COURT OF APPEALS OF VIRGINIA
Present: Judges Elder, Humphreys and Senior Judge Willis
Argued at Chesapeake, Virginia
SARAH HARRISON
OPINION BY
v. Record No. 2311-06-1 JUDGE LARRY G. ELDER
OCTOBER 23, 2007
OCEAN VIEW FISHING PIER, LLC AND
VIRGINIA ALCOHOLIC BEVERAGE CONTROL BOARD
FROM THE CIRCUIT COURT OF THE CITY OF NORFOLK
Norman A. Thomas, Judge
Thomas S. Carnes (Colgan & Carnes, on brief), for appellant.
Martin A. Thomas (Decker, Cardon, Thomas, Weintraub & Neskis,
P.C., on brief), for appellee Ocean View Fishing Pier, LLC.
K. Michelle Welch, Assistant Attorney General (Robert F.
McDonnell, Attorney General; Frank S. Ferguson, Deputy Attorney
General, on brief), for appellee Virginia Alcoholic Beverage
Control Board.
Sarah Harrison appeals from a decision of the Circuit Court of Norfolk, issued pursuant
to the Administrative Process Act, Code §§ 2.2-4000 to -4031 (the APA), and ordering the
Alcoholic Beverage Control Board (the Board) to grant to the Ocean View Fishing Pier, LLC
(the Pier), two licenses permitting the sale of alcoholic beverages on its premises until 2:00 a.m.
On appeal, Harrison contends the circuit court erred in finding the Board’s original decision to
issue the licenses with a 12:00 a.m. restriction to be arbitrary and capricious. She also contends
that, in ordering the Board to grant licenses with a 2:00 a.m. restriction dictated by the court, the
court erroneously assumed a duty committed by the basic law to the Board. In assignments of
cross-error, the Pier contends Harrison lacked standing to appeal the circuit court’s ruling and
that her appeal is moot. The Board joins in the Pier’s argument on these issues, but it agrees
with Harrison’s argument that the circuit court erred in ruling its issuance of the restricted
licenses was arbitrary and capricious.
We hold Harrison has standing to appeal and that, on the record before us, her appeal is
not moot. We further hold that the Board’s imposition of restrictions on the licenses was not
arbitrary and capricious and that the circuit court erred in ruling to the contrary. However,
because the Board’s opinion granting the restricted licenses makes no findings of fact or
conclusions of law to support imposition of the restrictions, we reverse the decision of the circuit
court and remand to it for remand to the Board with instructions to make findings and
conclusions in compliance with the APA. Because we reverse and remand on this ground, we
need not consider Harrison’s claim that the form of the circuit court’s ruling constituted an
improper usurpation of the Board’s authority to grant ABC licenses.
I. PROCEDURAL HISTORY
In September 2003, a fishing pier located in the Ocean View section of Norfolk was
destroyed by a hurricane. The pier “did not have an ABC license on it” and, thus, had not been
monitored by the ABC Board. After the pier was destroyed, Ronald W. Boone, Sr., a real estate
developer and long-time area resident, formed the Ocean View Fishing Pier, LLC, and
constructed a new pier on the same site. The new pier included a restaurant with indoor, rooftop,
and patio areas. The company submitted applications for a “wine and beer on- and off-premises
license and mixed beverage restaurant” license, and when area residents complained about the
request for licensure, an agent from the ABC Board’s Bureau of Law Enforcement Operations
filed an application for a hearing on the licenses.
At an administrative hearing on October 21, 2005, the hearing officer received testimony
and other evidence for and against issuance of the requested ABC licenses. Sarah Harrison, a
resident and owner of property in the neighborhood, appeared “as the spokesperson for the
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objectors.” Harrison and several other area residents offered letters stating their opposition to the
granting of an ABC license to the Pier, and some also offered testimony in keeping with their
letters. Those letters and testimony included concern that noise emanating from the Pier and
disturbances caused by alcohol consumption would disrupt the peace and tranquility of the
surrounding neighborhood, negatively affecting property values and the lives of adults and
children who lived near or visited the Pier. Additional witnesses testified in support of the Pier’s
request for an ABC license, indicating they favored having an “upscale” restaurant in the
neighborhood.
