Court Opinion

ID: 3183813
Source: CourtListenerOpinion
Date Created: 2016-03-09 15:17:08.088574+00
Date Added: 2024-06-11T13:27:20.003728
License: Public Domain

Cite as 2016 Ark. App. 160

                ARKANSAS COURT OF APPEALS
                                  DIVISIONS I AND IV
                                     No. CV-15-619
                                               Opinion Delivered   MARCH 9, 2016

SARAH C. GILDEHAUS                             APPEAL FROM THE BENTON
                APPELLANT                      COUNTY CIRCUIT COURT
                                               [NO. CV-2014-1385-4]
V.
                                               HONORABLE JOHN R. SCOTT, JUDGE
ARKANSAS ALCOHOLIC
BEVERAGE CONTROL BOARD                         AFFIRMED
AND CHRISTOPHER MOORE
                 APPELLEES

                            DAVID M. GLOVER, Judge

       Sarah Gildehaus appeals from the order that dismissed her petition for judicial review

of the Alcohol Beverage Control (ABC) Board’s transfer of a retail liquor permit and that,

alternatively, affirmed the Board’s decision. She contends that the trial court erred in 1)

dismissing her amended petition for lack of standing, 2) refusing to consider the entire record

on appeal, and 3) allowing the issuance of a retail liquor permit despite numerous violations

of the law. We affirm.

       In its order dismissing Gildehaus’s petition, the trial court set out the basic, and

essentially undisputed, background facts. Michelle Jameson received conditional permit

number 05132 for a retail liquor store to be located at 2800 West Hudson Road, Suite D,

in Rogers, Arkansas. After reconsidering the potential financial burdens, Jameson contacted

the ABC and asked about alternatives she might pursue. She learned about inactive status

for a permit while she considered her future desires regarding the permit. She was told she
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could submit an application for inactive status for her permit if she opened her business for

one day, had a phone line and her business license, sold one bottle of liquor, and had an

ABC agent come and approve her location. Jameson operated her business for one day and

then applied with Christopher Moore to the ABC to transfer permit number 05132 from

her to Moore. The ABC Director refused to approve the application on April 17, 2014.

She appealed the transfer denial, and, following a hearing, the ABC Board unanimously

reversed the Director and approved the transfer on September 17, 2014, (the “agency

decision”).

       On October 13, 2014, Gildehaus filed an original petition with the circuit court,

seeking judicial review and a stay of the agency decision. On December 18, 2014, she filed

an amended petition. Paragraph three of her amended petition provides in pertinent part:

       Further, this location is within three (3) miles of Gildehaus’ liquor store and is a
       competitor of Gildehaus. As a result, this has caused Gildehaus to suffer injury and
       is a basis for this litigation.

She offered no further testimony or evidence of injury at the hearing to expand upon

paragraph three of her amended petition.

       Gildehaus urged reversal of the agency decision based on the following summarized

arguments: 1) Jameson did not have a valid permit to transfer to Moore because Jameson

represented she had leased the property, when in fact she had only an option to lease the

premises; no ABC agent ever inspected Jameson’s store prior to opening, she just complied

with the ABC agent’s request that she send photos; Jameson had no sales-tax permit and did

not remit taxes to DFC; she received $4,000 from Moore to pay for her option to lease the

premises; and 2) Moore was not legally qualified to receive transfer of the permit because

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he had some interest in two permits; he made knowing misstatements of material facts

regarding ownership of the business location; and he provided remuneration to another

retail liquor permittee.

       In its April 15, 2015 order, the trial court dismissed Gildehaus’s petition, concluding,

sua sponte, she lacked standing under the Administrative Procedure Act. Relying upon

Arkansas Alcoholic Beverage Control v. Muncrief, 74 Ark. App. 221, 45 S.W.3d 438 (2001), the

trial court reasoned it was without jurisdiction to hear her petition because she had failed to

set forth specifically how she sustained injury or why she was in immediate danger of

sustaining injury. The order explained, alternatively, that even if Gildehaus had established

standing for judicial review, there was substantial evidence to support the agency’s decision

to allow the transfer of the permit. A majority of our six-judge panel hearing this appeal

affirms the trial court’s dismissal based on Gildehaus’s failure to establish sufficient injury to

invoke judicial review. Accordingly, we find no basis for addressing the alternative ruling

that affirms the agency’s decision.

