Pr Pub, LLC D/B/A the Quarry v. Iowa Alcoholic Beverages Division ( 2014 )

IN THE COURT OF APPEALS OF IOWA
No. 13-1016
Filed April 16, 2014
PR PUB, LLC d/b/a THE QUARRY,
Plaintiff-Appellant,
vs.
IOWA ALCOHOLIC BEVERAGES DIVISION,
Defendant-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Scott County, Mark J. Smith,
Judge.
PR Pub, LLC, d/b/a The Quarry, appeals from the district court’s decision
affirming the Iowa Alcoholic Beverages Division’s denial of its liquor license
renewal application. AFFIRMED.
Dennis D. Jasper, Bettendorf, for appellant.
Thomas J. Miller, Attorney General, and John R. Lundquist, Assistant
Attorney General, for appellee.
Considered by Doyle, P.J., Bower, J., and Goodhue, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2013).
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DOYLE, P.J.
PR Pub, LLC, d/b/a The Quarry, appeals from the district court’s decision
affirming the Iowa Alcoholic Beverages Division’s denial of its liquor license
renewal application. We affirm.
I. Background Facts and Proceedings
Patrick Rupp is the sole owner of PR Pub, LLC. PR Pub, LLC does
business as The Quarry, a Davenport bar/tavern. In 2010, Rupp applied for a
liquor license for The Quarry. The Iowa Alcoholic Beverages Division (the ABD)
issued a liquor license to The Quarry in April 2010.
The ABD subsequently received information from an anonymous source
indicating Rupp’s liquor license application may have contained
misrepresentations. The ABD referred the complaint to the Division of Criminal
Investigation. An investigation revealed Rupp’s application failed to disclose his
criminal history. Specifically, in the application, Rupp was asked whether he had
ever been “convicted of a felony offense in Iowa or any other state” or “charged,
arrested, indicted, convicted or received a deferred judgment for any violation of
any state, county, city, federal, or foreign law.” Even though he had been
convicted of possession of a controlled substance (cocaine) in 2004, trespass in
2002, and operating while intoxicated in 1993, Rupp answered “No,” “No,” and
“None” to the questions pertaining to this information on his application.
Rupp filed a license renewal application for The Quarry in 2011. Again,
Rupp answered “No,” “No,” and “None” to the questions pertaining to his criminal
history, despite the fact Rupp was arrested for operating while intoxicated in April
2010 and received a deferred judgment for that charge in August 2010. One day
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after the renewal application was submitted,1 Rupp attempted to amend his
application in regard to his criminal history.2
In June 2011, the ABD denied Rupp’s renewal application upon its
determination Rupp “failed to disclose criminal history in the application which is
a misrepresentation of material facts” such that he did not “meet the standards of
‘good moral character’” to hold a license in Iowa.
The ABD’s decision was affirmed on appeal by an administrative law
judge in October 2011 and the ABD administrator in February 2012. The
administrator’s decision on appeal stated:
The Licensee asserts that the false answers provided on the
criminal history screens of the initial and renewal electronic license
applications were unintentional. Licensee testimony suggests that
the criminal history questions were answered incorrectly because of
careless reading.
[However, t]he questions contained on the criminal history
screens of the electronic license application are clear and easily
understood . . . .
When filing the initial electronic licensing application on
March 5, 2010, the Licensee should have disclosed the 2004
possession of controlled substance (cocaine) charge and
conviction, the 2002 trespass charge and conviction, the 1994
theft—4th degree charge and dismissal, and the 1993 operating
while intoxicated charge and conviction. Based on the review of
the records, hearing testimony and other information reviewed by
the Administrator, the Licensee did not disclose any criminal history
on the licensing applications. The evidence is undisputable that the
Licensee filed the renewal electronic licensing application on March
3, 2011, and the Licensee should have divulged the 2010 charge
and deferred judgment for operating while intoxicated, especially
when considering the deferred judgment was within the previous 7
months.
1
The ABD deems the applications “filed” at the time they are signed and submitted.
2
According to Rupp, his office manager filed the license applications for The Quarry on
his behalf. Rupp asserts after the application renewal was filed, he “immediately
remembered that he had some criminal conduct on his record” and he then “immediately
contacted ABD to correct his answers.”