The evidence also included copies of several ordinances relating to operation of the Pier
passed by the Norfolk City Council. Those ordinances “granted a Special Exception to permit
the operation of an entertainment establishment on the property,” subject to the condition that
alcoholic beverages could be sold in the indoor and outdoor portions of the restaurant from
8:00 a.m. to 2:00 a.m. and that “entertainment” in the indoor portion of the restaurant could
occur during those same hours but that “[t]he hours of operation for entertainment on the outdoor
portion of the restaurant shall be from 12:00 p.m. to 8:00 p.m.” only. 1
The hearing officer issued a written decision, finding (1) pursuant to Code
§ 4.1-222(A)(2)(b), that the Pier was not “so located that granting a license and operation
thereunder by the applicant would result in violations of this title, Board regulations, or violation
of the laws of the Commonwealth or local ordinances relating to peace and good order” and
(2) pursuant to Code § 4.1-222(A)(2)(d), that the Pier was not “so located with respect to any
residence or residential area that the operation of such place under such license will adversely
1
The ordinances also indicated that “any requirements, limitations or restrictions
imposed by the ABC Commission or by any provision of Virginia law upon this establishment
which are more stringent than the requirements of the Special Exception shall be effective and
binding.”
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affect real property values or substantially interfere with the usual quietude and tranquility of
such residence or residential area.” The hearing officer also indicated that, “[a]lthough th[ese]
objection[s] [are] not substantiated, certain restrictions/conditions shall be imposed upon the
licenses issued,” including hours restrictions for entertainment and the serving of alcoholic
beverages that matched those in the city ordinance.
Harrison requested an appeal before the ABC Board on the same issues that had been
considered by the hearing officer. In argument, Harrison requested that the Board deny the ABC
licenses based on those objections or, in the alternative, “restrict the hours [for those licenses] to
[those] appropriate for fine dining,” which she asserted would be “10:00 or 11:00 at night.”
The ABC Board, in its subsequent written decision, adopted the hearing officer’s findings
“that the objections are not substantiated by the evidence and should be dismissed” and that the
ABC licenses should be granted, but it imposed additional restrictions on the licenses. It
provided that the sale of alcoholic beverages both inside and outside the restaurant must
terminate nightly at 12:00 a.m., instead of 2:00 a.m. as previously set out by the hearing officer.
It provided that entertainment for the indoor portion of the restaurant must also terminate nightly
at 12:00 a.m., instead of at 2:00 a.m. as previously set out by the hearing officer.
The Pier filed a timely notice and petition appealing the ABC Board’s decision to the
Norfolk Circuit Court. 2 Harrison then filed a notice of appeal, in which she challenged the
issuance of the licenses, but her appeal was not timely. In the proceedings before the Board, the
Pier set out six assignments of error challenging the modification of its hours for serving alcohol,
2
The Pier had previously requested rehearing or reconsideration of the ABC Board’s
decision requiring that alcohol sales terminate at 12:00 a.m. rather than 2:00 a.m. The Board
unanimously denied the motion.
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requiring that sales of alcohol terminate at 12:00 a.m. rather than 2:00 a.m. 3 Both Harrison and
the Board, via counsel, filed answers to the petition.
Sometime thereafter, the Pier and the Board reached an agreement by which the Pier
sought to withdraw its appeal to the circuit court to permit “remand to the [ABC] Board for
rehearing of certain matters relevant to this case with preservation of the appellee’s objection and
appellate rights respecting the currently existing record and any additional objections and
appellate rights which may arise from the anticipated rehearing on remand.” The Pier and the
ABC Board filed a joint motion to that effect. Appellee/respondent Harrison objected to a
remand. The Board and the Pier argued that Harrison lacked standing to object to entry of the
order allowing the Pier to withdraw its appeal. The circuit court denied the Pier’s motion to
withdraw its appeal in order to permit a remand to the ABC Board for additional proceedings.
After a hearing at which all parties presented argument, the circuit court granted the
Pier’s petition and remanded the matter to the ABC Board, ordering it to issue the licenses with
2:00 a.m. restrictions for indoor and outdoor alcohol sales and indoor entertainment. The circuit
court concluded that all the Pier’s assignments of error except one lacked merit but that the
meritorious assignment required reversal of the Board’s decision.
