Retroactive, Inc. v. Nebraska Liquor Control Comm. , 298 Neb. 936 ( 2018 )

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
04/20/2018 01:09 AM CDT
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
R etroactive, Inc., a Nebraska corporation, doing
business as Funkytown, appellee, v. Nebraska Liquor
Control Commission, an agency of the State of
Nebraska, appellant, and City of Omaha,
a political subdivision of the State
of Nebraska, appellee.
___ N.W.2d ___
Filed February 9, 2018. No. S-17-202.
1. Judgments: Jurisdiction: Appeal and Error. Determination of a juris-
dictional issue which does not involve a factual dispute is a matter of
law which requires an appellate court to reach its conclusions indepen-
dent from a trial court.
Appeal from the District Court for Lancaster County: Darla
S. Ideus, Judge. Vacated and dismissed.
Douglas J. Peterson, Attorney General, and Milissa Johnson-
Wiles for appellant.
Burke J. Harr and Justin D. Eichmann, of Houghton, Bradford
& Whitted, P.C., L.L.O., for appellee Retroactive, Inc.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, K elch, and
Funke, JJ.
Heavican, C.J.
INTRODUCTION
The Nebraska Liquor Control Commission (Commission)
denied the issuance of a Class C liquor license to applicant
Retroactive, Inc., doing business as Funkytown, for premises
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
located in Omaha, Nebraska. Retroactive sought review in
the district court, arguing that the decision of the Commission
(1) was arbitrary and capricious and unsupported by evidence
and (2) exceeded the authority of the Commission. The City
of Omaha (City) filed a motion to dismiss for failure to name
the citizen objectors as “necessary parties” to the petition
for review. The district court denied the City’s motion and
entered an order reversing the Commission’s decision to deny
the Class C liquor license. The Commission appeals. We hold
that the district court did not have subject matter jurisdiction,
because the Commission did not name the citizen objectors as
parties of record to the petition for review.
BACKGROUND
Factual Background
On October 1, 2015, Retroactive applied for a Class C liquor
license for a nightclub located at 1516 Jones Street in Omaha
(application). Nine objectors filed citizen protests against the
application. All of the objectors reside in a residential build-
ing that shares a common wall with the proposed nightclub.
On December 17, the Commission held a hearing concerning
the application.
At the hearing, the City called three witnesses. First, an
assistant city attorney for the City testified that Retroactive’s
owner previously applied for a liquor license for the same
location and that the application was denied. The attorney
asked the court to take administrative notice of the file and
order of denial for that license. Second, David Hecker, an
objector, testified that he objected to the application, because
the business proposal was inconsistent with the current status
of the neighborhood and the application was identical in all
material respects to the one that had previously been denied
by the Omaha City Council and the Commission. Third, Billy
Coburn, an objector, testified that “the nature of the commu-
nity in the neighborhood . . . has changed over the last two
years since prior clubs have existed at 1516 Jones.” Coburn
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
stated that issuance of the liquor license “will devalue the
surrounding properties, affect the safety of the neighborhood,
and the adjoining walls were not addressed for sound con-
trol.” The two objectors who testified were not represented
by counsel.
Procedural Background
Pursuant to Neb. Rev. Stat. § 53-131 (Cum. Supp. 2016),
on October 1, 2015, Retroactive made an application for the
Commission’s issuance of a Class C liquor license for the
location at 1516 Jones Street in Omaha. On November 3, the
Omaha City Council held a hearing pursuant to Neb. Rev.
Stat. § 53-134 (Cum. Supp. 2016) and passed a resolution to
recommend denial of the application. On November 5, the
Commission received a recommendation from the Omaha City
Council to deny the application. On December 17, pursuant to
Neb. Rev. Stat. § 53-133 (Cum. Supp. 2016), the Commission
conducted a hearing on the application, and on January 8, 2016,
the Commission entered an order denying the application.
On January 19, 2016, Retroactive filed a petition for review
under the Administrative Procedure Act (APA) in the district
court. In the petition, Retroactive argued that (1) the January
8 order was arbitrary and capricious, (2) the January 8 order
was unsupported by evidence, and (3) the Commission’s deter-
mination outlined in the January 8 order exceeds its statu-
tory authority.
