Ruiz v. Dept. of Consumer Prot.

Full title: ELOISE RUIZ ET AL. v. DEPARTMENT OF CONSUMER PROTECTION ET AL

Court: Connecticut Superior Court Judicial District of New Britain at New Britain

Date published: Jan 13, 2009

2009 Ct. Sup. 1433 (Conn. Super. Ct. 2009)

Opinion

No. HHB CV 07-4013885

January 13, 2009

Memorandum of Decision

CARL J. SCHUMAN, J.

The plaintiffs, Eloise Ruiz and seventeen fellow residents of Newington, appeal from the decision of the defendant, the state liquor control commission (the commission), denying a remonstrance and granting a final package store permit to William Sweedler (Sweedler) and Stew's Wine and Spirits of Newington (Stew's Wines). The court affirms the commission's decision and dismisses the appeal.

I

The record reveals the following procedural history. On February 8, 2007, the commission held an evidentiary hearing on Sweedler's application for a package store liquor permit for Stew's Wines, to be located at 3475 Berlin Turnpike in Newington. The hearing occurred as a result of a legally sufficient remonstrance filed by the plaintiffs. See General Statutes § 30-39(c).¹

1 Section 30-39(c) provides: "(c) Any ten persons who are at least eighteen years of age, and are residents of the town within which the business for which the permit or renewal thereof has been applied for, is intended to be operated, or, in the case of a manufacturer's or a wholesaler's permit, any ten persons who are at least eighteen years of age and are residents of the state, may file with the department, within three weeks from the last date of publication of notice made pursuant to subdivision (3) of subsection (b) of this section for an initial permit, and in the case of renewal of an existing permit, at least twenty-one days before the renewal date of such permit, a remonstrance containing any objection to the suitability of such applicant or proposed place of business. Upon the filing of such remonstrance, the department, upon written application, shall hold a hearing and shall give such notice as it deems reasonable of the time and place at least five days before such hearing is had. The remonstrants shall designate one or more agents for service, who shall serve as the recipient or recipients of all notices issued by the department. At any time prior to the issuance of a decision by the department, a remonstrance may be withdrawn by the remonstrants or by such agent or agents acting on behalf of such remonstrants and the department may cancel the hearing or withdraw the case. The decision of the department on such application shall be final with respect to the remonstrance."

The commission issued a decision in which it denied the remonstrance and granted the permit to Sweedler. The plaintiffs appealed to this court. The court, Cohn, J., found aggrievement but remanded the case to the commission for clarification of the findings of fact on the merits. On remand, the commission determined that there was no need for additional evidence and issued a revised memorandum of decision clarifying its original findings and reaffirming its denial of the remonstrance and its grant of a permit to Sweedler and Stew's Wines.

The plaintiffs renew their challenge to the commission's decision. They raise essentially two issues: (1) whether General Statutes § 30-48a(a), which prohibits a person from having an interest in more than two liquor permits, bars the permit in this case; and (2) whether Sweedler has full control and authority over the permit premises to the extent required by General Statutes § 30-47(6).

II CT Page 1434

General Statutes § 4-183(j) governs this court's review of the merits of an agency's decision. This section provides: "[t]he court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. The court shall affirm the decision of the agency unless the court finds that substantial rights of the person appealing have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional or statutory provisions; (2) in excess of the statutory authority of the agency; (3) made upon unlawful procedure; (4) affected by other error of law; (5) clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or (6) arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion. If the court finds such prejudice, it shall sustain the appeal and, if appropriate, may render a judgment under subsection (k) of this section or remand the case for further proceedings. For purposes of this section, a remand is a final judgment." Stated differently, "[j]udicial review of an administrative agency decision requires a court to determine whether there is substantial evidence in the administrative record to support the agency's findings of basic fact and whether the conclusions drawn from those facts are reasonable." (Internal quotation marks omitted.) Schallenkamp v. DelPonte, 229 Conn. 31, 40, 639 A.2d 1018 (1994).