II. ANALYSIS
A. PRELIMINARY PROCEDURAL ISSUES
1. Harrison’s Standing in the Circuit Court and this Court
The Board contends Harrison lacked standing to participate in the circuit court
proceedings and to object to the joint motion of the Pier and the Board to dismiss the Pier’s
3
The Board also altered the hearing officer’s recommendation regarding indoor
entertainment, providing that indoor entertainment terminate at 12:00 a.m. rather than 2:00 a.m.
The Pier challenged this change in its notice of appeal but did not assign error to the change in its
subsequent petition for appeal.
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appeal and remand to the Board. As a result, the Board argues the circuit court erred in denying
the joint motion to dismiss and remand. 4 Further, the Pier and the Board contend, because
Harrison lacked standing to participate in the proceedings before the circuit court, she also
lacked standing to appeal the circuit court’s decision to this Court. Based on the procedural
posture of this case, viewed in light of the applicable statutes and regulations, we reject these
arguments.
The Alcoholic Beverage Control Act (the ABC Act) establishes the Alcoholic Beverage
Control Board (the Board) and gives it the authority, inter alia, to grant and revoke licenses for
the sale of alcohol. Code §§ 4.1-103, 4.1-229. The Board may conduct hearings as necessary to
perform its duties, Code § 4.1-103(11), and promulgate reasonable regulations to carry out the
ABC Act’s provisions, Code § 4.1-111(A). The ABC Act directs “[t]he Board [to] promulgate
regulations that . . . [p]rescribe what hours and on what days alcoholic beverages shall not be
sold by licensees or consumed on licensed premises,” Code § 4.1-111(B)(1), and it expressly
provides that “regulations . . . relating to hours of sale for licensees” need not “be uniform in
their application,” Code § 4.1-111(D); see 3 VAC 5-50-30 (setting out standard hours for
off-premises sale and on-premises sale and consumption but providing that “[i]ndividual
licensees whose hours have been more stringently restricted by the board shall comply with such
requirements”).
The Board may refuse to grant any license if it has “reasonable cause to believe,” inter
alia, that “[t]he place to be occupied by the applicant . . . [i]s so located with respect to any
residence or residential area that the operation of such place under such license will adversely
affect real property values or substantially interfere with the usual quietude and tranquility of
4
Neither the Board nor the Pier asserts any other basis on which it contends the circuit
court’s denial of the motion to dismiss the appeal and remand to the Board was erroneous.
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such residence or residential area.” Code § 4.1-222(A)(2)(d). Also, “[i]mplicit in the ABC
Board’s authority to revoke a license under [former] Code § 4-37(A)(3)[, present Code
§ 4.1-229], upon reason to believe that cause exists for which the Board would have been entitled
to refuse a license under [former] Code § 4-31(A)(2)(b), (c), or (d)[, present Code
§ 4.1-222(A)(2)(b), (c), or (d),] had the facts been known, is the ability to exercise the lesser
power to restrict the license in accordance with the purposes of the [ABC Act].” Muse v. ABC
Bd., 9 Va. App. 74, 79, 384 S.E.2d 110, 113 (1989) (emphases added). Accordingly, the Board
may “exercise th[is] lesser power to restrict the license,” id., where it has “reasonable cause to
believe” such restrictions are necessary to avoid an “adverse[] affect [on] real property values or
substantial[] interfere[nce] with the usual quietude and tranquility of such residence or residential
area,” Code § 4.1-222(A)(2)(d).
Pursuant to its regulatory authority, the Board has promulgated regulations permitting
“[a]ny interested party who would be aggrieved by a decision of the board upon any application
. . . to appear and be heard in person . . . and produce under oath evidence relevant and material
to the matters in issue.” 3 VAC 5-10-10; see 3 VAC 5-10-120 (defining “interested parties” as
“[p]ersons who would be aggrieved by a decision of the board”); see Va. Beach Beautification
Comm’n v. Bd. of Zoning Appeals, 231 Va. 415, 419-20, 344 S.E.2d 899, 902-03 (1986)
(discussing meaning of “aggrieved” as involving allegation, inter alia, of “a denial of some
personal or property right . . . different from that suffered by the public generally”). After a
hearing officer renders an “initial decision,” any interested party “may appeal to the board an
adverse initial decision . . . of a hearing officer or a proposed decision . . . of the board.” 3 VAC
5-10-240. All interested parties are entitled to notice of the Board’s “final decision” and “any
written opinion.” 3 VAC 5-10-280.