The City filed a motion to dismiss on February 24, 2016,
arguing that the citizen objectors were “necessary parties” to
the action and were not made a party to the petition for review
under the APA. The district court filed an order on May 9,
overruling the City’s motion to dismiss. The court found that
“[t]he plain language of § 53-1,115(4) limits its application to
‘for purposes of this section.’” Therefore, the court found that
“the citizen protesters who provided written protests and those
who testified at the hearing before the Commission were not
‘parties of record’ as that term is defined by the APA.”
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
The district court filed an order on January 24, 2017, revers-
ing the Commission’s decision to deny the application. The
district court remanded the matter to the Commission to issue a
Class C liquor license. The Commission appeals. The City did
not file a notice of appeal.
ASSIGNMENTS OF ERROR
The Commission assigns, restated, that the district court
erred in (1) failing to dismiss the petition on appeal for lack of
subject matter jurisdiction, because Retroactive failed to name
Hecker as a “necessary party” to its review under the APA,
and (2) reversing the decision of the Commission to deny a
Class C liquor license to Retroactive.
STANDARD OF REVIEW
[1] 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.1
ANALYSIS
Citizen Objectors as
Parties of R ecord
We note that the Commission uses the terms “necessary
party” and “party of record” interchangeably in its brief. We
read the Commission’s use of the term “necessary party”
to mean “party of record” as that term is used in Neb. Rev.
Stat. §§ 53-1,115 (Reissue 2010) and 84-917 (Reissue 2014).
The Commission argues that the district court erred in failing
to dismiss the petition on appeal for lack of subject matter
jurisdiction due to the failure of Retroactive to name Hecker
as a party on appeal according to §§ 53-1,115 and 84-917.
Retroactive contends that the Nebraska Liquor Control Act’s
statutory definition of “party of record” in § 53-1,115 does not
1
Kozal v. Nebraska Liquor Control Comm., 297 Neb. 938, 902 N.W.2d 147
(2017).
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
extend to the APA and that under Shaffer v. Nebraska Dept.
of Health & Human Servs.,2 the citizen objectors are not par-
ties of record, because the citizen objectors were not treated
as parties by the hearing officer at the hearing held before
the Commission.
Both parties cite to Shaffer, in which this court deter-
mined that a Medicaid provider was a “party of record” at
a Department of Health and Human Services hearing, and
therefore a party of record pursuant to § 84-917(2)(a)(i) in
the subsequent appeal to the district court. This court rea-
soned that the Medicaid provider was a “party of record” at
the hearing, because the provider (1) was required by federal
law to be a party to the hearing and (2) participated in the
hearing and was treated as a party by the hearing officer. In
determining whether the provider was treated as a party, this
court stated that the provider “appeared at the fair hearing
to explain and defend its decision.”3 In addition, the pro-
vider’s “representatives presented evidence, cross-examined
witnesses, entered into stipulations, and presented arguments”
and “[a]t the beginning and conclusion of the hearing, the
hearing officer referred to [the Medicaid recipient] and [the
Medicaid provider] as the ‘parties.’”4 This court accordingly
vacated the judgment, because “the failure to make [the
Medicaid provider] a party to the appeal deprived the district
court of jurisdiction.”5
We recently decided Kozal v. Nebraska Liquor Control
Comm.6 In Kozal, issued subsequent to the district court’s
review of the Commission’s decision in this case, we held that
“the definition of ‘party of record’ in § 53-1,115(4) controls for
2
Shaffer v. Nebraska Dept. of Health & Human Servs., 289 Neb. 740, 857
N.W.2d 313 (2014).
3
Id. at 751, 857 N.W.2d at 322.
4
Id.
5
Id. at 752, 857 N.W.2d at 323.
6
Kozal v. Nebraska Liquor Control Comm., supra note 1.
