Town & Country Food Stores, Inc. v. New Mexico Regulation & Licensing Dep't , 1 N.M. Ct. App. 628 ( 2012 )

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO
Opinion Number: 2012-NMCA-046Filing Date: March 22, 2012
Docket No. 30,921
TOWN & COUNTRY FOOD STORES, INC.,
d/b/a TOWN AND COUNTRY FOOD STORES
#241, Liquor License #0996,
Appellant-Respondent,
v.
NEW MEXICO REGULATION AND
LICENSING DEPARTMENT, ALCOHOL AND
GAMING DIVISION, AND THE DIRECTOR OF
THE ALCOHOL & GAMING DIVISION,
Appellees-Petitioners.
Consolidated with
NO. 30,922
TOWN & COUNTRY FOOD STORES, INC.,
d/b/a TOWN AND COUNTRY FOOD STORES
#248, Liquor License #4035,
Appellant-Respondent,
v.
NEW MEXICO REGULATION AND
LICENSING DEPARTMENT, ALCOHOL AND
GAMING DIVISION, AND THE DIRECTOR OF
THE ALCOHOL & GAMING DIVISION,
Appellees-Petitioners.
APPEAL FROM THE DISTRICT COURT OF CURRY COUNTY
Teddy L. Hartley, District Judge
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Linda L. Aikin
Santa Fe, NM
for Respondent
Gary K. King, Attorney General
Andrea R. Buzzard, Assistant Attorney General
Santa Fe, NM
for Petitioners
OPINION
WECHSLER, Judge.
{1} In this case, we consider whether criminal liability is a condition precedent to the
imposition of a civil penalty on a licensee in an administrative hearing under the Liquor
Control Act (the Act), NMSA 1978, §§ 60-3A-1 to -8A-19 (1981, as amended through
2011). Appellant, the New Mexico Regulation and Licensing Department Alcohol and
Gaming Division (the Department), filed a petition for a writ of certiorari in this Court
seeking review of a district court decision reversing two administrative decisions finding that
Appellee, Town and Country Food Stores, Inc. (Town & Country), violated Section 60-7B-
1(A)(1) by selling alcohol to a minor and imposing a one-day suspension of Town &
Country’s liquor license and a fine pursuant to Section 60-6C-1(A)(1). We granted the
Department’s petition.
{2} In its petition to this Court, the Department argues that the district court erred by (1)
holding that criminal liability of the server is a condition precedent to the imposition of a
civil penalty against a licensee under Section 60-6C-1(A)(1) for a violation of Section 60-
7B-1(A)(1) and (2) raising the issue sua sponte because Town & Country did not raise the
issue in the administrative hearing. We hold that the district court erred in determining that
a criminal conviction of the server pursuant to Section 60-7B-1(F) is a condition precedent
to the Department’s imposing civil liability on the licensee under Section 60-6C-1(A)(1).
As a result, we reverse the decision of the district court and need not address the
Department’s second issue. We remand for the district court to consider the remaining
appellate issues presented to, but not reached by, the district court.
BACKGROUND
{3} This case arises out of two consolidated appeals from the Department. In each case,
the Department found that Town & Country violated Section 60-7B-1(A)(1) by selling
alcohol to a minor. Both violations arose out of sting operations conducted by the Special
Investigations Division (SID) of the New Mexico Public Safety Department.
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{4} The first sting operation occurred on May 13, 2008. SID agents used Justin Garrison,
then nineteen years old and therefore a minor, to purchase alcohol at Town & Country’s
store number 248 in Clovis, New Mexico. Garrison entered the store, obtained a six-pack
of beer from the cooler, and placed it on the check-out counter. The clerk did not request
identification from Garrison or inquire about his age. Garrison purchased the beer, and a SID
agent issued Town & Country and the clerk citations for violating the Liquor Control Act,
Section 60-7B-1(A)(1), which prohibits the sale of alcohol to minors.