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Thereafter, pursuant to the APA, “any . . . party aggrieved by and claiming unlawfulness
of a case decision . . . shall have a right to the direct review thereof by an appropriate and timely
court action against the agency or its officers or agents in the manner provided by the rules of the
Supreme Court of Virginia.” Code § 2.2-4026; see Rules 2A:2, 2A:4. After issuance of a “final
decision of a circuit court on appeal from . . . a decision of an administrative agency,” “[a]ny
aggrieved party may appeal to the Court of Appeals.” Code § 17.1-405; see Code § 4.1-224
(granting petitioner and Board right to appeal to Court of Appeals following circuit court review
pursuant to APA).
Implicit in this regulatory structure is that a person owning a residence situated such that
the granting of an ABC license may “adversely affect [that person’s] real property values or
substantially interfere with the usual quietude and tranquility of such residence,” Code § 4.1-222,
is entitled to appear before a hearing officer of the ABC Board as one claiming to be an
“interested party who would be aggrieved by a decision of the board upon any application,” 3
VAC 5-10-10. Also implicit in this structure is that such a person is entitled to participate in the
appeals process until any and all appeals are resolved. See Code §§ 2.2-4026, 17.1-405; Rule
2A:2; 3 VAC 5-10-240; 3 VAC 5-10-280.
This is precisely what occurred in the case of Harrison’s objections to the Pier’s
application for ABC licensure. The agency was prepared to issue the requested licenses to the
Pier until it learned that Harrison and other neighboring residents objected, and it was on the
basis of their objections that the agency held an administrative hearing. At this proceeding, the
agency took no position on the granting of the licenses. Harrison appeared in these proceedings
based on her claim and the claim of other residents that the granting of the licenses the Pier had
requested would both adversely affect participating residents’ real property values and
substantially interfere with the usual quietude and tranquility of their residences. When the
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hearing officer granted the licenses without restrictions, Harrison was a party aggrieved by the
decision, see 3 VAC 5-10-120, 5-10-240, and Harrison appealed the matter to the Board without
any contention from the Pier that she lacked standing to request review.
The Board reviewed Harrison’s objections to issuance of the licenses without posing any
question regarding her standing to assert those objections. When Harrison prevailed in part,
based on the Board’s imposition of a restriction prohibiting the Pier from selling alcohol or
having indoor entertainment after 12:00 a.m. rather than 2:00 a.m., the Pier noted an appeal to
the circuit court and named Harrison as a party in both its notice of appeal and its petition for
appeal. See Code § 2.2-4026; Rules 2A:2, 2A:4. Harrison and the Board both filed answers to
the Pier’s petition, and neither the Pier nor the Board contended that Harrison was not a proper
party to the proceedings in the circuit court.
Although Harrison did not herself file a timely appeal of the Board’s decision to the
circuit court, this failure resulted in a waiver only of her opportunity to challenge the underlying
issuance of the ABC licenses. It did not cause Harrison to lose her interest in defending, on
appeal, that aspect of the Board’s decision on which she had prevailed--the imposition on the
licenses of a 12:00 a.m. restriction on alcohol sales and indoor entertainment. Within the scope
of defending that interest, Harrison remained a party who would be affected by any delay in the
final resolution of the proceedings that would result from the requested dismissal of the appeal
and remand to the Board. When the circuit court ruled against Harrison’s interests by holding
the Board lacked authority to impose the 12:00 a.m. restriction on alcohol sales and indoor
entertainment and ordering it to issue unrestricted licenses, Harrison had a right to appeal the
removal of the restrictions to the Court of Appeals pursuant to Rule 2A:5 and Code § 17.1-405.
Her failure in the circuit court to note a timely appeal of the underlying issuance of the licenses
prohibited her from challenging only that aspect of the decision on appeal to this Court; it did not
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prevent her from challenging the circuit court’s order to remove from the licenses the challenged
time restrictions for alcohol sales and indoor entertainment. See Mass. Mut. Life Ins. Co. v.
