Court Opinion

ID: 7874823
Source: CourtListenerOpinion
Date Created: 2022-09-08 21:04:14.611079+00
Date Added: 2024-06-11T16:31:21.657777
License: Public Domain

WOZNIAK, Judge,
dissenting.
I respectfully dissent. There exists no factual determination to be resolved, but only questions of law which this court can and should resolve in the interest of judicial economy. I would affirm the trial court pursuant to directions as contained herein.
ADDITIONAL FACTS
On December 15, 1981, incorporators of E.T.O., d/b/a “Fergie’s Bar,” appeared before the County Board of Olmsted County to advise it of their plans to remodel and renovate the subject property upon condition that the Board indicate its willingness to approve a liquor license at this location. The County Board voted in favor of an intent to issue the license when all requirements were met.
In reliance thereon, $85,000 was expended to remodel and renovate the building to comply with county building and plumbing codes. Fergie’s Bar was issued a license by the Board in July 1982.
In December 1982, E.T.O. applied for renewal of the license before the Town Board and County Board which both granted for the 1983 calendar year. Denial by the Town Board for renewal of the license for calendar year 1984 precipitated this lawsuit.
ANALYSIS
I. VESTED INTEREST
As an inducing precondition to the County’s approval of its original liquor license, Fergie’s Bar did expend $85,000 to improve the premises and bring its building in compliance with the County’s building and plumbing codes. It had been operating for IV2 years, and under these facts Fergie’s Bar had a vested property interest in its license.
A recent Minnesota case involving the renewal of an asphalt license recognizes that:
Plaintiff here has more than a mere expectancy or abstract hope of license renewal; it has a legitimate claim of entitlement to its license. The investment necessary to carry on an asphalt manufacturing business could not be made unless there were an understanding that operations could continue from year to year. A shutdown of the plant would cause plaintiff a “grievous loss.” Moreover, the City and State, by requesting or requiring plaintiff to expend its funds on proper equipment, have strengthened the natural assumption that once compliance had been achieved, a license would surely be forthcoming. It requires no extended discussion to conclude that the rules defining plaintiff’s interest in its license do, as a matter of social and economic reality, create a property right.
Trumbull Division Owens-Corning Fiberglass Corporation v. City of Minneapolis, 445 F.Supp. 911, 916 (D.Minn.1978), (citations omitted). The same rationale applies *98to the renewal of liquor licenses. See Katris v. City of Waukegan, 498 F.Supp. 48, 53 (N.D.Ill.1980); Misurelli v. City of Racine, 346 F.Supp. 43 (E.D.Wis.1972) (vacated and remanded on other grounds); City of Kenosha v. Bruno, 412 U.S. 507, 93 S.Ct. 2222, 37 L.Ed.2d 109 (1973); Hornsby v. Allen, 326 F.2d 605 (5th Cir.1964); see also Federal Distillers, Inc. v. State, 304 Minn. 28, 40, 229 N.W.2d 144, 154-155 (1975) (the Twenty-First Amendment does not empower state to invade equal protection or due process rights). In view of Fergie’s investment and history of operation, it had a legitimate claim to renewal of its license, absent a finding of a violation of any statute or ordinance pertaining to alcoholic beverages, parking, or other law or regulation; or a violation of any terms, provisions, or conditions of its liquor license.
II.
DUE PROCESS
Fergie’s property interest must be safeguarded by due process. Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972). One elementary requirement of due process is that a licensee is entitled to a fair hearing. In re Murchison, 349 U.S. 133, 136, 75 S.Ct. 623, 625, 99 L.Ed.2d 942 (1955); Hymanson v. City of Saint Paul, 329 N.W.2d 324, 329 (Minn.1983) (Justice Scott dissenting). The hearing is not fair when the decisionmaker has a conflict of interest. Tumey v. Ohio, 273 U.S. 510, 47 S.Ct. 437, 71 L.Ed. 749 (1927) (pecuniary interest); Gibson v. Berryhill, 411 U.S. 564, 93 S.Ct. 1689, 36 L.Ed.2d 488 (1973) (pecuniary interest). Here Councilman Kuehn had a direct financial stake in the voting on Fergie’s Bar.
As the majority stated: “He claims his 53 acres across the county road from Fer-gie’s Bar had been devalued by $100,000 because of the presence of Fergie’s Bar.” This was not disputed.
Such a claim disqualifies Councilman Kuehn even if his vote would not constitute the majority. Cinderella Career and Finishing Schools, Inc. v. Federal Trade Commission, 425 F.2d 583, 592 (D.C.Cir.1970). Therefore, his participation in the license hearing voids the result. Gibson.
The majority relies on Lenz v. Coon Creek Watershed District, 278 Minn. 1, 153 N.W.2d 209 (1967) in finding Kuehn’s personal financial interest did not disqualify him from taking part in the decision.
The majority quoted the analysis and five factors set forth in Lenz, and repeated in Township Board of Lake Valley Township, Traverse County v. Lewis, 305 Minn. 488, 234 N.W.2d 815 (1975), discussed hereafter, and in Opinion 59a-32 of the Minnesota Attorney General, dated September 11, 1978. The issues presented to the Attorney General and addressed in his opinion were stated as follows:
QUESTION ONE
Is a rezoning, by a city council, of property owned by a member of the council, precluded by the prohibitions of Minn. Stat. § 412.311, or § 471.87.
QUESTION TWO
Is the council precluded from acting upon proposed rezoning where a council member has been employed as an architect or planner for the persons seeking the rezoning?