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The fact the Licensee did not disclose any criminal history on
the renewal licensing application, and even after the Licensee
submitted an amended criminal history for the renewal of the liquor
license on March 4, 2011, the multiple charges and their
dispositions were omitted. The Licensee is responsible to complete
the liquor license application by providing accurate responses to all
questions and the Licensee failed to on both the initial and renewal
electronic licensing applications.
Furthermore, the Licensee rationalized the incorrect criminal
history answers by claiming that there was a failure to confirm the
responses provided by those authorized to complete the forms
before the applications were filed with the ABD. The applicant
signature screen for the initial and renewal electronic licensing
applications contained specific language, alerting the applicant that
their signature declares all information contained in the application
is true and correct and that misrepresentation of material facts in
the application is a crime and grounds for denial of the license or
permit under Iowa law. On March 5, 2010, and March 3, 2011,
Rupp signed and acknowledged those terms. Consequently, the
Licensee was put on notice on two separate occasions that failure
to comply could result in the denial of the license.
The licensing process is reliant on licensees being forthright
in their responses to all questions contained in the licensing
application. What is in question in this particular case is whether
the Licensee has the requisite “good moral character” for renewal
of the license, not whether the omitted charges would have been
grounds for denial of the liquor license. The Licensee actions failed
to prove they have the requisite “good moral character” for renewal
of the liquor license.
The Administrator does not find the justifications argued for
not disclosing the Licensee’s criminal history persuasive. To
excuse irresponsibility and not hold accountable a Licensee who
does not ensure that the application is true and correct or allow
misrepresented material fact in the license application on multiple
occasions is not a reasonable conclusion. Therefore, the
Administrator concludes the Licensee does not possess “good
moral character” to hold a liquor license in Iowa.
The Quarry filed a petition for judicial review challenging the
administrator’s decision. In May 2013, the district court affirmed the
administrator’s final decision, stating in part:
It is reasonable that ABD used the dishonest application on
record to come to the conclusion that Rupp intended to deceive
ABD. It is reasonable that ABD could have determined with the
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evidence on the record that Rupp’s honesty during the licensure
process would be material to granting a license. It is also
reasonable that ABD found scienter through Rupp’s lack of regard
for whether a representation is true or false.
The Quarry argues this is not the case, as they contacted
the ABD attempting to amend the application. The Quarry asserts
correctly, that they meet the other necessary qualifications for
licensure and these non-disclosures, if all information had been
disclosed would not have impacted licensure. However, the failure
to be forthcoming in the application impacts licensing. ABD states
corrections to the application were done after the denial. ABD also
asserts that Rupp was not completely forthcoming in amending the
record by not including the second OWI offense. This is a wholly
discretionary area for ABD. Agencies are granted the necessary
discretion to make licensing decisions. Burns v. Board of Nursing,
495 N.W.2d 698, 700 (Iowa 1993).
ABD could reasonably find that Rupp did not possess the
good moral character required for a Class C Liquor License, based
on Rupp’s actions during the licensure process. There is
substantial evidence on the record that would allow a reasonable
person to find that this may have been the case.
The Quarry appeals.3
II. Standard of Review
It must first be noted that our review of final agency action is “severely
circumscribed.” See Greenwood Manor v. Iowa Dep’t of Pub. Health, 641
N.W.2d 823, 839 (Iowa 2002); Sellers v. Emp’t Appeal Bd., 531 N.W.2d 645, 646
(Iowa Ct. App. 1995). Nearly all disputes are won or lost at the agency level; the
cardinal rule of administrative law is that judgment calls are within the province of
the administrative tribunal, not the courts. See id.We review final agency action for corrections of errors at law. Sunrise
Ret. Cmty. v. Iowa Dep’t of Human Servs., 833 N.W.2d 216, 219 (Iowa 2013).
We apply the standards of chapter 17A (2011) of the Iowa Administrative
Procedure Act to agency action to determine if our conclusions are the same as
3
The Quarry sought and was granted an extension of time to file its appeal.