Ludwig, 426 U.S. 479, 480-81, 96 S. Ct. 2158, 2158, 48 L. Ed. 2d 784, 786-87 (1976); cf.
Robinson v. Robinson, 46 Va. App. 652, 671, 621 S.E.2d 147, 156-57 (2005) (en banc) (holding
that party challenging equitable distribution award need not assign error to otherwise favorable
spousal support award to preserve ability of trial court to reconsider spousal support award based
on reversal of equitable distribution).
Whether Harrison ultimately proves to the satisfaction of the agency, or the court on
review, that the granting of the ABC licenses will “adversely affect [her] real property values or
substantially interfere with the usual quietude and tranquility of [her] residence” does not control
the issue of her standing to litigate the issue.
2. Mootness of Appeal
The Pier and the Board also contend Harrison’s appeal is moot. They assert that, upon
remand from the circuit court, the Board issued new licenses with 2:00 a.m. provisions pursuant
to the circuit court’s order and that Harrison failed to appeal that issuance. Thus, they contend,
any decision in this appeal will not affect the new case decision and is moot.
Under settled principles, it is our duty “‘to decide actual controversies by a judgment
which can be carried into effect, and not to give opinions upon moot questions or abstract
propositions, or to declare principles or rules of law which cannot affect the matter in issue in the
case before it.’” Potts v. Mathieson Alkali Works, 165 Va. 196, 225, 181 S.E. 521, 533 (1935)
(quoting Mills v. Green, 159 U.S. 651, 653, 16 S. Ct. 132, 133, 40 L. Ed. 293, 293-94 (1895))
(emphasis added). Harrison’s appeal is not moot under this standard because a decision in
Harrison’s favor will result in “‘a judgment which can be carried into effect.’” Id. (quoting
Mills, 159 U.S. at 653, 16 S. Ct. at 133, 40 L. Ed. at 293-94). A decision in Harrison’s favor will
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nullify the circuit court decision, which served as the basis for the Board’s subsequent issuance
of any ABC licenses, thereby also nullifying those licenses. Cf. Robinson, 46 Va. App. at 671,
621 S.E.2d at 156-57. Thus, we hold the appeal is not moot, and we proceed to examine it on the
merits.
B. MERITS
The Board found “reasonable cause to believe that the objections are not substantiated by
the evidence and should be dismissed” and ordered that the ABC licenses “should be granted.” 5
Despite this rejection of the objections to licensure, the Board imposed additional restrictions on
the licenses, including the restriction that indoor entertainment and indoor and outdoor alcohol
sales must cease at 12:00 a.m. rather than 2:00 a.m. The circuit court held the Board’s statement
that the objections were not substantiated by the evidence was in irreconcilable conflict with the
Board’s imposition of restrictions and that this inconsistency rendered the Board’s ruling
arbitrary and capricious.
In this appeal, Harrison, joined by the Board, contends the circuit court’s ruling finding
an inconsistency was erroneous. She argues the circuit court found substantial evidence in the
record to support a 2:00 a.m. or a 12:00 a.m. restriction on alcohol and entertainment and, thus,
that the Board, separate and apart from its decision that the objections did not justify complete
denial of the requested licenses, properly exercised its authority to impose reasonable restrictions
on the licenses. Harrison requests, in the event we conclude the Board’s order was deficient, that
we remand to the circuit court “for remand to the Board with instructions to consider whether,
upon the existing evidentiary record, restrictions on the subject licenses as to hours of operation
are appropriate.”
5
The licenses included those restrictions already imposed by the City of Norfolk, as
previously mentioned, but did not impose any additional restrictions.
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The Pier disputes the circuit court’s ruling can be interpreted to include a finding that
substantial evidence in the record supported the restrictions. The Pier contends, however, that
even if the circuit court did make such a finding, that finding was erroneous. It also contends the
circuit court erred in finding a causal nexus between the restrictions imposed and the situs of the
establishment. Finally, the Pier contends the circuit court properly ruled the Board’s imposition
of restrictions on the licenses was arbitrary and capricious.
