Case Title: E & J Lounge Operating Company, Inc. v. Liquor Commission of the City and County of Honolulu

Citation: 

Docket Number: 

State: hawaii

Court: Hawaii Supreme Court

Date: 2008-04-07T00:00:00Z

Document:
LAW LIBRARY

‘s*+FOR PUBLICATION IN WEST’ S HAWAI'I REPORTS AND PACIFIC REPORTER**+

 

 

IN THE SUPREME COURT OF THE STATE OF HAWAI'I

 

00:

 

E & J LOUNGE OPERATING COMPANY, INC.,
‘a Hawai'i corporation,
Petitioner /Appel lant-Appellee/Cross-Appell,

yong a

aa

LIQUOR COMMISSION OF THE CITY
‘AND COUNTY OF HONOLULU,
Respondent /Appellee-Appel lant /Cross-Appel i

 

SN Wd 62 1HF eae

and

4H. JAMES STAHL; TYSON J. THOMAS; RANDI THOMAS;

EMILY REED; and BILL MAXWELL, Respondents/Intervenors-
Appellees/Intervenors-Cross-Appellants

 

No, 27940

CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS
(CIV. NO. 05-1-1464)

JoLy 29, 2008

MOON, C.J., LEVINSON, NAKAYAMA, ACOBA, AND DUFFY, JJ.

    

Petitioner/Appellant-Appellee/Cross-Appellee E & J

Lounge Operating Company, Inc., a Hawai'i corporation

(Petitioner), seeks review of the judgment of the Intermediate
Court of Appeals (the ICA)* filed on January 8, 2008, pursuant to

its December 24, 2007 published opinion vacating the April 20,

+ the published opinion was authored by Associate Judge Corinne K.A
‘Associate Judge Craig

Watanabe and joined by Chief Jusge Mark E. fecktenwald.
H. Nakamura filed's separate dissenting opinion. ICA, as used in connection
with this appeal, refers to the majority opinion.

 
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2006 (1) Findings of Fact (FOF), Conclusions of Law (COL) and
Decision and Order and (2) Judgment of the Circuit Court of the
First Circuit? (the court), and remanding the case to the court
to determine Petitioner’s appeal on the merits. See £4 J Lounge
Operating Co, v. Liguor Comm'n, City 4 County of Honolulu, 116
Hawas's 528, 556, 174 P.3d 367, 395 (App. 2007).

We hold that (1) public hearings on liquor license
applications held by the liquor commission are contested case
hearings auch that Hawai'i Revised Statutes (HRS) § 91-11 (1993)?
requires any commissioner who is not present at any stage of the
public hearing to become familiar with the record before voting
on a liquor license application, unless the application is
automatically rejected pursuant to HRS § 281-59(a) (2007),

(2) Respondent /Appellee-Appellant /Cross~Appellee Liquor
Commission of the City & County of Honolulu (the Commission) did

not comply with HRS § 91-11 in this case, (3) HRS § 91-13.5

 

ded.

 

F The Honorable Eden Elizabeth Hifo pr
+ ns § 91-11 ie quoted in ite entirety infra at note 10.
+ RS § 281-59(0) provides, in pertinent part,

that if a majority of the:
(1) “Registered voters for the area within five

hundred feet of the nearest point of the
Premises for waich the license is asked or
Benere and lessees of record of real estate and
ounera of record of

@

 

 

ares in a cooperative

‘tment within five hundred fest of the

Rearest point of the premises for which the
Tienes te askear

have duty, filed oy" cabeed C0 be flied thets protests against

the granting of the license, or if there appears any other

Gussiellesctelen unaer this’ chapter, the Spplication shall

be refused.

 

 

 

 
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(Supp. 2004) does not require automatic approval of Petitioner’ s
Liquor license application, and (4) the court's finding, that it
ie unclear from the present state of the record whether the
Commission complied with the notice requirements of HRS § 281-57
(Supp. 2006), because it was not challenged on secondary appeal
to the ICA or this court, is affirmed. Thus, we vacate the ICA’s
Judgment, affirm the court’s decision and order as clarified
below, and remand the case to the court with instructions to

(1) vacate the Conmission’s decision and order and (2) remand the
application to the Commission for decision-making in compliance
with the court's order and this opinion, specifically, (a) to
determine whether the notices sent by Petitioner complied with

RS § 281-57 and, if so, (b) to rule on the application after all

 

+ in pertinent part, $ 9113.5, entitled "Maximum tine period for
business or development-related permits, Licenses, of approvals? automatic
approval; extensiona[,]” provides

(e) ALD such Lasuing agencies shall take action to
guant_or deny any spplication for a business or develomment=
elated permit, License, or approval wichia the established
aximus pesiod' of tine,” or che application shall be deenea
anoroved.

le) “For purposes of this section, “application for
business or development-related permit, License, or
approval” means any state or county application, petitior
permit, License, certificate, or any other form of a requ
for approval required by Law’ to be obtained price to the
Formation, operation, of expansion of 8 comercial or
industrial enterprise, or for any permit, license,
certificate, or any form of approval required under sections
MGn4, 4604.2, 4604.5, 46n8, and chapters 183¢, 205, 205A,
34-A, 3408, 3405, S40F, 3428, 2420, 5420, 3428, 3428, 3426,
342m, 342r, 3429, 342k, and 3420.