{5} The second sting operation took place on June 12, 2008. Again, SID agents used
Garrison to purchase alcohol, this time at Town & Country’s store number 241 in Clovis,
New Mexico. Garrison entered the store, obtained a six-pack of beer from the cooler, and
placed it on the check-out counter. The clerk requested identification from Garrison.
Garrison provided the clerk with his New Mexico issued driver’s license, which had a
printed legend stating that Garrison was not twenty-one years old and contained his date of
birth. Despite Garrison’s age, the clerk sold Garrison the beer. A SID agent then issued
Town & Country and the clerk citations for violating Section 60-7B-1(A)(1).
{6} Pursuant to Section 60-6C-4(F), in each case, the Department director appointed a
hearing officer, who conducted an administrative hearing to address the alleged violations
of Section 60-7B-1(A)(1). The hearing officer found, in each case, that Town & Country
violated Section 60-7B-1(A)(1) and that the sting operation did not entrap Town & Country.
The Department director adopted the findings and imposed a $1000 fine and a one-day
suspension of alcohol sales pursuant to Section 60-6C-1(A)(1). Pursuant to NMSA 1978,
Section 39-3-1.1 (1999) and Rule 1-074 NMRA, Town & Country appealed to the district
court, arguing that the hearing officer erred (1) in finding that SID did not conduct the sting
operation in a manner that amounted to entrapment of Town & Country, (2) by improperly
shifting the burden of proof to Town & Country to prove that the clerk was not predisposed
to sell liquor to a minor, and (3) in determining that the SID agents conducted the sting
operation in a manner that violated SID rules, but that the violations were not relevant. The
district court consolidated the cases and issued a decision on May 13, 2010, reversing the
Department director’s order.
{7} The district court did not rely on Town & Country’s arguments in reversing the
Department director. Instead, the district court held that the “respective servers must be
found guilty of [violating Section 60-7B-1(A)(1)] in a separate criminal proceeding” under
Section 60-7B-1(F) as a “condition precedent” to civil liability for Town & Country as a
licensee. The Department timely filed a petition for writ of certiorari under Rule 12-505
NMRA, which this Court granted.
STANDARD OF REVIEW
{8} Upon a grant of a petition for writ of certiorari under Rule 12-505, this Court
“conduct[s] the same review of an administrative order as the district court sitting in its
appellate capacity, while at the same time determining whether the district court erred in the
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first appeal.” Rio Grande Chapter of the Sierra Club v. N.M. Mining Comm’n, 2003-NMSC-
005, ¶ 16, 133 N.M. 97, 61 P.3d 806. In reviewing an administrative decision, “we apply
a whole-record standard of review.” See Smyers v. City of Albuquerque, 2006-NMCA-095,
¶ 5, 140 N.M. 198, 141 P.3d 542 (internal quotation marks and citation omitted). “We
independently review the entire record of the administrative hearing to determine whether
the . . . decision was arbitrary and capricious, not supported by substantial evidence, or
otherwise not in accordance with law.” City of Albuquerque v. AFSCME Council 18 ex rel.
Puccini, 2011-NMCA-021, ¶ 8, 149 N.M. 379, 249 P.3d 510 (internal quotation marks and
citation omitted). When the hearing officer’s decision is based on an issue of law, such as
statutory interpretation, our review is de novo. ERICA, Inc. v. N.M. Regulation & Licensing
Dep’t, 2008-NMCA-065, ¶ 11, 144 N.M. 132, 184 P.3d 444.
CRIMINAL LIABILITY AS A CONDITION PRECEDENT
{9} The Department argues that the district court erred by determining that Section 60-
7B-1(A)(1) requires criminal liability as a condition precedent to the Department imposing
civil liability on a licensee. This argument requires statutory construction. In engaging in
statutory construction, our primary purpose is to give effect to the intent of the Legislature.
