Candyland, LLC v. Nebraska Liquor Control Comm. ( 2020 )


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    07/10/2020 08:07 AM CDT
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    Nebraska Supreme Court Advance Sheets
    306 Nebraska Reports
    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
    Cite as 
    306 Neb. 169
    Candyland, LLC, a Nebraska limited liability
    company, doing business as “Kandi’s,” appellant,
    v. Nebraska Liquor Control Commission,
    an agency of the State of Nebraska,
    et al., appellees,
    ___ N.W.2d ___
    Filed June 19, 2020.    No. S-19-535.
    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.
    2. Administrative Law: Liquor Licenses: Parties: Words and Phrases:
    Appeal and Error. Under the Nebraska Liquor Control Act, the defi-
    nition of “party of record” in Neb. Rev. Stat. § 53-1,115(4) (Cum.
    Supp. 2018) controls for purposes of the Administrative Procedure
    Act’s requirement that all parties of record shall be made parties to
    the proceedings for review in a review of the Nebraska Liquor Control
    Commission’s proceedings.
    3. Administrative Law: Jurisdiction: Appeal and Error. For a district
    court to acquire jurisdiction to review a final decision of an administra-
    tive agency under the Administrative Procedure Act, the appellant must
    file the petition and serve summons.
    4. Administrative Law: Service of Process: Time. Service on nongovern-
    mental entities under Neb. Rev. Stat. § 84-917(2)(a)(i) (Reissue 2014) is
    required within 30 days of the filing of the petition.
    Appeal from the District Court for Lancaster County: Jodi
    L. Nelson, Judge. Appeal dismissed.
    Kyle J. McGinn and William F. McGinn, of McGinn,
    Springer & Noethe, P.L.C., for appellant.
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    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
    Cite as 
    306 Neb. 169
    Douglas J. Peterson, Attorney General, Milissa Johnson-
    Wiles, and James Smith, Solicitor General, for appellees.
    Heavican, C.J., Miller-Lerman, Cassel, Stacy, Papik,
    and Freudenberg, JJ.
    Per Curiam.
    NATURE OF CASE
    Candyland, LLC, applied to the Nebraska Liquor Control
    Commission (Commission) for a retail Class C liquor license.
    After the Omaha City Council recommended denial and hun-
    dreds of “Protestants, Citizen Objectors, and Interested Parties”
    appeared in person or by writing before the Commission,
    the Commission denied Candyland’s application. Candyland
    attempted to appeal the order of the Commission to the dis-
    trict court for Lancaster County under the Administrative
    Procedure Act (APA). Candyland did not believe that the citi-
    zen objectors were necessary parties and did not serve sum-
    mons on the citizen objectors. Subsequently, the district court
    found that Candyland had not served “[a]ll parties of record”
    as required by Neb. Rev. Stat. § 84-917(2)(a)(i) (Reissue
    2014) of the APA and dismissed the petition for review for
    lack of subject matter jurisdiction. Candyland filed a motion
    for a new trial, which was denied. Candyland appeals the
    district court’s orders in which it dismissed the petition and
    denied the motion for new trial. We conclude the district
    court did not err. The district court lacked subject matter
    jurisdiction under the APA, and likewise, we lack jurisdiction.
    Accordingly, we dismiss this appeal.
    STATEMENT OF FACTS
    On June 18, 2018, Candyland applied to the Commission for
    a retail Class C liquor license for a business on Blondo Street
    in Omaha, Douglas County, Nebraska. In July, the Omaha
    City Council conducted a hearing on Candyland’s application
    and approved a resolution that recommended it be denied.
    The case proceeded to the Commission, which held a hearing
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    306 Nebraska Reports
    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
    Cite as 
    306 Neb. 169
    on the application on October 10. Hundreds of “Protestants,
    Citizen Objectors, and Interested Parties” appeared in person
    or by writing for the Commission hearing. On October 29, the
    Commission denied Candyland’s application.
    On November 15, 2018, pursuant to the APA, Candyland
    filed a petition on appeal in the district court for Lancaster
    County. The petition named as respondents the Commission,
    the City of Omaha, and the hundreds of “Protestants, Citizen
    Objectors, and Interested Parties.” On the same day, Candyland
    filed a “Motion for Service by Publication on Respondent
    Protestants and Citizen Objectors.” Candyland served sum-
    mons on the Commission and the City of Omaha.
    On December 14, 2018, the district court held a hearing on
    Candyland’s motion for service by publication. The district
    court overruled the motion, evidently indicating that citizen
    objectors were not necessary parties to the case.
    On May 3, 2019, the district court dismissed Candyland’s
    petition for lack of subject matter jurisdiction. It found that
    Candyland had failed to obtain service of summons on the
    citizen objectors, without which there could be no jurisdiction.
    The court rejected Candyland’s argument that the volume of
    citizen objectors would have made individual service onerous.
    The court noted that it was undisputed that none of the indi-
    viduals had been served but acknowledged in a footnote that
    it had previously erred when it had observed that the citizen
    objectors were not necessary parties.
    Candyland appeals.
    ASSIGNMENTS OF ERROR
    In its appeal from the district court, Candyland assigns,
    summarized and restated, that the district court erred when
    it (1) denied Candyland’s motion for service by publica-
    tion and dismissed its petition for failure to obtain service;
    (2) concluded that citizen objectors were parties of record
    and necessary to vest subject matter jurisdiction; and (3)
    required Candyland to serve citizen objectors, thereby denying
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    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
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    306 Neb. 169
    Candyland access to courts, in violation of Neb. Const. art. I,
    § 13. For purposes of our analysis, we consider Candyland’s
    assignments of error in reverse order.
    STANDARDS 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. Retroactive, Inc. v. Nebraska Liquor Control Comm.,
    