       Ordinarily, an appeal from the circuit court regarding an agency decision requires

our court to review the agency’s decision, not the trial court’s decision. Arkansas State

Highway & Trans. Dep’t v. Ram Outdoor Advert., 2015 Ark. App. 713. Here, however, we

review the trial court’s decision for error because the controlling basis for its decision was

to dismiss Gildehaus’s petition for lack of jurisdiction because she failed to demonstrate

specific, concrete, real, and immediate injury from the agency’s action. The question of

standing is a matter of law for this court to decide, and we review questions of law de novo.

Arkansas Beverage Retailers Ass’n, Inc. v. Moore, 369 Ark. 498, 256 S.W.3d 488 (2007).

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        Judicial review of an agency decision is governed by the Administrative Procedures

Act. Arkansas Code Annotated section 25-15-212(a) (Repl. 2014) provides in pertinent

part:

        Administrative adjudication—Judicial review.

              (a) In cases of adjudication, any person, . . . who considers himself or herself
                  injured in his or her person, business, or property by final agency action
                  shall be entitled to judicial review of the action under this subchapter.
                  Nothing in this section shall be construed to limit other means of review
                  provided by law.
Opinions from both our court and the supreme court have explained that, under this statute,

only persons who have a personal stake in the outcome of a controversy have standing to

invoke the jurisdiction of the circuit court in order to seek judicial review of agency action;

that the injury must be concrete, specific, real, and immediate, rather than conjectural or

hypothetical; and that the petitioner must demonstrate how he or she has already sustained

or is immediately in danger of sustaining such injury as a consequence of the agency’s action.

See, e.g., Arkansas Beverage Retailers Ass’n, Inc., supra; Arkansas Beverage Control v. Muncrief,

74 Ark. App. 221, 45 S.W.3d 438 (2001); Estes v. Walters, 269 Ark. 891, 601 S.W.2d 252

(Ark. App. 1980).

        Here, the only basis for injury asserted by Gildehaus was that Moore’s proposed

liquor store would be located within three (3) miles of Gildehaus’s liquor store and would

be a competitor of Gildehaus. This allegation of injury was not further developed at the

hearing, and neither has it been further explained on appeal. The gist of Gildehaus’s

argument to us on this controlling issue is as follows: the trial court erred in dismissing her

appeal for lack of standing because granting the permit to Moore violated several statutory

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and regulatory requirements and directly impacted her own business by allowing an

additional neighboring permittee that did not exist before the transfer and location change

in favor of Moore. She is clear in her allegations that the Board ignored statutory and

regulatory violations by Jameson and Moore and that she believes she has been harmed by

the agency’s decision to allow the transfer of the permit. However, our cases and those of

the supreme court require more than mere assertions of injury—to be entitled to judicial

review of an agency decision pursuant to Arkansas Code Annotated section 25-15-212(a),

a petitioner must demonstrate injury that is concrete, specific, real, and immediate, rather

than conjectural or hypothetical; and the petitioner must also demonstrate how he or she

has already sustained or is immediately in danger of sustaining such injury as a consequence

of the agency’s action. See, e.g., Arkansas Beverage Retailers Ass’n., Inc., supra; Arkansas

Beverage Control v. Muncrief, supra; Estes, supra.

       The “keys to the courthouse” lie in Arkansas Code Annotated section 25-15-212(a).

If a petitioner satisfies the injury requirement of this statute, then he or she qualifies for

judicial review of agency action. If a petitioner does not demonstrate specific, concrete,

real, and immediate injury from the agency’s action, then he or she is not entitled to judicial

review of agency action. We find no error with the trial court’s determination that

Gildehaus’s assertions of injury are not sufficient to invoke the trial court’s jurisdiction to

review the agency decision pursuant to Arkansas Code Annotated section 25-15-212(a).

Moreover, though we are concerned with the sua sponte nature of the trial court’s dismissal,

Gildehaus does not challenge the trial court’s decision on that basis; consequently, we do

not address it.

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       Affirmed.

       KINARD, GRUBER, WHITEAKER, JJ., agree.

       HOOFMAN, J., concurs.

       VIRDEN, J., dissents.

       CLIFF HOOFMAN, Judge, concurring. While I agree with the majority’s decision

to affirm, I would do so based on the circuit court’s alternative finding that substantial

evidence supports the Alcohol Beverage Control (ABC) Board’s decision to approve the

transfer of the retail liquor permit to appellee Christopher Moore. Thus, I must respectfully

concur.

