Court Opinion

ID: 2748153
Source: CourtListenerOpinion
Date Created: 2014-11-05 16:03:22.041443+00
Date Added: 2024-06-11T11:26:08.345216
License: Public Domain

Cite as 2014 Ark. App. 604

                 ARKANSAS COURT OF APPEALS
                                         DIVISION I
                                        No. CV-14-80

LOUIS A. SHEPPARD                                  Opinion Delivered   November 5, 2014
                                APPELLANT
                                                   APPEAL FROM THE PULASKI
                                                   COUNTY CIRCUIT COURT, SIXTH
V.                                                 DIVISION [NO. CV-13-1269]

                                                   HONORABLE TIMOTHY DAVIS
ARKANSAS ALCOHOLIC BEVERAGE                        FOX, JUDGE
CONTROL BOARD
                     APPELLEE                      AFFIRMED

                           JOHN MAUZY PITTMAN, Judge

       Louis A. Sheppard appeals the decision of the Arkansas Alcoholic Beverage Control

Board (the “Board”), which cancelled his conditionally granted application for A permit to

operate a retail liquor store. He raises several points on appeal, and after considering each of

his arguments, we affirm the decision of the Board.

       In November 2010, the people of Clark County, Arkansas, voted to allow alcohol

sales. After this vote, the Arkansas Alcoholic Beverage Control Board began accepting

applications for retail liquor-store permits. Sheppard applied for a permit, and the Board

conditionally granted his application on October 16, 2011.

       The approval of Sheppard’s permit was conditioned upon several modifications to the

premises where he intended to do business. The conditions required the remodeling of the

building, the installation of a fire-exit light and telephone, and re-inspection of the premises.

Alcoholic Beverage Control Division Rules and Regulations section 1.35 requires that any
                                  Cite as 2014 Ark. App. 604

conditions attached to the granting of a permit be met within twelve months or the

application will be cancelled. Sheppard was allowed two extensions to this twelve-month

deadline, and he was given until December 31, 2012, to meet the conditions imposed by the

Board.

         On December 31, 2012, Sheppard notified the Board that he was ready for a final

inspection. Seletia Smith, an inspection agent for the Alcoholic Beverage Control Division,

inspected the premises on January 2, 2013, and found that there was a restaurant buffet in the

center of the store, and that the premises lacked a telephone and shelving units. She returned

several days later, and a telephone had been installed. However, the buffet server remained

in the middle of the store, shelving units were not installed, and portions of the building were

partitioned off with plastic sheeting.

         In the meantime, the Director of the Alcoholic Beverage Control Division, Michael

Langley, received a letter from Charles Singleton1 on January 3, 2013. In the correspondence,

Singleton asked that Sheppard’s conditionally granted application be rescinded because of false

material statements in his application and the delay in opening the business. On January 16,

2013, Langley advised the Board of the correspondence, and the Board determined that it

would hold a hearing on February 20, 2013, to review the information received.

         The Board held an administrative hearing, and at its conclusion, it voted to terminate

Sheppard’s conditionally granted permit because of the delay in opening the liquor store and

         1
       Singleton is an attorney and former director of the Alcoholic Beverage Control
Division who represents Jay Arnold. Arnold stood to have his application for permit
considered in the event that Sheppard’s conditionally granted permit was cancelled.

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false material statements in his application. Sheppard appealed the Board’s decision to the

Pulaski County Circuit Court, and the circuit court affirmed the Board’s decision.          This

timely appeal followed.

       On appeal, Sheppard contends that: (1) the Board lacked jurisdiction to revoke his

permit based upon conditions it had no power to impose, (2) the Board lacked jurisdiction

to act because only the Director of the Alcoholic Beverage Control Division has the authority

to revoke a permit, (3) the Board lacked authority to revoke his permit for failure to conduct

business, (4) the Board lacked jurisdiction because it did not comply with notice requirements,

(5) the Director engaged in an improper ex parte communication with Charles Singleton, (6)

the Board lacked authority to apply Arkansas Code Annotated section 3-4-301(a)(2)(Repl.

2008), and (7) even if it had authority under section 3-4-301(a)(2), that section was arbitrarily

applied.