III

At the heart of the first issue is General Statutes § 30-48a(a), which provides in relevant part as follows: "[n]o person, and no backer as defined in section 30-1, shall, except as hereinafter provided, acquire an interest in more than two alcoholic beverage retail permits . . . [A] person shall be deemed to acquire an interest in a retail permit if an interest is owned by such person, such person's spouse, children, partners, or an estate, trust, or corporation controlled by such person or such person's spouse, children, or any combination thereof. The provisions of this subsection shall apply to any such interest without regard to whether such interest is a controlling interest."

The following pertinent facts are not in dispute. Stew's Wines, which is the backer of the application, is a limited liability corporation. The sole member of Stew's Wines is the Stewart J. Leonard, Jr. Family Trust (trust), which is an irrevocable trust created for the benefit of the children of Stewart J. Leonard, Jr. (Leonard). Leonard already holds an interest in two liquor permits. (Return of Record (ROR), Revised Memorandum of Decision (Rev. Mem.), pp. 2-3, paras. 2, 5, 6, 10.)

The plaintiffs rely on § 30-48a(a) to make, in essence, the following argument. Because Leonard already holds interests in two liquor permits, he cannot "acquire an interest" in the one challenged here.² Under the statute, he would "acquire an interest" if an interest in a permit is owned by him or, more importantly here, "owned by [a] trust . . . controlled by such person or such person's spouse children, or any combination thereof." There is no real dispute that an interest in the liquor permit is "owned by" a trust because the trust in question here is the sole member of the limited liability corporation that serves as the backer for the application. Therefore, the dispositive issue is whether the trust is "controlled by [Leonard] or such person's spouse, children, or any combination thereof." General Statutes § 30-48a(a).

2 Although it is not an issue here, the statute provides that the prohibition "shall apply to any such interest without regard to whether such interest is a controlling interest." General Statutes § 30-48a(a).

In its revised memorandum of decision, the commission found that Sweedler is the sole trustee of the trust and is the sole person in control of the trust. The commission stated that Leonard is not a trustee and does not have control over the trust. It added that no member of Leonard's family has control over the trust. (Rev. Mem., p. 2. paras. 7-9; p. 5.)

The plaintiffs challenge these findings. In making them, the commission relied in part on the testimony of various witnesses, including John Musicaro, a lawyer who drafted the trust document in question, as well as Sweedler and Leonard. The court has reviewed the commission's abundant citations to the testimony of these witnesses and finds that the cited testimony supports the commission's factual findings.³ The court cannot review this aspect of the commission's findings further. "In determining whether an administrative finding is supported by substantial evidence, a court must defer to the agency's assessment of the credibility of the witnesses and to the agency's right to believe or disbelieve the evidence presented by any witness, even an expert, in whole or in part." (Internal quotation marks omitted.) Connecticut Building Wrecking Co. v. Carothers, 218 Conn. 580, 593, 590 A.2d 447 (1991).

3 For example, Musicaro testified that the trust complied with the requirements of the two-permit statute. (ROR, Tab 2, p. 208.) Sweedler testified that he would be in full control of the trust. (ROR, Tab 2, pp. 71, 98.)

A review of the trust document itself confirms the commission's findings. Although the trust names Leonard's descendants as beneficiaries, that interest, in and of itself, is an equitable or beneficial one and does not give them any control over the trust. See Jackson v. Jackson, 178 Conn. 42, 47-48, 420 A.2d 893 (1979). (ROR, Tab 5, Ex. E, pp. 2-4.)