59a Op.Atty.Gen. 32 (1978).
The statutes listed in Question One are those specifically prohibiting Minnesota’s public officers from taking part in their official capacities in any sale, lease, or contract in which they have personal financial interests. The interested officeholder in the case presented to the Attorney General had not taken part in any decision on the zoning of his property. The issue was whether or not the interested officeholder’s fellow council members, who had no financial interest in the rezoning, could validly act on the matter. The Attorney General found that a city council could rezone the property of one of its members without violating the above-listed statutes, but in doing so stated as follows:
*99Thus, it is our opinion that Minn.Stat. § 471.87 does not operate to prohibit enactment or amendment of a zoning ordinance which affects property of a council member. Substantial self-interest by a council member may, however, disqualify the member from participation in the council proceedings involving the rezoning. Participation by such an interested member may be cause for invalidation of the action. See generally, Ops.Atty.Gen., 477b-34, June 19, 1967, and 396g-16, Oct. 15, 1957 (copies enclosed); Rathkopf, The Law of Planning and Zoning, § 22.03; 4 McQuillin, Municipal Corporations, §§ 13.35, 13.35a.
Id. (emphasis added).
After quoting the five factors set out by the Supreme Court in the Lenz decision, the Attorney General stated as follows:
These standards would, in our view, preclude the participation by a member in consideration of a zoning ordinance of narrow applicability affecting property of the member, such as appears to be the situation described in the facts presented.
Id. (emphasis added).
In response to Question Two, the Attorney General stated as follows:
In our view, the response to Question One applies whether the interest of the council member in the council’s action stems from property ownership or from an employment relationship with interested parties. Thus, the interest in council action, while not directly proscribed by the terms of section 471.87, would, in many circumstances, preclude participation by the interested member in the action of the council. Where the council member in his private capacity has been involved in preparation of the specific proposal upon which council action is contemplated the considerations set forth in Lenz v. Coon Creek Watershed District, supra, would dictate that such a member would be disqualified from acting in his official capacity upon the proposal.
Id. (emphasis added).
It is clear that conflicts of interest “must be decided on the basis of the particular facts present.” Both the Lenz and Lewis decisions, as well as the opinion of the Attorney General cited above, implicitly acknowledge that the rule disqualifying public officials from acting in matters in which they havé a significant personal interest is not based solely in statute, but rests in the common law. In neither Lenz nor Lewis did the court find a sufficiently significant personal interest in the outcome of the public body’s decision to disqualify an officeholder from participation and invalidate the decision.
Here, a very different factual situation is addressed than existed in Lenz. Lenz involved a watershed district board ordering 27.1 miles of improvement to a drainage channel, an improvement which would alleviate periodic flooding, reduce damage to roads and bridges, improve outlets for county ditches, provide discharge from a game refuge, drain agricultural land, and accomodate storm sewer systems for two cities. Id. 278 Minn. at 3, 153 N.W.2d at 212. Landowners opposing the improvement charged that the watershed board’s action was invalid because four of five board members “owned land affected and benefitted by the proposed improvement.” Id. at 14, 153 N.W.2d at 219. The Minnesota Supreme Court found that this fact did not invalidate the board’s order, and in the Lewis case succinctly explained the reason for this holding:
[B]ecause there was a good chance that any large improvement would necessarily involve land owned by some of the managers, and because procedural safeguards, including the availability of appeal to district court, were available, we held that there was not sufficient need to disqualify those officials from acting.
Lewis, 305 Minn. at 493-494, 234 N.W.2d at 819.
This is not a case of a public improvement conferring a general benefit upon a *100great many citizens, board members necessarily included. In this case, the interested public official who cast the deciding vote to oppose — and, in effect, to deny — the liquor license stood to personally gain at least $100,000 by the closing of Fergie’s Bar, due to the unique fact that his development property lies directly across the road. There can be little doubt he possessed a significant personal interest.
It cannot be argued convincingly that all Marion Township residents are necessarily “affected” by or “interested” in the Fer-gie’s Bar licensure to bring these facts within the ambit of Lenz. The decision on the fate of Fergie’s Bar has no wide impact even remotely similar to the broad effects of a 27.1 mile drainage improvement project designed to stop flooding, reduce damage to roads and bridges, drain farmland, and provide two cities with storm sewer systems. Fergie’s Bar is, after all, one small business in the approximately 34.5 square mile area of Marion Township.
A resident may be “interested,” but the question to resolve is the significant personal interest which created the conflict and which denies due process because of the denial of a fair hearing as enunciated by Tumey and Gibson and implicit in Lenz and Lewis.
It must be further noted that Lenz was decided prior to Gibson, which focuses on personal pecuniary bias as disqualifying.
III.
NONCONFORMING USE
Prior to granting Fergie’s Bar a license, the Burr Oak School building had been permanently closed by formal resolution. Fergie’s had been operating for more than one year before the building was taken over by the Rochester Area Vocational and Technical Institute. By that time, Fergie’s owners had invested substantial sums in operating the bar; the bar had a recognized property interest. Trumbull. By reason of the institute’s moving to within 1500 feet of Fergie’s, the bar became a nonconforming use. It “must either be permitted to remain or be eliminated by use of eminent domain.” County of Freeborn v. Claussen, 295 Minn. 96, 99, 203 N.W.2d 323, 325 (1972).
For the above reasons, I would affirm the District Court. The Township may reconsider Fergie’s license application in a hearing where Kuehn is not entitled to vote. If it decides not to continue Fergie’s license, it must proceed by eminent domain.