       We first consider whether the Board had the authority to conditionally grant

Sheppard’s application for a permit. State agencies only possess such powers as are conferred

by statute or necessarily implied from a statute. Brookshire v. Adcock, 2009 Ark. 207, 307
S.W.2d 22. Although not binding, this court gives great deference to an agency interpretation

of a statute, and will not overturn the construction of a state statute by an administrative

agency unless it is clearly wrong. Id. Our review encompasses several statutory provisions

relating to the powers of the Board, and we read these statutes relating to the same subject in

a harmonious manner if possible. City of Fort Smith v. Tate, 311 Ark. 405, 410, 844 S.W.2d
356, 359 (1993).

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       Arkansas Code Annotated section 3-4-208(g)(1) (Repl. 2008) provides that an

application for permit will be approved if the Board finds that “an applicant is qualified and

that his or her proposed premises meet the public convenience and advantage of the area in

question.” Sheppard argues that, because this section is silent regarding the Board’s authority

to impose conditions on the approval of applications, the Board has no such power. We

disagree. Arkansas Code Annotated section 3-4-201(c)(2)(B) (Repl. 2008) vests the Board

with the authority to set qualifications for applicants. Furthermore, Arkansas Code Annotated

section 3-4-704 (Repl. 2008) provides that the “Alcoholic Beverage Control Division is

authorized to adopt reasonable rules and regulations to carry out the intent and provisions of

this subchapter,” and Arkansas Code Annotated section 3-2-205(b)(2) (Repl. 2008) provides

the Board with the authority to adopt rules and regulations for the supervision and control

of the manufacture and sale of alcohol.

       From this authority, the Board has enacted the Alcoholic Beverage Control Division

Rules and Regulations. These rules and regulations are contemplated by the legislature and

within the Board’s jurisdiction. They set forth requirements regarding the supervision and

control of alcohol sales and allow the Board to impose conditions to meet these requirements.

After a de novo review of these statutory provisions, we find that the Board had the authority

to enact rules and regulations, which included the imposition of conditions on granting permit

applications.

       Sheppard contends that the Board’s action on February 20, 2013, was to revoke his

permit. Only permits that have been issued may be revoked. Ark. Code Ann. § 3-4-301(a)

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(Repl. 2008). Sheppard was never issued a permit; the Board merely conditionally granted

his application for permit. Therefore, the Board could not have revoked Sheppard’s permit,

and we need not address Sheppard’s arguments regarding whether the Board had the authority

to revoke his permit and whether it complied with revocation procedures.

       Next, we consider whether the Board had the authority to act on Sheppard’s permit

following its conditional grant of his application. Arkansas Code Annotated section 3-2-214

(Repl. 2008) allows the Board to review, on its own motion, any action of the director in

granting or failing to grant, renewing or failing to renew, revoking or suspending, or failing

to revoke or suspend upon complaint, any permit. This statutory provision afforded the

Board the authority to review Sheppard’s application to determine why the director had failed

to issue a permit fifteen months after his application had been conditionally granted.

       Finding that the Board had the authority to conditionally grant Sheppard’s application

and to hold a review hearing to determine why the director had failed to issue a permit, we

shift to Sheppard’s argument that he was not provided with sufficient notice of the proceeding

held on February 20, 2013. Our review indicates that Sheppard did not challenge the

sufficiency of the notice that he received at the administrative hearing, and appellate courts

have repeatedly held that they will not set aside an administrative determination upon a

ground not presented to the agency because to do so would deprive the agency of the

opportunity to consider the matter, make its ruling, and state the reasons for its action.

Franklin v. Arkansas Department of Human Services, 319 Ark. 468, 892 S.W.2d 262 (1995). This

issue is not preserved for our review.

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       Sheppard also challenges the Board’s decision by arguing that it was tainted by an ex

parte communication between Michael Langley and Charles Singleton. We do not reach the

merits of this argument because Sheppard also failed to raise this point at the administrative

hearing. We will not set aside an administrative determination upon a ground not presented

to the agency. Id.