       In appellant Sarah Gildehaus’s first point on appeal, she argues that the circuit court

erred in dismissing her amended petition due to a lack of standing. I agree and would not

affirm on this basis. In her petition, Gildehaus alleged that she was injured by the Board’s

decision to approve the transfer of the retail liquor permit to Moore because the proposed

location for the permit was within three miles of Gildehaus’s liquor store and would

compete with her store. She further alleged that the Board’s decision should be reversed

because granting the permit to Moore violated various statutory and regulatory

requirements. In his answer, Moore did not challenge Gildehaus’s standing; in fact, he

implicitly agreed that Gildehaus had standing by noting that the permit for her store was

being judicially reviewed and that he reserved the right to raise the issue at a later date if she

were to be denied the permit and “lose standing.” Nor did Moore file a motion to dismiss

the petition or raise the issue of standing at the hearing before the circuit court. Instead,

the circuit court raised the issue sua sponte in its order, finding that it “had no jurisdiction

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to hear the petition” because Gildehaus had failed to sufficiently plead standing. Our

supreme court has explained that standing is not akin to subject-matter jurisdiction and that

it is a defense that can be waived by the parties. Chubb Lloyds Ins. Co. v. Miller Cty. Cir.

Ct., 2010 Ark. 119, 361 S.W.3d 809. The circuit court therefore erred by raising the issue

sua sponte. Moore admits as much in his brief on appeal but argues that Gildehaus cannot

demonstrate prejudice from the circuit court’s finding that she lacked standing because the

court also went on to discuss the evidence supporting the Board’s decision and ultimately

affirmed that decision. I agree with Moore, and I would instead affirm the circuit court

based on its alternative finding, as will be discussed below.

       In her second and third points on appeal, Gildehaus makes two separate arguments

concerning the circuit court’s decision to affirm the Board: she contends that the circuit

court erred by refusing to consider the entire record, and she argues that the circuit court

erred in allowing the issuance of the retail liquor permit to Moore despite numerous

violations of the law. On appeal to this court, our review is directed toward the decision

of the administrative agency, rather than the decision of the circuit court. Dep’t of Health &

Human Servs. v. R.C., 368 Ark. 660, 249 S.W.3d 797 (2007). A circuit court or appellate

court may reverse the agency decision if it concludes that the substantial rights of the

petitioner 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

agency’s statutory authority; (3) made upon unlawful procedure; (4) affected by other error

or law; (5) not supported by substantial evidence of record; or (6) arbitrary, capricious, or

characterized by abuse of discretion. Id.; Ark. Code Ann. § 25-15-212(h) (Repl. 2014).

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       On appeal, the challenging party has the burden of proving an absence of substantial

evidence and must demonstrate that the proof before the administrative agency was so nearly

undisputed that fair-minded persons could not reach its conclusion. Dep’t of Health &

Human Servs., supra. The question is not whether the evidence before the agency would

have supported a contrary finding, but rather whether it supports the finding that was made.

Id. Considerable deference is accorded the decision of the administrative agency in part

because these agencies are better equipped by specialization, insight through experience,

and more flexible procedures than courts to determine and analyze legal issues affecting their

agencies. Id.

       Gildehaus’s argument that the circuit court erred by not considering the entire record

is premised on the circuit court’s rulings at the hearing that prevented her from discussing

Michelle Jameson’s failure to obtain a sales-tax permit prior to opening her liquor store for

one day. Gildehaus contends that the circuit court abused its discretion in not allowing this

evidence where it was raised and considered before the Board and where appellees also

“opened the door” to its admission. However, as noted above, our review on appeal in

these cases is limited and is directed only toward the administrative agency’s decision, not

that of the circuit court. Dep’t of Health & Human Servs., supra. Thus, there is no need to

address the merits of this particular argument, which asserts error by the circuit court.

       Gildehaus’s final argument on appeal is that the circuit court erred in affirming the

Board’s issuance of the permit to Moore despite numerous violations of the law.

Specifically, Gildehaus asserts that Jameson failed to comply with applicable statutes and

regulations by not obtaining and displaying a sales-tax permit when she opened her store on

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December 11, 2013, and by not remitting sales tax for that day. Gildehaus also argues that

Jameson received $4,000 from Moore, another liquor permit holder, to lease the space for

her liquor store in violation of Arkansas Code Annotated section 3-4-301(a)(9) (Supp.

2015). Based on these violations, Gildehaus contends that Jameson’s permit should have

been revoked instead of being placed on inactive status and transferred to Moore.

       With regard to Jameson’s failure to pay sales tax, the Board found that this was an

issue for the Department of Finance and Administration and that Jameson had complied

with its regulations for obtaining inactive status, which required that she be “open for

business and prepared to sell or dispense alcoholic beverages for at least one full eight hour

day.” See DFA Title 1, subtitle C, Permit Procedure Section 1.27.1. I agree with the

Board’s finding. While a failure to pay sales tax can be grounds for revocation of a permit,

this issue was not necessarily relevant to whether Jameson had satisfied the ABC regulations

for obtaining an inactive permit.