We agree with the argument of Harrison and the Board. The Board’s finding that the
objections to issuance of the licenses were not substantiated did not render arbitrary and
capricious the Board’s decision to impose additional restrictions on the licenses, especially in
light of the circuit court’s finding that substantial evidence in the record supported the
restrictions imposed. However, because the Board made no findings of fact to support its
imposition of restrictions on the licenses, we remand the case to the Board for further
proceedings consistent with this opinion.
The APA expressly provides that an agency’s case decision “shall . . . briefly state . . . the
findings, conclusions, reasons, or basis therefor upon the evidence presented by the record and
relevant to the basic law under which the agency is operating together with the appropriate order,
license, grant of benefits, sanction, relief, or denial thereof.” Code § 2.2-4020 (emphasis added).
On appeal of a case decision, issues subject to judicial review include:
(ii) compliance with statutory authority . . . or right as provided in
the basic laws as to . . . the factual showing respecting violations or
entitlement in connection with case decisions, (iii) observance of
required procedure where any failure therein is not mere harmless
error, and (iv) the substantiality of the evidentiary support for
findings of fact.
Code § 2.2-4027.
In the context of factual issues, Code § 2.2-4027 mandates that the court “take due
account of the presumption of official regularity, the experience and specialized competence of
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the agency, and the purposes of the basic law under which the agency has acted.” See
Johnston-Willis Ltd. v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1, 7 (1988) (decided under
former Code § 9-6.14:17). “This heightened deference acknowledges an agency’s ‘“expert
discretion [in] matters coming within its cognizance and [allows] judicial interference . . . only
for relief against arbitrary or capricious action that constitutes a clear abuse of the delegated
discretion.”’” Envtl. Defense Fund, Inc. v. State Water Control Bd., 15 Va. App. 271, 277, 422
S.E.2d 608, 611 (1992) (quoting ABC Comm’n v. York Street Inn, Inc., 220 Va. 310, 315, 257
S.E.2d 851, 855 (1979) (quoting Schmidt v. Bd. of Adjustment, 88 A.2d 607, 615-16 (N.J.
1952))). “In accordance with familiar principles of appellate review, ‘we review the facts in the
light most favorable to sustaining the Board’s action.’” Goad v. Bd. of Med., 40 Va. App. 621,
634, 580 S.E.2d 494, 501 (2003) (quoting Atkinson v. ABC Comm’n, 1 Va. App. 172, 176, 336
S.E.2d 527, 530 (1985)).
“In contrast, judicial review of a ‘legal issue’ requires ‘little deference,’ unless it . . .
‘falls within an agency’s area of particular expertise.’” Envtl. Defense Fund, 15 Va. App. at 278,
422 S.E.2d at 612 (quoting Kenley, 6 Va. App. at 243-46, 369 S.E.2d at 8). This principle
“recognizes the ‘special competence’ of the judiciary to decide issues of ‘common law,’
‘constitutional law’ or ‘statutory interpretation,’ distinct from ‘findings of fact.’” Id. (quoting
Kenley, 6 Va. App. at 243-46, 369 S.E.2d at 8).
1. Circuit Court Ruling and Evidence Supporting Imposition of Restrictions
Contrary to the argument of the Pier, we hold the circuit court’s explanation, as a whole,
constitutes a finding by the circuit court that the agency record, viewed in the light most
favorable to Harrison and the other objectors, contained substantial evidence to support the
12:00 a.m. restriction on alcohol sales. It does not constitute a ruling limited, as the Pier
contends, to the conclusion that the record supported only the unrestricted grant or denial of the
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licenses. In response to the Pier’s assignment of error number 2, “that the Board’s restriction of
the applicant’s license to hours of operation for the sale of alcoholic beverages to 12 midnight
was in error because the decision was unsupported by substantial evidence in the agency record,”
the court noted the record contained “conflicting evidence” and specifically found “that the
Board could have made a decision going either way on this record.” (Emphases added).
2. Relationship Between Board’s Stated Findings and Imposition of Restrictions
The Pier nevertheless contends that, even if the Board could have issued restricted
licenses on the evidence presented and the circuit court so found, the Board’s decision was
fatally flawed because it “could not hold that the Objectors had failed to prove their case and
then arbitrarily restrict the hours of sale.” We disagree. We hold the circuit court erred in ruling
that the Board’s findings and conclusions were in irreconcilable conflict such that imposition of
the restrictions was arbitrary and capricious.