    298 Neb. 936
    , 
    906 N.W.2d 328
    (2018).
    ANALYSIS
    In this case, the district court determined that it lacked
    subject matter jurisdiction because Candyland had not served
    citizen objectors. The district court dismissed the petition.
    As explained below, we agree with the district court’s ruling.
    Where the district court lacked subject matter jurisdiction, we
    likewise lack jurisdiction and dismiss Candyland’s appeal. See
    In re Estate of Evertson, 
    295 Neb. 301
    , 
    889 N.W.2d 73
    (2016).
    Candyland Did Not Preserve Its Constitutional
    Challenge to § 25-508.01.
    In the September 19, 2019, order by which this case was
    moved to this court’s docket, we noted that the constitutional
    issue raised by Candyland’s third assignment of error, regard-
    ing Neb. Rev. Stat. § 25-508.01 (Reissue 2016), had not been
    preserved. Accordingly, as we previously concluded, we do not
    consider Candyland’s constitutional challenge.
    Citizen Objectors Are Parties of Record
    Who Should Be Served.
    [2] Candyland contends that citizen objectors were not
    parties necessary to confer jurisdiction on the district court.
    We reject this argument. “Parties of record” who must be
    served under the APA is defined solely based on statute. See,
    § 84-917(2)(a)(i); Retroactive, Inc. v. Nebraska Liquor Control
    
    Comm., supra
    ; Kozal v. Nebraska Liquor Control Comm.,
    
    297 Neb. 938
    , 
    902 N.W.2d 147
    (2017). Recently, we held
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    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
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    306 Neb. 169
    that under the Nebraska Liquor Control Act, “the definition
    of ‘party of record’ in § 53-1,115(4) controls for 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.” Kozal v. Nebraska Liquor Control
    
    Comm., 297 Neb. at 948
    , 902 N.W.2d at 155. It follows that
    the definition provided by the Nebraska Liquor Control Act
    in Neb. Rev. Stat. § 53-1,115(4) (Cum. Supp. 2018) “is the
    controlling definition of ‘party of record’ for purposes of APA
    review of the Commission’s proceedings.” Kozal v. Nebraska
    Liquor Control 
    Comm., 297 Neb. at 948
    , 902 N.W.2d at
    155-56. Accord Retroactive, Inc. v. Nebraska Liquor Control
    
    Comm., supra
    .
    Turning to the statutory definition, § 53-1,115(4) provides:
    For purposes of this section, party of record means:
    (a) In the case of an administrative proceeding before
    the commission on the application for a retail, bottle club,
    craft brewery, or microdistillery license:
    (i) The applicant;
    (ii) Each individual protesting the issuance of such
    license pursuant to subdivision (1)(b) of section 53-133;
    (iii) The local governing body if it is entering an
    appearance to protest the issuance of the license or if it
    is requesting a hearing pursuant to subdivision (1)(c) of
    section 53-133; and
    (iv) The commission.
    There is no dispute that some number of individuals pro-
    tested the issuance of the license to Candyland. The district
    court did not err when it concluded that for purposes of
    § 84-917(2)(a)(i), protestants or citizen objectors were parties
    of record. See § 53-1,115(4).
    Dismissal for Failure to Serve Citizen
    Objectors Was Not Error.
    [3] It is well settled that for a district court to acquire juris-
    diction to review a final decision of an administrative agency
    under the APA, the appellant must file the petition and serve
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    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
    Cite as 
    306 Neb. 169
    summons. See, J.S. v. Grand Island Public Schools, 
    297 Neb. 347
    , 
    899 N.W.2d 893
    (2017); Northern States Beef v. Stennis,
    