       The Board also found that the $4,000 that Jameson had received from Moore was

merely a loan and did not violate Arkansas Code Annotated section 3-4-301(a)(9), which

states that a permit must be revoked if the permittee receives renumeration from any other

retail liquor permittee. There was substantial evidence to support this finding based on the

evidence presented to the Board. Further, as with the sales-tax issue, this alleged violation

may be grounds for revocation of a permit, but it does not necessarily prevent Jameson from

obtaining inactive status in the absence of a revocation. As appellees assert, Gildehaus did

not attempt to have Jameson’s permit revoked, nor did she timely challenge the Board’s

decision to grant Jameson inactive status. Thus, the issue before the Board at the hearing in

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this case was focused solely on whether Moore should be allowed to receive a transfer of

Jameson’s permit. Under these circumstances, the Board did not err in concluding that the

issues raised by Gildehaus with respect to Jameson did not prevent the issuance of the transfer

permit to Moore.

       Gildehaus’s remaining arguments relate to alleged violations of law by Moore in

obtaining his transferred permit. She contends that he knowingly provided false statements

to the Board in his transfer application by representing that he owned the proposed premises

when he did not; that he provided funds to Jameson, as was discussed above; and that he

held an interest in two retail liquor permits at the same time.

       The Board addressed each of these arguments in its decision. With regard to Moore’s

false statement in his transfer application, Moore admitted at the hearing that he had

misspoken when he indicated that he owned the premises. He explained that it was his

original intention to own the property but that his wife and father-in-law instead formed

an LLC to purchase the premises for financial reasons. The Board accepted this explanation

and found that Moore did not intend to be deceitful. It is the prerogative of the agency to

believe or disbelieve any witness and to decide what weight to accord the evidence. C.C.B.

v. Ark. Dep’t of Health & Human Servs., 368 Ark. 540, 247 S.W.3d 870 (2007).

       Gildehaus’s argument related to the $4,000 received by Jameson is also without merit.

Moore testified at the Board hearing that he never received any direct or indirect benefit

from Jameson pursuant to her retail liquor permit. As discussed above, the Board found

that this money was merely a loan and did not constitute renumeration in violation of

Arkansas Code Annotated section 3-4-301(a)(8). We give an administrative agency great

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deference when it comes to interpreting a statute or regulation that it is charged with

administering, and we will not overturn such an interpretation unless it is clearly wrong.

Seiz v. Ark. State Hwy. & Transp. Dep’t, 2009 Ark. 361, 324 S.W.3d 336. I cannot say that

the Board clearly erred in its interpretation of this statute.

       With regard to Gildehaus’s final contention, the Board found that Moore never held

an interest in two retail liquor permits at the same time because he agreed to relinquish

permit number 05013 when the Board approved his transfer request for permit number

05132. The Board further noted that Moore’s first permit was only conditional and that he

never operated a retail liquor store under this permit. Thus, this case can be distinguished

from Hewitt v. Gage, 257 Ark. 579, 519 S.W.2d 749 (1975), which is cited by Gildehaus, as

Hewitt operated seven retail liquor outlets at the same time that he was requesting a transfer

of a permit to a different location. Accordingly, because substantial evidence supports the

Board’s decision to approve the transfer of permit number 05132, I concur with the

majority’s affirmance of this case.

       BART F. VIRDEN, Judge, dissenting. I respectfully dissent from the majority

decision to affirm the circuit court’s sua sponte raising of the issue of Gildehaus’s standing

to challenge the transfer of the retail liquor permit from Jameson to Moore.

       In its order, the circuit court cited Estes v. Walters, 269 Ark. 891, at 894, 601 S.W.2d
252, 254, in which this court affirmed the circuit court’s decision to uphold the ABC

determination that the appellant did not have standing to challenge the granting of a new

permit (though on different grounds than were originally found by the ABC). In Estes, the

ABC granted a new permit to Carmel Jones, and it dismissed Estes’s petition challenging

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the new permit based on his lack of standing. Both the appeal to the circuit court and to

the appellate court were based on the ABC’s findings concerning standing. The difference

between Estes and the present case is that in Estes, standing was raised below at the

administrative agency hearing, and the issue was not raised sua sponte by the circuit court,

as in our present case. Thus, I would not affirm based on my belief that Estes is inapposite

to the facts of the present case.

