of Licensing had said that if Freedman did not have an executed lease at this time, the application would be disapproved. Freedman's response was that he could not possibly obtain a lease and zoning approval within even three months.
Investigator Pfitzenmaier reported the substance of this conversation to the Assistant Chief of the Bureau of Licensing and Records by memorandum dated July 11, 1984.
By letter dated July 25, 1984, the DABT advised Liquid Assets, Inc., that its license application had been disapproved. The stated reason for the disapproval was as follows: "Application incomplete in that applicant has failed to provide documentation evidencing that he has secured a location for the license."
At no time did any agent or representative of the DABT advise Freedman that he had an indefinite period of time within which to make arrangements for a business location. At no time did any agent or representative of the DABT advise Freedman that he could wait until September of 1984 to obtain a business location.
CONCLUSIONS OF LAW
Based on the foregoing findings of fact and on the applicable statutes, rules, and court decisions, I make the following conclusions of law.
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Sec. 120.57, Fla. Stat.
The foregoing findings of fact incorporate the substance of the majority of the findings proposed by both parties. I have, nevertheless, rejected many of the details in the findings proposed by Liquid Assets, Inc., on the grounds that they are subordinate, cumulative, immaterial, or unnecessary. See Wong v. Career Service Commission, 371 So.2d 530 (Fla. 1st DCA 1979). For the same reasons I have rejected some of the details in the findings proposed by the DABT. Further, the last two sentences of paragraph 12 of the Liquid Assets, Inc., proposed findings are rejected on the grounds that they are predicated on a misunderstanding of the evidence. Substantial portions of paragraphs 14, 15, and 16 and all of paragraph 17 of the Liquid Assets, Inc., proposed findings are rejected on the grounds that they are contrary to the greater weight of the evidence. Paragraph 22 of the Liquid Assets proposed findings is rejected because it is based solely on Freedman's speculation and not on competent substantial evidence. Paragraph 23 of the Liquid Assets proposed findings is rejected because it is immaterial and irrelevant to the resolution of the issues in this case.
Section 561.19(2), Florida Statutes, provides for the manner in which the random selection drawing will be held and then goes on to provide:
Subject to this selection process, if an applicant is found qualified as provided by the Beverage Law, a license shall be granted. However, it shall not be issued until and unless the applicant establishes to the satisfaction of the director that the premises to be licensed qualify under the Beverage Law.
Section 561.19(4), Florida Statutes, provides as follows, in pertinent part:
The granting of licenses pursuant to subsection (2) or subsection (3) shall not be governed by the provisions of s. 120.60. The granting of any such license shall occur no later than 180 days after a drawing is held pursuant to notice published in the Florida Administrative Weekly. . . .
In Florida the elements of estoppel are rather well settled. They were recently described as follows in Fiorentino v. Dept. of Admin. Div. of Retirement, 10 FLW 140 (Fla. 1st DCA 1985):
In Florida equitable estoppel consists of four elements: (1) a representation by the party estopped to the party claiming the estoppel as to some material fact; (2) which representation is contrary to the condition of affairs later asserted by the estopped party; (3) a reliance upon the representation by the party claiming the estoppel; and (4) a change in the position of the party claiming the estoppel to his detriment, caused by the representation and his reliance thereon.
Travelers Indemnity Co. v. Swanson, 662 F.2d 1098 (5th Cir. 1981).
Where the party against whom estoppel is sought is the State, a few additional considerations come into play. First, "the instances are rare when the doctrine will be so applied." See Jefferson National Bank v. Metropolitan Dade County, 271 So.2d 207 (Fla. 3d DCA 1972); Bryant v. Peppe, 238 So.2d 836 (Fla. 1970); North American Company v. Green, 120 So.2d 603 (Fla. 1959). The Florida courts have also held that the application of the doctrine of estoppel against the State "requires exceptional or special circumstances and some positive act on the part of some officer of the sovereign." Gay v. Inter County Tel. & Tel. Co., 60 So.2d 22 (Fla. 1952). The Florida courts have also held that mere oversight or forbearance or inaction over a period of time "is hardly a basis for estoppel." Dept. of Revenue v. Hobbs, 368 So.2d 367 (Fla. 1st DCA 1979). To similar effect see North American Company v. Green, supra; Lawrence Nali Construction Co. v. Dept. of Revenue, 366 So.2d 27 (Fla. 1st DCA 1978).
And from Greenhut Construction Company v. Knott, Inc., 247 So.2d 517 (Fla. 1st DCA 1971), we learn the following:
The Law of this state generally recognizes the proposition that although the sovereign may under certain circumstances be estopped, such circumstances must be exceptional and must include some positive act on the part of some officer of the state upon which the aggrieved party had a right to rely and did rely to its detriment. Under no circum - stances may the state be estopped by the unauthorized acts or representations of its officers.