    2 Neb. Ct. App. 340
    , 
    509 N.W.2d 656
    (1993).
    In its December 2018 order, the district court denied
    Candyland’s motion to serve citizen objectors by publica-
    tion, but according to the court’s later order of May 3, 2019,
    it recognized that it had erroneously believed in December
    2018 that the citizen objectors were not “necessary parties.”
    To the extent that the district court had dismissed the citizen
    objectors in December and thereby purportedly acquired juris-
    diction by virtue of a timely filed petition and service on the
    Commission and the City of Omaha, such order was a nullity.
    A court cannot create or confer jurisdiction in itself. See State
    v. Lotter, 
    301 Neb. 125
    , 
    917 N.W.2d 850
    (2018), cert. denied
    ___ U.S. ___, 
    139 S. Ct. 2716
    , 
    204 L. Ed. 2d 1114
    (2019).
    Further, even if service by publication could be appropri-
    ate, about which we make no comment, the motion was not
    accompanied by a showing by affidavit required by Neb. Rev.
    Stat. § 25-517.02 (Reissue 2016), and therefore the motion for
    service by publication was properly denied.
    With respect to proper service on the citizen objectors,
    there has been considerable discussion in this appeal regarding
    the time during which Candyland was required to serve the
    citizen objectors. In their appellate briefs, the parties asserted
    that Candyland was required to serve the citizen objectors
    within 30 days of filing the petition. However, at oral argu-
    ment, the Commission asserted that Candyland had 180 days
    to serve the citizen objectors, in accordance with Neb. Rev.
    Stat. § 25-217 (Reissue 2016). This assertion caused this court
    to order supplemental briefing, the result of which was that
    the Commission asserted service was required in 180 days,
    the City of Omaha asserted 30 days, and Candyland asserted
    180 days.
    The time by which Candyland was required to serve the citi-
    zen objectors is controlled by the APA. Section 84-917(2)(a)(i)
    of the APA provides as follows:
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    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
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    306 Neb. 169
    Proceedings for review shall be instituted by filing a peti-
    tion in the district court of the county where the action
    is taken within thirty days after the service of the final
    decision by the agency. All parties of record shall be
    made parties to the proceedings for review. If an agency’s
    only role in a contested case is to act as a neutral fact-
    finding body, the agency shall not be a party of record.
    In all other cases, the agency shall be a party of record.
    Summons shall be served within thirty days of the fil-
    ing of the petition in the manner provided for service of
    a summons in section 25-510.02. If the agency whose
    decision is appealed from is not a party of record, the
    petitioner shall serve a copy of the petition and a request
    for preparation of the official record upon the agency
    within thirty days of the filing of the petition. The court,
    in its discretion, may permit other interested persons
    to intervene.
    (Emphasis supplied.) Neb. Rev. Stat. § 25-510.02 (Reissue
    2016), to which reference is made in § 84-917(2)(a)(i), per-
    tains to the manner of service on governmental entities. The
    citizen objectors, of course, are nongovernmental entities.
    Section 84-917(2)(a)(i) has undergone numerous revisions
    and amendments and has received considerable treatment in
    appellate cases, each of which has tried to make sense of the
    statute as it existed at the time of its application to the case
    under review. See, e.g., Leach v. Dept. of Motor Vehicles,
    