Bd. of Educ. v. N.M. State Dep’t of Pub. Educ., 1999-NMCA-156, ¶ 16, 128 N.M. 398, 993
P.2d 112. “The first rule is that the plain language of a statute is the primary indicator of
legislative intent. Courts are to give the words used in the statute their ordinary meaning
unless the [L]egislature indicates a different intent. The court will not read into a statute .
. . language which is not there, particularly if it makes sense as written.” Johnson v. N.M.
Oil Conservation Comm’n, 1999-NMSC-021, ¶ 27, 127 N.M. 120, 978 P.2d 327 (internal
quotation marks and citations omitted). “We ascertain the intent of the [L]egislature by
reading all the provisions of a statute together, along with other statutes in pari materia.”
N.M. Mining Ass’n v. N.M. Water Quality Control Comm’n, 2007-NMCA-010, ¶ 12, 141
N.M. 41, 150 P.3d 991.
{10} We begin by examining the relevant portions of the Act. The hearing officer found
that Town & Country violated Section 60-7B-1(A) and, based on Section 60-6C-1, fined
Town & Country and suspended its liquor license. Section 60-7B-1(A) provides that “[i]t
is a violation of the [Act] for a person, including a person licensed pursuant to the provisions
of the [Act], or an employee, agent or lessee of that person, if he knows or has reason to
know that he is violating the provisions of this section, to . . . sell, serve or give alcoholic
beverages to a minor or permit a minor to consume alcoholic beverages on the licensed
premises[.]” Section 60-6C-1(A) allows the Department to impose a civil, administrative
penalty to licensees for violations of Section 60-7B-1(A). In relevant part, Section 60-6C-
1(A), states that:
[t]he director may suspend or revoke the license or permit or fine the
licensee in an amount not more than ten thousand dollars ($10,000), or both,
when he finds that any licensee has:
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(1) violated any provision of the [Act] or any regulation or order
promulgated pursuant to that [A]ct[.]
The Act, Section 60-7B-1(F), further provides that “[i]n addition to the penalties provided
in Section 60-6C-1 . . . , a violation of the provisions of [Section 60-7B-1(A)] of this section
is a fourth degree felony[.]” The district court concluded that, because a violation of Section
60-7B-1(A) “triggers” both criminal prosecutions under Section 60-7B-1(F) and an
administrative penalty under Section 60-6C-1(A), the Department cannot impose the
administrative penalty on a licensee without the server first being found guilty under Section
60-7B-1(F) as a condition precedent.
{11} However, examining the plain language of Section 60-7B-1(A), (F) and Section 60-
6C-1(A), neither provision supports a reading that the Legislature intended the criminal
liability of a server or any agent of the licensee to be a condition precedent to the imposition
of a civil penalty on the licensee. Indeed, there is no language in either provision that
conditions the administrative penalty on a criminal conviction of the server or other agent
of the licensee. We decline to read such language into the Act. See Johnson, 1999-NMSC-
021, ¶ 27 (stating that we “will not read into a statute . . . language which is not there,
particularly if it makes sense as written” (internal quotation marks and citation omitted)).
Further, Section 60-7B-1(F) states that criminal penalties for both the licensee and the server
are “[i]n addition to,” not a condition precedent to, the administrative penalties against the
licensee as provided in Section 60-6C-1(A)(1). If the Legislature intended the criminal
penalties authorized in Section 60-7B-1(F) to be a condition precedent to the imposition of
administrative penalties, it would have used clearer language. See Colonias Dev. Council
v. Rhino Envtl. Servs., Inc., 2003-NMCA-141, ¶ 17, 134 N.M. 637, 81 P.3d 580 (stating that
the Legislature would have provided a much “clearer indication” if it had intended a statute
to a more expansive meaning), rev’d on other grounds by Colonias Dev. Council v. Rhino
Envtl. Servs. Inc., 2005-NMSC-024, 138 N.M. 133, 117 P.3d 939.