 

 

(Emphases added.)

‘The relevant provisions of HRS § 281-57 are set forth infra st
notes 7, 8 and 30.
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voting commissioners have reviewed the entire agency record in

accordance with HRS § 91-11.

 

Petitioner submitted an Application for Liquor License
to the Commission for a General Dispenser License for the Island
Colony condominium located at 445 Seaside Avenue in Waikrkr. On
February 24, 2005, pursuant to HRS § 281-57(a),’ the Commission
held a preliminary hearing to determine whether Petitioner's
application should be scheduled for a public hearing or denied.
‘The Commission voted three-to-one in favor of scheduling a public
hearing for Petitioner's application.

on April 21, 2005, the first of what would be three
public hearing dates pursuant to HRS § 281-57(b)," the public
hearing on Petitioner’s application commenced and the Commission
received substantial testimony and evidence. At that hearing,

only three of the five Commissioners were present: Dennis

 

+ RS § 281-57(a) states in relevant part that “[u}pon the Eiiing of
the investigator's report upon any application the (Comaission] may hold a
preliminary hearing and upon such preliminary hearing it may deny the
Spplication.”

     

 

+ Rs § 261-571») provides, sn pertinent part:

Tf no preliminary hearing is had or if the application
ie not denied upon s preliminary hearing,

 

heising .- ~The novice shall require that sll protests
Gr objections against the isauance of the license applied
for shall be filed with che administrator of the
(Clomnission at of before the tine of hearing, = «

 

(Emphases added.) HRS § 281-57(b) is quoted in its entirety infra at note 20
 

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Enomoto (Enomoto), Danny Kim (Kim), and Chu Lan Shubert Kwock
(Kwock). E& J Lounge, 116 Hawai'i at 541, 174 P.3d at 380.

The hearing was continued to April 28, 2005, at which
time the Commission received additional testimony and evidence.
Four out of five Commissioners were in attendance at that
hearing: Enomoto, Kim, Kwock, and Danny Auyoung (Auyoung). Id.

‘The hearing was again continued to May 12, 2005. Three
out of the five Commissioners were in attendance at the meeting:
Auyoung, Enomoto, and Kwock. Id, at 542, 174 P.3d at 381. on
that date, the Commission voted to deny Petitioner's license
application.

on July 14, 2005, the Commission served Petitioner's
attorney a certified copy of its June 16, 2005 written FOF, COL,
and Decision and Order. Ide

on August 11, 2005, Petitioner filed a notice of appeal
to the court pursuant to HRS § 1-14 (1993 & Supp. 2004),

alleging that the Commission violated HRS chapter 91.”

* on appeal to the court from the Commission's June 16, 2005 FOF,
Cot, and Decision and Order, Petitioner raised the following issues in its
ceehing beled tefors she Sovct! |) Sielhe” (Gommlesion’a) Seaas denying the
quot license must be vacsted for failure To compiy with Eee $31 @)
SEBS Gib cel centres Lasuance of the ouer Licease Ts 3) Ee he coat
should not remand this mstter to the (Comission! tor further hearings  required « vote by
the majority "of ail the mesbers to which the Board ig statucorsly

gntitledt,1” dasa, four menber 261, 18 P-3d at 164. Thos,

  

“because the Board failed to ‘either approving or rejecting”
tthe subject application, it was deened granted by operation of the default
provision contained in ARS 163-41 (1993), Ld. In conteast, in the instant
Ease, three members of the Connission, which Se comprises of fire
Commissioners, voted to deny Petitioner's application, Thus, a majority of
the Comission voted, such that the denial would not be invalid under Hawaiian

Electric Liaht co.

% subsequent to this decision, IRS $ 91-13.5 wae anended to provide
chat a lack of quorum did not constitute a failure to act. Gag 2005 Haw.
Sess. L. Act 68 § 1, at 150 (aaaing language to provide that delay in action
by the agency due to lack of quorum at a regular meeting or any subsequent
Reeting would not result in automatic approval)

‘effective on May 23, 2005,” Gag 2005 Sess. L. Haw. Act 62 6 3, at 151. Thus,
LeNGS noe ta effect when the Comission voted to deny Petitione:'s
application and, In any event, appears inapplicable £0 the instant case.

 

 

 

   

 

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Commissioner Au Young vas not present at the first meeting and
was not made familiar with the course of that meeting pursuant to
HRS § 91-11, the Commission was incapable of rendering a decision
on Petitioner’s application on May 12, 2005. The fact that the
decision was legally ineffective does not mean that the
Commisaion failed to act for purposes of the relevant statutes.