Yet another aspect of the doctrine of estoppel as applied against the State is addressed by the following from State v. Hadden, 370 So.2d 849 (Fla. 3d DCA 1979):
The burden of proving an estoppel rests on the party invoking it, and every fact essential to estoppel must be proved. (Citations omitted) One claiming estoppel on the basis of another's silence or omission must show he justifiably relied thereon to his prejudice, and that his reliance thereon and conduct to his prejudice was intended or reasonably anticipated by such other person. Ennis v. Warm Mineral Springs, Inc., 203 So.2d 514, 520 (Fla. 2d DCA 1967).
*** *** *** Moreover, estoppel will not be applied
against the State for an omission to act, but will be applied only in special circumstances which must include "some positive act on the part of some [official] of the state upon which the aggrieved party had a right to rely and did rely to its detriment." (Citations omitted)
Liquid Assets, Inc., does not quarrel with the notion that an indispensable prerequisite to the issuance of the alcoholic beverage license it seeks is for it to obtain a location for the proposed business. Nor is there any dispute about the fact that Liquid Assets, Inc., does not now have, and never has had, the right to occupancy of any business premises for the operation of the proposed business. The only material point in disagreement is whether the facts proved at hearing are sufficient to estop the DABT from denying the application without giving the applicant at least one more chance. The principal thrust of the argument in support of the estoppel theory is stated as follows at page 9 of the Liquid Assets, Inc., proposed recommended order:
With respect to the actual elements of estoppel themselves, there was an omission by the government (the Division), to wit: a failure on its part to either deny the Respondent's application or to warn the Respondent in a timely manner that it would have to act promptly to secure an alternative location.
The argument quoted above fails for several reasons. First, absent some specific statutory provision so providing, a government agency is under no duty to warn an applicant of the likely consequences of any actions or inactions of the applicant. See Fiorentino v. Dept. of Admin., Div. of Retirement, supra. There is no such statutory duty applicable here. Second, it is well established, as noted in the cases cited and quoted from above, that a government omission or forbearance to act is an insufficient basis for invocation of the doctrine of estoppel against the State. Here the Liquid Assets, Inc., application was vulnerable to denial the day it was filed because it showed on its face that the applicant did not have a right of occupancy to any premises in which to conduct the proposed business. The fact that the DABT waited patiently for over a year and a half to see if the applicant was going to
take any action to cure the defect in the application is hardly occasion for the invocation of an estoppel against the DABT. Unlike good wine and cheese, bad applications do not improve with age. No action or failure to act on the part of the DABT was the cause of the original insufficiency in the application and the long delay in the DABT's action on the application in no way created any impediment to any action by Liquid Asserts, Inc., to cure the insufficiency.
Liquid Assets, Inc., simply failed to take any action to cure the insufficiency in its application.
As an alternative basis for invoking an estoppel against the DABT, the applicant argues that Liquid Assets, Inc., "was assured that [it] need do nothing else until the building was completed and the lease executed." This argument also fails for several reasons. First, Liquid Assets, Inc., did not prove all of the factual predicates to this argument. (See paragraph 13 of the findings of fact, above, which is contrary to the urgings of Liquid Assets, Inc.) Although Freedman was advised that the Liquid Assets, Inc., application had been placed in "suspense," that statement certainly did not have the effect of communicating to Liquid Assets, Inc., that it need do nothing else. Second, there is nothing in the record in this case which establishes clearly that Liquid Assets, Inc., actually relied on any statements from personnel at the DABT. And, finally, there is no showing that any such reliance, if any there was, was reasonable under the circumstances. As in the case of Greenhut Construction Company v. Knott, Inc., supra, here there is no proof of an authorized representation by an officer of the State upon which the applicant had a right to rely, and did in fact rely.
Based upon all of the foregoing, I recommend that the Director of the Division of Alcoholic Beverages and Tobacco enter a final order in this case denying the Liquid Assets, Inc., application for a new quota license.
DONE AND ORDERED this 15th day of July, 1985, at Tallahassee, Florida.
MICHAEL M. PARRISH
Filed with the Clerk of the Division of Administrative Hearings this 15th day of July, 1985.
1/. The designations of the parties in this case were reversed when this case was originally opened. Liquid Assets should have been listed as Petitioner and the DABT as Respondent. Rather than change the case style at this late date in
the proceedings, I have left it as it has been to avoid injecting any confusion in identifying the case at a later date. This reversal of designation in the case style did not create any confusion in the minds of the parties or the Hearing Officer respecting which party had the burden of proof.
2/ There is conflicting evidence on this point. The greater weight of the evidence is contrary to Freedman's testimony that he did communicate this information to Oliva. Oliva has no recollection of receiving this information. Further, Olive appeared to be quite meticulous with regard to making a record of anything of significance, but there is no DABT record of his having received this information.
Thomas A. Klein, Esquire Staff Attorney
Department of Business Regulation 725 South Bronough Street Tallahassee, Florida 32301
Guy K. Stewart, Jr., Esquire 6105 Granada Boulevard