{12} In addition, the portion of the Act governing the procedures for imposing a civil
penalty does not require a criminal conviction based on Section 60-7B-1(F) before the
administrative penalty can be imposed. Section 60-6C-4 provides the procedures for the
initial complaints against a licensee, the subsequent investigation by the Department, and the
manner in which the hearing officer must conduct the administrative hearing. Section 60-
6C-4(B) and (C) require that the Department file an administrative charge if it has probable
cause after an investigation to believe that a licensee violated the Act. Section 60-6C-
4(K)(5) and (7) require that the hearing officer or Director determine the guilt or innocence
of the licensee “based upon substantial, competent[,] and relevant evidence and testimony
appearing in the record of hearing.” The Legislature did not condition either the initial
administrative charges or the ultimate determination of guilt or innocence on whether a
criminal proceeding resulted in a conviction against the licensee or the server. Under the
plain meaning of the Act, the district court erred in vacating the Department’s decisions to
suspend Town & Country’s Liquor license and fine Town & Country for violating Section
60-7B-1(A)(1).
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{13} Although the plain language of the Act is clear that the Legislature did not intend
criminal liability to be a condition precedent for the imposition of civil liability under
Section 60-7B-1(A), we further note that a contrary conclusion would frustrate the purpose
of the Act. In enacting the Act, the Legislature sought to “tighten this state’s liquor control
laws.” Williams v. Ashbaugh, 120 N.M. 731, 733, 906 P.2d 263, 265 (Ct. App. 1986). “The
purpose of [the Act] is to regulate and place limitations on the sale of alcohol, not to promote
it [, and] we employ a liberal interpretation to give effect to [this] legislative purpose and to
facilitate temperance” when interpreting the Act. Santillo v. N.M. Dep’t of Pub. Safety,
2007-NMCA-159, ¶ 19, 143 N.M. 84, 173 P.3d 6 (internal quotation marks and citations
omitted). The Legislature authorized the Department to investigate and issue civil penalties
against licensees in order to enforce the Act’s limitations and regulations. Construing the
civil penalty provision to be subordinate to the district attorney’s ability to secure a criminal
conviction of the server would hamper the ability of the Department to ensure that licensees
comply with the Act. For example, in this case, the district attorney dismissed charges filed
against the store clerk relating to store number 241 after the clerk completed a pre-
prosecution program, and the district attorney disposed of the case relating to store number
248 by a conditional discharge without an adjudication of guilt after the clerk entered a plea.
See NMSA 1978, § 30-31-28(C) (1972) (providing that a conditional discharge for a
controlled substance possession offense “shall be without court adjudication of guilt”). The
district attorney’s office did not attempt to secure a criminal conviction in either instance,
instead electing to dispose of the criminal case by other available pre-trial means.
{14} Town & Country argues that our construction of the Act as not requiring a criminal
conviction as a condition precedent to the imposition of civil liability contradicts this Court’s
holding in ERICA. The district court relied on ERICA for the proposition that this Court has
determined that the administrative hearings to revoke or suspend liquor licenses and fine
licensees under the Act are akin to criminal review and have taken a “half-step from
administrative to criminal” and therefore, reasoned that a finding of guilt against a licensee
must “be conditioned upon the criminal conviction of its agents.” We disagree with this
interpretation of ERICA.
{15} In relevant part, this Court in ERICA, 2008-NMCA-065, ¶ 2, determined that a
hearing officer “erred in excluding and striking evidence that was relevant on the issue of
entrapment.” In ERICA, the licensee attempted to present defenses as to both objective
entrapment and substantive due process under our Supreme Court’s decision in State v.
Vallejos, 1997-NMSC-040, 123 N.M. 739, 945 P.2d 957. The hearing officer did not allow
the licensee to present evidence relating to either form of entrapment based on Kearns v.