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the district court’s conclusions. See id. We are bound by the agency’s findings
of facts if they are supported by substantial evidence. Id.; see also Iowa Code
§ 17A.19(10). “‘Substantial evidence’ means the quantity and quality of evidence
that would be deemed sufficient by a neutral, detached, and reasonable person,
to establish the fact at issue . . . .” Iowa Code § 17A.19(10)(f)(1). We will not
interfere with an agency’s decision when reasonable minds might disagree or
there is a conflict in the evidence. Organic Techs. Corp. v. State ex. rel. Iowa
Dep’t of Natural Res., 609 N.W.2d 809, 815 (Iowa 2000). “We apply agency
findings broadly and liberally to uphold, rather than to defeat, an agency’s
decision.” Id. “On appeal, our task ‘is not to determine whether the evidence
supports a different finding; rather, our task is to determine whether substantial
evidence . . . supports the findings actually made.’” Mike Brooks, Inc. v. House,
___ N.W.2d ___, ___, 2014 WL 890152, *4 (Iowa 2014) (quoting Cedar Rapids
Cmty. Sch. Dist. v. Pease, 807 N.W.2d 839, 845 (Iowa 2011)).
The issue presented in this appeal is a mixed issue of fact and law—
whether substantial evidence supports the facts relied on by the ABD to conclude
The Quarry misrepresented material facts on its liquor license applications such
that it failed to maintain the requisite good moral character to retain its license.
“The legislature delegated to the ABD the power to enforce, implement, and
administer the laws concerning beer, wine, and alcoholic liquor contained in
chapter 123 of the code.” Auen v. Alcoholic Beverages Div., Iowa Dep’t of
Commerce, 679 N.W.2d 586, 590 (Iowa 2004). Accordingly, we will not reverse
the ABD’s interpretation of Iowa Code chapter 123’s licensing standards unless it
is “irrational, illogical, or wholly unjustifiable,” or unless the ABD’s decision is
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unreasonable, arbitrary or capricious or characterized by an abuse of discretion
or a clearly unwarranted exercise of discretion. See Iowa Code § 17A.19(10)(l),
(m) & (n).
III. Discussion
The Quarry claims there was not substantial evidence in the record to
justify the ABD’s decision not to renew its liquor license. The ABD counters that
its decision was supported by substantial evidence and well within the authority
granted by the Iowa Alcoholic Beverage Control Act. See Iowa Code ch. 123.
The Iowa Alcoholic Beverage Control Act was created for the protection of
the “welfare, health, peace, morals, and safety of the people of the state,” and
accordingly, the provisions shall be liberally construed to ensure its purpose is
accomplished. Id. § 123.1. The Act provides that a liquor license may be issued
to any person of “good moral character.” Id. § 123.30(1)(a). A “person of good
moral character” means “[t]he person has such financial standing and good
reputation as will satisfy the administrator that the person will comply with this
chapter and all laws, ordinances, and regulations applicable to the person’s
operations under this chapter . . . .” Id. § 123.3(26)(a). The ABD has further
promulgated certain regulations to help guide the administrator in its
determination of an applicant’s reputation:
A local authority or the administrator may consider an
applicant’s financial standing and good reputation in addition to the
other requirements and conditions for obtaining a liquor control
license, wine or beer permit . . . .
b. In evaluating an applicant’s “good reputation,” the local
authority or the administrator may consider such factors as, but not
limited to, the following: . . . licensee or permittee convictions for
violations of laws relating to operating a motor vehicle while under
the influence of drugs or alcohol, the recency of convictions under
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laws relating to operating a motor vehicle while under the influence
of drugs or alcohol, licensee or permittee misdemeanor convictions,
the recency of the misdemeanor convictions.
Iowa Admin. Code r. 185-4.2.
An applicant who fails to disclose information specifically requested by the
ABD jeopardizes the legitimacy and safety of the licensing procedures of the
Iowa Alcoholic Beverage Control Act. Moreover, in determining an applicant’s
“good moral character,” the division is granted the authority to assess the
applicant’s “good reputation” by reviewing his misdemeanor convictions, along
with any other factors it deems appropriate. See id. (stating administrator is not
limited to consideration of factors specifically listed).
In this case, we conclude the ABD’s factual findings are supported by
substantial evidence, and we do not believe the ABD’s interpretation of chapter
123’s licensing standards under these facts was irrational, illogical, or wholly
unjustifiable. The fact the ABD gave weight to Rupp’s dishonesty—or at the very
least his lack of oversight to ensure the veracity of his applications—in
determining his “good moral character” does not make the ABD’s decision
unreasonable, an abuse of discretion, or arbitrary and capricious. Accordingly,
we affirm the decision of the district court affirming the ABD’s denial of The
Quarry’s liquor license renewal application.
AFFIRMED.