A reasonable construction of the Board’s decision, which “dismissed” the objections to
the granting of the licenses but imposed hours restrictions on the licenses without articulating an
explanation for those restrictions, is that the Board held the objections did not justify outright
denial of the licenses but did justify the time restrictions imposed. Thus, the Board’s decision to
issue the restricted licenses was not arbitrary and capricious, and the circuit court erred in ruling
to the contrary.
3. Necessity of Findings by Board to Support Imposition of Restrictions
Nevertheless, in order to support the imposition of restrictions on the licenses, the APA
required the Board to “briefly state . . . the findings, conclusions, reasons, or basis [for the
restrictions] upon the evidence presented by the record and relevant to the basic law under which
the agency is operating.” Code § 2.2-4020. Failure to make such findings is not harmless error:
[A] simple but fundamental rule of administrative law . . . is to the
effect that a reviewing court, in dealing with a determination or
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judgment which an administrative agency alone is authorized to
make, must judge the propriety of such action solely by the
grounds invoked by the agency. If those grounds are inadequate or
improper, the court is powerless to affirm the administrative action
by substituting what it considers to be a more adequate or proper
basis. To do so would propel the court into the domain which [the
legislature] has set aside exclusively for the administrative agency.
[A]n important corollary of the foregoing rule . . . [is:] If
the administrative action is to be tested by the basis upon which it
purports to rest, that basis must be set forth with such clarity as to
be understandable. It will not do for a court to be compelled to
guess at the theory underlying the agency’s action; nor can a court
be expected to chisel that which must be precise from what the
agency has left vague and indecisive.
SEC v. Chenery Corp., 332 U.S. 194, 196-97, 67 S. Ct. 1575, 1577-78, 91 L. Ed. 1995, 1999
(1947), cited with approval in First Va. Bank v. Commonwealth, 213 Va. 349, 351, 193 S.E.2d 4,
5-6 (1972) (noting holding that “where the [State Corporation] Commission has reached the right
result for the wrong reason, its decision, unlike that of a trial court, will not be permitted to
stand”); cf. Goodyear Tire & Rubber Co. v. Pierce, 5 Va. App. 374, 384, 363 S.E.2d 433, 438
(1987) (holding, under judicial review provisions of Workers’ Compensation Act, that “[i]n
order to sufficiently scrutinize any award, we must have an adequate ‘statement of the findings
of fact, rulings of law and other matters pertinent to the questions at issue’ for a proper review”
(quoting former Code § 65.1-97)).
Where a case decision is found “not to be in accordance with law under § 2.2-4027, the
court shall suspend or set it aside and remand the matter to the agency for further proceedings, if
any, as the court may permit or direct in accordance with law.” Code § 2.2-4029. This case
decision was not in accordance with law under Code § 2.2-4027 because the Board, by failing to
make findings of fact to support the restrictions as required by Code § 2.2-4020, failed to
“observ[e] . . . required procedure” in a way that, in light of Chenery, was not “mere harmless
error,” Code § 2.2-4027. Thus, pursuant to Code § 2.2-4029, we remand to the circuit court to
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remand to the Board with instructions to “briefly state . . . the findings, conclusions, reasons, or
basis [for the restrictions] upon the evidence presented by the record and relevant to the basic
law under which the agency is operating.” Code § 2.2-4020; see also Jones v. Willard, 224 Va.
602, 607, 299 S.E.2d 504, 508 (1983) (recognizing principle that, even where remand is not
expressly authorized, appellate jurisdiction includes implicit authority to remand to agency for
additional findings and conclusions “absent a specific mandate to the contrary”). We do not
consider, prior to remand, whether the evidence in the record is sufficient to support the
restrictions.
C. REMEDY
Because we reverse the circuit court’s decision on the merits and remand to the Board for
additional proceedings, we need not consider whether, as Harrison and the Board allege, the
form of the circuit court’s ruling constituted an improper usurpation of the Board’s authority to
grant ABC licenses.
III.
For these reasons, we reverse the circuit court’s ruling and remand to the circuit court for
remand to the Board with instructions to comply with the requirements of the Administrative
Process Act concerning the necessity of findings and conclusions to support its decision
regarding the licenses.
Reversed and remanded with instructions.
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