Aragon, 65 N.M. 119, 123-24, 333 P.2d 607, 610 (1958), which held that an entrapment
defense is not available in a liquor license suspension or revocation administrative hearing
because the proceedings are not criminal in nature. ERICA, 2008-NMCA-065, ¶¶ 9, 47. In
ERICA, this Court declined to apply Kearns and remanded the case to the hearing officer to
develop a full record on the entrapment issue based on the questionable viability of Kearns.
ERICA, 2008-NMCA-065, ¶ 52. We noted that our Supreme Court decided Kearns under
a different version of the Act at a time when the Act did not require an intent element to
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revoke or suspend a license or fine a licensee. ERICA, 2008-NMCA-065, ¶ 50. We also
questioned the reasoning in Kearns that entrapment cannot be a defense because liquor
license proceedings are not criminal in nature, noting that “the roots of the entrapment
doctrine lie in civil cases.” ERICA, 2008-NMCA-065, ¶ 49 (internal quotation marks and
citation omitted).
{16} ERICA does not stand for the proposition that liquor license suspension or revocation
hearings are criminal or quasi-criminal in nature. ERICA recognized the civil nature of these
proceedings, yet noted that since 1958 many jurisdictions have criticized the failure to allow
entrapment as a defense in civil liquor license proceedings. Id. Further, ERICA does not
state that liquor license proceedings are criminal in nature because intent is now required,
only that the current version of Section 60-7B-1(A) has an intent element, which may
therefore lend itself to recognizing entrapment as a defense in liquor license revocation
proceedings. ERICA, 2008-NMCA-065, ¶¶ 50-51. ERICA therefore does not contradict or
change our interpretation of Section 60-7B-1(A), (F), Section 60-6C-1, or Section 60-6C-4.
The district court erred in determining that a criminal conviction of the server pursuant to
Section 60-7B-1(F) is required as a condition precedent before the Department imposes civil
liability on the licensee pursuant to Section 60-6C-1(A)(1).
REMAND ON REMAINING APPELLATE ISSUES
{17} Town & Country also argues that we should affirm the district court’s decision
because (1) the hearing officer erred in determining that the SID did not entrap Town &
Country, and (2) the SID failed to abide by its department standards in conducting the sting
operation. Town & Country raised these issues in the district court in its statement of
appellate issues. However, because the district court determined that criminal liability is a
condition precedent to imposing civil liability under Section 60-6C-1 on a licensee, the
district court did not reach these issues. Because the district court considered this case as
an appellate court under Rule 1-074, we remand to the district court to consider the
remainder of Town & Country’s appellate issues in the first instance. See Cerrillos Gravel
Prods., Inc. v. Bd. of Cnty. Comm’rs of Santa Fe Cnty., 2004-NMCA-096, ¶ 24, 136 N.M.
247, 96 P.3d 1167 (remanding to the district court to consider issues raised, but not reached
by the district court acting in an appellate capacity), aff’d, 2005-NMSC-023, 138 N.M. 126,
117 P.3d 932.
CONCLUSION
{18} Because the district court erred in determining that a criminal conviction of the server
under Section 60-7B-1(F) is required before the Department can impose civil liability on the
licensee pursuant to Section 60-6C-1(A)(1), we reverse the decision of the district court. We
remand for the district court to consider the remaining appellate issues presented to, but not
reached by, the district court.
{19} IT IS SO ORDERED.
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____________________________________
JAMES J. WECHSLER, Judge
WE CONCUR:
____________________________________
LINDA M. VANZI, Judge
____________________________________
TIMOTHY L. GARCIA, Judge
Topic Index for Town & Country Food Stores, Inc. v. NM Regulation & Licensing,
Docket No. 30,921
AL ADMINISTRATIVE LAW AND PROCEDURE
AL-AA Administrative Appeal
AE APPEAL AND ERROR
AE-RM Remand
AE-SR Standard of Review
GV GOVERNMENT
GV-LA Liquor Control Act
ST STATUTES
ST-RC Rules of Construction
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