       We now consider the merits of the Board’s decision to cancel Sheppard’s conditionally

granted permit based upon his failure to open his business within twelve months and for false

material statements in his application. Our review is directed, not toward the circuit court,

but rather toward the decision of the agency. Arkansas State Highway & Transportation Dep’t

v. Kidder, 326 Ark. 595, 933 S.W.2d 794 (1996). Administrative decisions should be upheld

if they are supported by substantial evidence and are not arbitrary, capricious, or characterized

by an abuse of discretion. Wacaser v. Insurance Commissioner, 321 Ark. 143, 900 S.W.2d 191

(1995).   Substantial evidence is defined as valid, legal, and persuasive evidence or such

relevant evidence as a reasonable mind might accept as adequate to support a conclusion. Files

v. Arkansas State Highway & Transportation Dep’t, 325 Ark. 291, 925 S.W.2d 404 (1996).

       Sheppard contends that the Board lacked jurisdiction to apply Arkansas Code

Annotated section 3-4-301(a)(2) and arbitrarily applied this statute, which provides that “any

permit issued . . . must be revoked . . . for making any false material statement in an

application for a permit.” This statute only applies to the revocation of permits that have

been issued. Because a permit was never issued to Sheppard, we conclude that the Board

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lacked authority under Arkansas Code Annotated section 3-4-301(a)(2) to revoke Sheppard’s

permit for making false material statements in his application.

       However, the Board’s decision was also based upon Sheppard’s failure to open his

business within twelve months. Sheppard does not argue on appeal that this decision was

grounds for reversal. When an appellant fails to attack an independent, alternative basis for

a ruling, we will not reverse. Pugh v. State, 351 Ark. 5, 89 S.W.3d 909 (2002); Thomsen v.

Arkansas Department of Human Services, 2009 Ark. App. 687, 370 S.W.3d 842. Even if

Sheppard did attack the Board’s alternative ground, there is substantial evidence to support

the Board’s decision. The Board heard evidence from inspector Seletia Smith. Her first

investigation following Sheppard’s deadline for meeting the conditions imposed revealed that

the premises lacked a telephone and shelving units for inventory. Additionally, there was a

restaurant buffet in the center of the premises. When she returned for reinspection, a

telephone had been installed, but the buffet server remained in the middle of the premises,

shelving units were uninstalled, and portions of the building were partitioned off with plastic

sheeting. Agent Smith testified that she did not consider the premises ready to open. Her

testimony constituted substantial evidence to support the Board’s determination that Sheppard

failed to meet within twelve months the conditions attached to the granting of his permit.

With this determination, we find that there was substantial evidence to support the Board’s

decision to cancel Sheppard’s conditionally granted application for permit.

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       Affirmed.

       GLADWIN, C.J., agrees.

       WYNNE, J., concurs.

       ROBIN F. WYNNE, Judge, concurring. I concur with the decision of the majority

to affirm the action taken by the Arkansas Alcoholic Beverage Control Board. I write

separately regarding preservation of issues for appeal by persons appearing pro se before an

administrative board.

       Appellant was notified by a letter of the Board dated February 8, 2013, that his

application for a permit was going to be reviewed by the Board at its meeting on February

20, 2013. He was not notified in the letter that a revocation was being considered. Indeed,

the Board’s attorney admitted at oral argument before this Court that no one anticipated that

the Board would take the action that it did before the motion to revoke was made. After the

motion was made, the Board voted and announced its decision to “revoke” appellant’s

“permit” although a permit had never been issued. It appears that appellant failed to preserve

his notice argument for appeal, as it was first raised to the circuit court in appellant’s petition

for review of the Board’s decision. However, I find it troubling that it also appears that

appellant was offered no real opportunity to object to improper notice of a revocation before

the Board. I believe that under certain circumstances it would be unreasonable to require a

person appearing pro se before an administrative board, who has been given no indication

from that board that any action the average person would believe required the services of an

attorney is being considered, to formally raise an argument before that administrative board

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in order to preserve it for appeal, especially an administrative body such as the Alcoholic

Beverage Control Board that routinely conducts more informal proceedings than other

administrative bodies, such as the Workers’ Compensation Commission or the Arkansas

Appeal Tribunal.

       I concur in the result reached in this case because the facts presented are not sufficiently

favorable to appellant such that a reexamination of the preservation requirements is warranted

in this case. However, a case may come before our appellate courts that does present

sufficiently favorable facts, and I highly suggest that our appellate courts take an opportunity

to review what is necessary to preserve an issue before an administrative board at that time.

       Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., by: Kevin M. Lemley, for

appellant.

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

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