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
purposes of the APA’s requirement that ‘[a]ll parties of record
shall be made parties to the proceedings for review’ in a review
of the Commission’s proceedings.”7 Thus, this court concluded
that “the definition in § 53-1,115(4) is the controlling defini-
tion of ‘party of record’ for purposes of APA review of the
Commission’s proceedings.”8
This court then addressed the application of Shaffer and
analyzed the underlying facts to determine whether “the citi-
zen objectors in this case acted as and were treated as parties
in the Commission’s hearing on the retailers’ license renewal
applications.”9 We held that
[b]ecause citizen objectors are defined by the Nebraska
Liquor Control Act as “part[ies] of record” in the
Commission’s liquor license application proceedings and
because the citizen objectors acted as and were treated
as parties in the Commission’s hearing, we conclude that
they are “parties of record” for purposes of the APA.10
Ultimately, this court held that the failure to include the citizen
objectors meant that the district court never acquired subject
matter jurisdiction to review the Commission’s order.11
In Kozal, prior to analyzing the application of Shaffer to the
facts, we held that the definition of “party of record” under
§ 53-1,115(4) applied for purposes of the APA. We observe
that contrary to our decision in Kozal, it is not necessary to
also analyze the underlying facts to determine whether citi-
zen objectors “acted as and were treated as parties.”12 Shaffer
involved a Medicaid provider at a Department of Health
and Human Services hearing and is inapplicable to the cur-
rent facts.
7
Id. at 948, 902 N.W.2d at 155.
8
Id. at 948, 902 N.W.2d at 156.
9
Id. at 952, 902 N.W.2d at 158.
10
Id. at 953-54, 902 N.W.2d at 158-59.
11
Id.
12
Id. at 953, 902 N.W.2d at 158.
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
We define “parties of record” solely based on statute, not on
the factual examination conducted in Shaffer. To the extent that
Kozal suggested that citizen objectors in a proceeding before
the Commission must do things such as submit pretrial witness
and exhibit lists, file and respond to prehearing motions, call
witnesses at the hearing, make stipulations, object to evidence,
and examine and cross-examine witnesses in order for a court
to have subject matter jurisdiction, such was dicta that we
decline to extend to this case.13
In the case before us, § 53-133(1)(b) requires that the
Commission receive “objections in writing.” Nine objectors
filed citizen protests against the application. At the start of
the hearing before the Commission, all nine forms submitted
by the citizen objectors, including the objection submitted by
Hecker, were offered and accepted into evidence.
The forms upon which the citizen objectors filed their
protests against the application state that “[i]f after hearing
the license is approved costs for the hearing will be assessed
against the protestants.” The statutory authority for this provi-
sion, § 53-1,115(3), states in pertinent part that “[u]pon final
disposition of any proceeding, costs shall be paid by the party
or parties against whom a final decision is rendered.” As a
result, all of the citizen objectors who submitted such forms
have incurred a monetary risk by being invested in the outcome
of the case.
Furthermore, the forms also require the citizen objectors
to state their names and addresses. The citizen objectors sign
the form, affirming that the information they have provided is
available to the public.
The Commission argues on appeal that Hecker filed a citizen
protest as an “individual protesting the issuance” of a liquor
license through “objections in writing.”14 We agree and con-
clude that Hecker is a “party of record” under § 53-1,115(4).
13
See id.
14
Brief for appellant at 9-10. See § 53-133(1)(b).
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Nebraska Supreme Court A dvance Sheets
298 Nebraska R eports
RETROACTIVE, INC. v. NEBRASKA LIQUOR CONTROL COMM.
Cite as 298 Neb. 936
We hold that Retroactive’s failure to name Hecker precluded
the district court from acquiring subject matter jurisdiction
review of the Commission’s order.
The Commission’s first assignment of error has merit.
District Court’s R eversal
of Commission’s Final
Determination
Because we find that Hecker was a “party of record” under
the APA and that the district court did not have subject mat-
ter jurisdiction, we need not address the Commission’s second
assignment of error.
CONCLUSION
Retroactive failed to include all parties of record in the
Commission proceeding when it sought review in the district
court. The district court never acquired subject matter juris-
diction. The district court’s order reversing the Commission’s
decision is vacated, and the cause is remanded with directions
to dismiss.
Vacated and dismissed.
Wright, J., not participating.