       Along with Estes, this court cites Arkansas Alcoholic Beverage Control v. Muncrief, 74
Ark. App. 221, 45 S.W.3d 438 (2001), in support of its holding that Gildehaus did not have

standing. In Muncrief, the ABC granted a new permit to Pearcy Grocery. Muncrief had

opposed the permit at the ABC hearing and then filed an appeal with the circuit court.

Pearcy Grocery moved to dismiss, alleging that Muncrief did not have standing to petition

for judicial review. Id. at 224–25, 45 S.W.3d at 441. Our court held that Muncrief did not

have standing because she failed to set out in her petition for judicial review in circuit court

specific allegations as to how she had sustained or was in immediate danger of sustaining

injury; thus, her petition was insufficient to invoke the court’s jurisdiction under the

Administrative Procedures Act, and the circuit court erred in finding that she had standing.

We reversed and dismissed.

       The difference between the present case and Muncrief is that the issue of standing was

raised by the parties to the action and not sua sponte by the circuit court. Furthermore, our

court has held that “[w]hen the issue of standing is not properly developed below, we do

not address it on appeal.” Harrill & Sutter, PLLC v. Farrar, 2012 Ark. 180, at 6, 402 S.W.3d
511, 514–15; See, e.g., Ark. Game & Fish Comm’n v. Murders, 327 Ark. 426, 938 S.W.2d
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854 (1997)( “The issue of whether appellees, who are all hunters, have standing to assert the

rights of non-hunters, was not raised at the trial court level. Consequently, we do not discuss

this issue on appeal, as lack of standing does not deprive a court of jurisdiction”).

       Our supreme court held in Chubb Lloyds Ins. Co. v. Miller Conty Circuit Court, Third

Division, 2010 Ark. 119, at 5, 361 S.W.3d 809, 812, that standing could be waived because

it is not akin to subject-matter jurisdiction: “If the issue were one of jurisdiction of the

subject matter, we would address it despite the fact that it was not raised before the trial

court. As it is not such an issue, we decline to address it for the first time on appeal.” In

Chubb, our supreme court clarified that “[u]nder Arkansas law, standing . . . is a defense to

be asserted and an issue that may be addressed upon appeal.” Id. at 11, 361 S.W.3d at 815.

       Moore never raised the issue of standing to the ABC. Neither Moore nor the ABC

raised the issue of standing to the circuit court. In none of our caselaw concerning the

review of an administrative agency’s decision has the circuit court raised the issue of standing

on its own. The circuit court and the court of appeals are both held to the same standard

when reviewing the decision of an administrative agency; “Review of administrative agency

decisions, by both the circuit court and the appellate courts, is limited in scope. The standard

of review to be used by both courts is whether there is substantial evidence to support the

agency’s findings.” Ark. State Hwy & Transp. Dep’t. v. Ram Outdoor Advert., 2015 Ark. App.
713, at 7, ___ S.W.3d____. If the ABC did not have an issue with Gildehaus’s standing,

and if Moore did not raise the issue to the ABC, I cannot see how it was appropriate for the

circuit court to raise the issue on its own.

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       Furthermore, on reaching the issue of standing, I assert that Gildehaus sufficiently

plead her injury to show “concrete, specific, real, and immediate injury” as required in

Arkansas Beverage Retailers Association, at 507–8.

       Gildehaus named Moore as a competitor who intended to set up shop within three

miles of her business. Granted, the appellees in Arkansas Beverage Retailers Association v. Moore,

369 Ark. 498, 256 S.W.3d 488 (2007) pled more than just that financial harm would occur

if the petition was granted. However, in that case, we specifically pointed out that pleading

financial harm could be sufficient to show standing. Id. at 508. (“[T]he circuit court erred

in its decision that financial impact could not support standing[.]”) She certainly could not

have plead damages in that Moore had not yet begun operations. If a competitor’s store

three miles away would not have standing, it is difficult for me to imagine who would.

       In conclusion, I want to reiterate that the ABC did not consider Gildehaus’s pleading

of her standing to challenge the permit insufficient. For the circuit court to overturn the

ABC’s decision to allow Gildehaus to challenge the permit violates the standard of review

that directs both the circuit court and the appellate court to give great deference to the

administrative board’s decision. Furthermore, I would hold that Gildehaus plead sufficient

injury to achieve standing.

       I respectfully dissent.

       Lyons & Cone, P.L.C., by: Jim Lyons, for appellant.

     Mary Robin Casteel, for appellee Arkansas Alcoholic Beverage Control
Administration.

     Reece Moore Pendergraft, LLP, by: Timothy C. Hutchinson, for appellee Christopher
Moore.

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