Moreover, Article IV of the trust, entitled "Compliance with Connecticut Liquor Control Act," essentially revokes any power of a Leonard family member to control any part of the trust if, as is the case here, the trust "has an ownership interest in an entity that holds an alcoholic beverage retail permit that is subject to the Liquor Control Act under the Connecticut General Statutes . . ." (ROR, Tab 5, Ex. E, p. 4.) The plaintiffs present no analysis of the trust that supports a contrary conclusion. Indeed, Article IV specifically provides that "[n]o person, bank or trust company may act as a Trustee unless such person is . . . an individual or entity that would be eligible under the provisions of the Liquor Control Act to acquire directly any interest in an alcohol beverage permit or ownership interest in an entity which holds an alcoholic beverage permit that is owned by any trust under this Agreement . . ." Further, Article IV states that, in the event that the trust has an ownership interest in such a permit, the "Trustees shall not distribute any alcoholic beverage permit or any ownership interest in an entity that which holds an alcoholic beverage permit to any beneficiary"; "[a]ny power to remove a Trustee that is granted under Article VI of this Agreement shall not apply";⁴ "[t]he power of appointment granted to [Leonard's] spouse under section B of Article I shall not apply";⁵ and "[a]ny power of appointment granted to a descendent of [Leonard's] may not be exercised to permit an alcoholic beverage permit or ownership interest in an entity that holds an alcoholic beverage permit to be distributed to a beneficiary who would not be a Qualified Person or to a trust that would be managed by a Trustee who would not be a Qualified Person." (ROR, Tab 5, Ex. B, pp. 4-5.)

4 Article VI provides that, under certain circumstances, the spouse and the beneficiaries of the trust have the power to remove the trustee and appoint a successor trustee. (ROR, Tab 5, Ex. E, p. 11.)

5 Article I.B. provides that Leonard's spouse "may at any time direct [the] Trustees to distribute all or any part of the trust principal to, or in trust for the benefit of, such persons or organizations . . . upon such estates and conditions, in such manner, and at such times as [the] spouse shall direct . . ." (ROR, Tab 5, Ex. E, pp. 1-2.)

Thus, based on both the testimony of the witnesses and a review of the trust document itself, the commission's findings and conclusion that neither Leonard nor members of his family have control over the trust has the support of substantial evidence in the administrative record and constitutes a reasonable conclusion to draw from the subsidiary facts. See Schallenkamp v. DelPonte, supra, 229 Conn. 40. Accordingly, Leonard has not "[acquired] an interest" in a alcoholic beverage permit in violation of General Statutes § 30-48a(a).

IV

General Statutes § 30-47(6) provides: "[t]he Department of Consumer Protection may, in its discretion, suspend, revoke or refuse to grant or renew a permit for the sale of alcoholic liquor if it has reasonable cause to believe . . . that the applicant or permittee has not been delegated full authority and control of the permit premises and of the conduct of all business on such premises . . ." Relying on this statute, the plaintiffs challenge the commission's finding that Sweedler has full control and authority over the permit premises and therefore is qualified to receive a permit. (Rev. Mem., p. 5.)

The initial response is that, in describing the commission's authority to refuse to grant a permit, the statute uses the permissive word "may" and thus does not require the commission to deny a permit even if it finds that the applicant has not been delegated full control over the permit premises. See Angelsea Productions, Inc. v. Commission on Human Rights Opportunities, 236 Conn. 681, 694-95, 674 A.2d 1300 (1996). In any case, there is ample evidence to support the commission's finding that Sweedler will have full authority and control. Four witnesses — John Suchy, the director of the commission; Sweedler; Vincent Summa, chief financial officer for Stew Leonard's Food Store in Norwalk; and Leonard — testified specifically that Sweedler would have full authority and control over the liquor store. [ROR, Tab 2, pp. 12-13, 16 (Suchy); pp. 98-100 (Sweedler); pp. 165-67 (Leonard); pp. 192-93 (Summa).] Accordingly, there was substantial evidence to support the commission's finding. See Schallenkamp v. DelPonte, supra, 229 Conn. 40.

V

For the foregoing reasons, the court upholds the commissioner's decision and dismisses the appeal.

It is so ordered.