Such an interpretation would violate the well-
established tenet of statutory construction that “an interpreting
court should not fashion a construction of statutory text that
effectively renders the statute a nullity or creates an absurd or
unjust result.” Konno v. County of Hawai'i, 85 Hawai'i 61, 71,
937 P.2d 397, 407 (1997) (internal quotation marks and citation
omitted) (emphasis added). Under such a rule, any procedural
exzor committed in the course of denying a license or pezmit
would trigger the autonatic approval provision, requiring the
reviewing court to oder the pertinent agency to grant said
license or permit. Given that the legislature provided an avenue
for judicial review pursuant to HRS $ 91-14, it would be legally
absurd to conclude that the legislature simultaneously intended
to deprive the courts of discretion to fashion appropriate
renedies where the agency acted, but that action was deemed to be
flawed.

xv.

Accordingly, we hold that the ICA erred in determining
that the Commission was not obligated to comply with HRS chapter
91 in considering Petitioner's application for a liquor license.

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The public hearing on Petitioner's application constituted a
contested case hearing because it was required by law pursuant to
HRS §§ 281-52 and -57 and it determined the rights, duties, and
privileges of the Petitioner under HRS § 91-1 with regard to its
application to offer alcohol for sale on its premises. The
Commissions decision thus was subject to the requirements of HRS
chapter 91, including judicial review pursuant to HRS § 91-14.
The Commission did not comply with these provisions, specifically
RS § 91-11,

For purposes of guiding the Commission on remand, it is
noted that there 1s no conflict between HRS § 91-11, requiring
that the Commissioners personally consider the entire record, and
HRS § 281-59(a), which mandates automatic denial of a permit when
a sufficient percentage of neighbors oppose an application.
Additionally, it is concluded that HRS § 91-13.5 does not compel
the automatic approval of Petitioner’s application in this case.
‘The Commission's failure to comply with HRS § 91-11 is not a
“failure to act” such as would trigger the automatic approval
provision of HRS § 91-13.5. The Conmission voted, albeit
Aneffectively, within the fifteen-day period prescribed by HRS
§ 281-5, thus avoiding the consequences of HRS § 91-13.5.
Accordingly, the Conmission retains the discretion to grant or
deny the application pursuant to the provisions of HRS chapter
281

Petitioner’s application is remanded to the Comission
with respect to the notices sent by Petitioner pursuant to HRS

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§ 281-57 as the court instructed, inasmuch as this part of the
court's decision and order was not challenged on appeal to the
ICA oF in the application to this court. Accordingly, the

Commission must determine if Petitioner mailed notices to the

requisite number of owners, lessees, and regist)

 

d voters living
in the vicinity of the premises as required by HRS § 281-57. If
the notice requirements were satisfied, the Commission may grant
or deny Petitioner's application in compliance with this opinion.
If the Commission determines that Petitioner did not comply with
the notice requirements contained in HRS § 281-57, the
application may not be considered.
xvr.

Hence, the ICA’s December 24, 2007 decision and
January 8, 2008 judgment are vacated. The case is remanded to
the court for disposition by it as follows: (1) the Commission’ s
June 16, 2005 order denying the application shall be vacated and
the case remanded to the Commission for further proceedings, (2)
that portion of the court's decision and order instructing that
on remand to the Commission, “[t]he Commission shall determine
whether the proper notice as required under HRS § 281-57 was made
by [Petitioner,]” i.e., whether Petitioner sent notices to the
requisite number of neighboring owners and lessees, is affirmed,
see supra at 48-49; however, if it is determined that Petitioner
did not serve notice on the number of people mandated by HRS §
281-57, the application may not be considered, see supra at $7;
(3) that portion of the court's decision and order instructing

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that, “[uJpon determining the proper nunber of persons required
to be served under HRS § 291-57 [sic], the Commission may grant
or deny the Application based on its ruling, may require the
Appellant to serve all persons required to be served under HRS

§ 281-59 [sic], and or hold additional public hearings” is
affirmed except that (a) in making its ruling, the Commission
must comport with HRS § 91-11, and (b) notices and the service
thereof regarding any additional hearings must comply with (4)
HRS § 91-9(b) (delineating the required content of notice of a
contested case hearing) with respect to parties as defined under
HRS § 91-1, and (14) HRS § 281-57 (setting forth notice
requirements for hearings on a liquor license application) as set

forth herein.

Duane W.H. Pang, Deputy

Gerpocation Counsel Lom

city and county of

Honolulu, for Respondent/ WW rRavrnge—
Appellee-Appeliant/

Cross-Appellee Liquor

Commission of the City and
County of Honolulu.

fon orice Canitiauit! ‘.
Fer fot itioner/appeliant- Jon 6, ly
Appellee/Cross~Appellee &

E&J Operating Company,
Inc.

 

Punta One urbe

Randi Thomas, pro se,
(H. James Stahl, Tyson J.
‘Thomas, Bill Maxwell, and
Emily Reed, pro se, with
her on the briefs),
Respondents/Intervenors-
Appellees/Intervenors~
Cross-Appellants.

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