    213 Neb. 103
    , 
    327 N.W.2d 615
    (1982) (approving 180 days);
    Northern States Beef v. Stennis, 
    2 Neb. Ct. App. 340
    , 
    509 N.W.2d 656
    (1993) (approving 30 days and rejecting 180 days).
    The Tax Equalization and Review Commission appeal
    statutes are modeled after the APA. Neb. Rev. Stat.
    § 77-5019(2)(a) (Reissue 2018) contains language roughly
    equivalent to § 84-917(2)(a)(i). In Cargill Meat Solutions v.
    Colfax Cty. Bd. of Equal., 
    281 Neb. 93
    , 97, 
    798 N.W.2d 823
    ,
    826 (2011), we stated that § 25-510.02 “provides the man-
    ner for serving the state or political subdivision. Obviously,
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    [the plaintiff], a private corporation, is not an entity covered
    by § 25-510.02. [The plaintiff] cannot possibly be served
    in accordance with § 77-5019(2)(a), so it cannot apply.” In
    Cargill Meat Solutions, because the county board filed its
    notice of appeal with the Nebraska Court of Appeals rather
    than with the Tax Equalization and Review Commission,
    appellate jurisdiction was never conferred under either party’s
    theory of the applicable statutes and the 30-day issue—and
    manner of service issue—was not resolved. Nevertheless, the
    Cargill Meat Solutions opinion concludes as follows:
    Summing up, one thing has become abundantly clear—
    the Legislature has inadvertently created a procedural
    minefield. Section 77-5019(2)(a) does not make sense.
    The statute states ‘[s]ummons shall be served on all par-
    ties . . . in the manner provided for serv­ice of a summons
    in section 25-510.02.’ As mentioned, § 25-510.02 governs
    service of process on a state or political subdivision.
    But not all parties to a [Tax Equalization and Review
    Commission] hearing or a subsequent appeal are politi-
    cal subdivisions. It defies the language of § 25-510.02 to
    require a county board of equalization to serve a private
    party, such as [the plaintiff], as if it were a political sub-
    division. In effect, the current version of § 77-5019(2)(a)
    leads to two different means for perfecting an appeal
    based upon the [party’s] status. We can think of no sen-
    sible reason for doing this.
    As [the plaintiff] points out in its brief, the previous
    version of § 77-5019(2)(a) required that summons be
    served “in the manner provided for service of a sum-
    mons in a civil action.” This language was workable.
    It provided the flexibility to allow a corporation to be
    served as a corporation, [Neb. Rev. Stat. § 25-509.01
    (Reissue 2016),] an individual to be served as an indi-
    vidual, [§ 25-508.01,] and a political subdivision to be
    served as a political subdivision[, § 25-510.02]. Stating
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    the obvious, the Legislature needs to correct this proce-
    dural 
    trap. 281 Neb. at 98
    , 798 N.W.2d at 826.
    [4] Failing clarity by the Legislature, we believe that serv­
    ice on nongovernmental entities under § 84-917(2)(a)(i) is
    required “within thirty days of the filing of the petition.” With
    respect to the 30-day provision, we agree with the reasoning of
    Northern States Beef v. Stennis, which stated:
    We find that the plain meaning of the statute requires
    that summons be served within 30 days of the filing
    of the petition in order to perfect an appeal under the
    [APA]. We conclude that the Legislature intended that
    service be effected in 30 days and not 6 months as pro-
    vided in § 25-217.
    If the service of a summons within 30 days is not
    jurisdictional, then 30-day service of summons has no
    reason for being included in § 84-917(2)(a). We therefore
    hold that in order to perfect an appeal under the [APA],
    the party instituting the proceedings for review must file
    a petition in the district court for the county where the
    action is taken within 30 days after the service of the
    final decision by the agency, and cause summons to be
    served within 30 days of the filing of the 
    petition. 2 Neb. Ct. App. at 340
    , 
    345-46, 509 N.W.2d at 659
    . Although the
    statute considered in Northern States Beef v. 
    Stennis, supra
    ,
    has since been amended with respect to the manner of service,
    the 30-day requirement has remained in the statute throughout
    subsequent revisions, including the version applicable to this
    case, which we have quoted above. See, also, § 84-917(2)(a)
    (Cum. Supp. 1992) (providing that summons “shall be served
    within thirty days of the filing of the petition in the manner
    provided for service of a summons in a civil action”).
    In this case, it was undisputed that Candyland did not serve
    the citizen objectors within 30 days of filing the petition. The
    district court lacked jurisdiction. The district court’s decision
    to dismiss the petition for review was correct.
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    CANDYLAND, LLC v. NEBRASKA LIQUOR CONTROL COMM.
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    CONCLUSION
    Candyland failed to seek district court review in the mode
    and manner provided by the statute. By failing to serve the
    summons and a copy of the petition on the citizen objectors
    within 30 days, it failed to timely petition for review. The
    district court lacked subject matter jurisdiction under the APA.
    We likewise lack subject matter jurisdiction, and we dismiss
    Candyland’s appeal for lack of jurisdiction.
    Appeal dismissed.
    Funke, J., participating on briefs.
    Miller-Lerman, J., concurring.
    I concur in the opinion of the court but write separately to
    remark on a too frequent undesirable trend in the process.
    This is one of a number of recent cases in which the State,
    appearing here for the Commission, introduced a new theory
    for the first time at appellate oral argument. See, e.g., State v.
    Vann, ante p. 91, ___ N.W.2d ___ (2020) (Miller-Lerman, J.,
    concurring). Ordinarily, an appellate court will not consider
    an argument made for the first time on appeal. State v. Kruse,
    
    303 Neb. 799
    , 
    931 N.W.2d 148
    (2019); Siedlik v. Nissen, 
    303 Neb. 784
    , 
    931 N.W.2d 439
    (2019). However, we have recog-
    nized that a jurisdictional argument can be tendered for the
    first time on appeal. Davis v. State, 
    297 Neb. 955
    , 
    902 N.W.2d 165
    (2017). At oral argument, the Commission asserted that
    Candyland had 180 days rather than 30 days to serve the non-
    governmental parties. Thus, the case required supplemental
    briefing, after which the Commission asserted service was
    required in 180 days, the City of Omaha asserted 30 days, and
    Candyland asserted 180 days.
    In my view, it is more respectful of the adversarial and
    judicial process to raise a critical issue at the first opportunity
    and throughout the proceedings, rather than at the last appear-
    ance of the case.