Matter of Galaxy Bar & Grill Corp. v. New York State Liq. Auth.

Tom, J.R, and Andrias, J.,

dissent in a memorandum by Tom, J.P., as follows: The Liquor Authority’s decision to deny petitioner’s application for a full on-premises liquor license has a rational basis in the record and was not arbitrary and capricious. Accordingly, I dissent.

Petitioner’s 2015 application was for a bar/tavern and cabaret, with live and recorded music, plus dancing. Carmel Jean Loiseau signed the application as petitioner’s principal. Loiseau’s prior experience was listed as building maintenance and maintenance manager. Loiseau also indicated that petitioner’s application had been disapproved twice before. The first time was on March 12, 2013, for failure to provide the Liquor Authority with certain information, and the second time was on April 11, 2014, for lack of management experience.

Eduardo Fontan Besey was petitioner’s proposed manager in the present application. Besey noted his professional experience, from 1999 through 2013, as a manager, consultant, and principal with various hotels, restaurants, and lounges in Montauk, Miami, and Manhattan. Also attached to the application was a detailed security plan for the location.

Following a full board hearing in August 2015, on September 11, 2015, the Authority denied the application. Among its many concerns, the Authority noted that this was the third time petitioner had applied for a license at this location, that the first application was denied for failure to cooperate with the Community Board, and that the second application was denied because petitioner failed to address the Authority’s concerns or provide a clear plan of supervision. The Authority remained concerned that on this third application petitioner had still failed to meet with the Community Board to resolve the objections the neighborhood had to licensing the location.

The Authority also noted that the sole principal of petitioner has never held a license to sell alcoholic beverages and did not disclose any experience working in, or supervising, a business with a liquor license. While acknowledging that Besey, who has appropriate experience, would be managing the business, the Authority noted that his experience was “questionable” because at least one of the businesses for which he worked had a history of sales to minors during the time Besey was employed as its manager.

Although petitioner did submit a security plan with this application, the Authority noted that local police had expressed reservations about having a nightclub at this location given the history of shootings, stabbings, sales to minors and other incidents. Given both this history, the lack of experience of petitioner’s principal and the questionable experience of the proposed manager and the other concerns it had about petitioner, the Authority was unconvinced that the location could be operated by petitioner as a nightclub without a reoc-currence of violence and unlawful operation. The Authority was not persuaded that petitioner’s proposed changes would be possible, given the evidence presented, including the limited seating, music and dancing at the premises. Thus, concerned that history would “repeat itself” the Authority determined it could not risk the safety of the local residents or patrons of the establishment.

In articulating its reasons for denying the application, the Authority also provided a history of the location. It noted that the past two licensees had their licenses revoked following violations of building codes; allowed the premises to become disorderly, and that such disorder included assaults such as stabbings and shootings, and lewd conduct; sold alcohol to minors and after hours; and permitted other parties to use their license. The Authority also remarked that the continuing pattern of problems at the location resulted in it becoming a focal point of police attention.

Ultimately, an Administrative Law Judge determined that the Authority had a rational basis for its determination, and on February 16, 2016 the Authority adopted the recommendation and denied the application.

The Liquor Authority is given wide latitude in the exercise of its powers (see Matter of Wanetick v State Liq. Auth., 8 AD2d 706, 706 [1st Dept 1959], lv denied 6 NY2d 707 [1959]). “[A] reviewing court is not entitled to interfere in the exercise of discretion by an administrative agency unless there is no rational basis for the exercise, or the action complained of is arbitrary and capricious” (Matter of Soho Alliance v New York State Liq. Auth., 32 AD3d 363, 363 [1st Dept 2006]). Courts look to whether the determination “is without sound basis in reason and is generally taken without regard to the facts” (Matter of Pell v Board of Educ. of Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck, Westchester County, 34 NY2d 222, 231 [1974]).

Here, the Authority’s written statement sets forth detailed, concrete reasons for its determination, made after a hearing, that good cause had been shown to deny the application, i.e., that “public convenience and advantage and the public interest” would not be promoted by issuance of the license (Alcoholic Beverage Control Law § 64 [1], [6-a]). In sum, the Authority’s determination has a rational basis in the record and was not arbitrary and capricious.

The Authority rationally considered a number of relevant factors in making its determination, including the principal’s lack of experience, the questionable experience of the proposed manager, petitioner’s failure to meet with the Community Board, opposition from the police and community, the history of violence and unlawful behavior at that location, the risk to the public’s safety, and that petitioner had the identical business plan for a nightclub as the previous two licensees whose licenses were revoked (see Alcoholic Beverage Control Law § 64 [6-a] [f]). Further, while petitioner did submit a security plan, “[t]he efficacy of such operational plans is, of course, subject to respondent’s evaluation” (Pastore & Assoc. v New York State Liq. Auth., 194 AD2d 409, 410 [1st Dept 1993]). Nor does the submission of a purportedly adequate security plan require the granting of the license if there are other factors weighing against doing so.

The Authority also properly considered “[t]he history of liquor violations and reported criminal activity at the proposed premises” (Alcoholic Beverage Control Law § 64 [6-a] [e]) even though petitioner had no ownership interest in the previous licensees (cf. Matter of Ha Ha Ha, Inc. v New York State Liq. Auth., 262 AD2d 1008 [4th Dept 1999]). Contrary to the majority’s argument, the prior licensees’ licensing history and the location, which reflects a potentially dangerous and troublesome locale that can affect the safety and welfare of the patrons and employees of the establishment, were relevant to this application and served as factors, among others, that informed the Authority in making its determination. Indeed, the history and location factors are very relevant to the complete lack of experience of the sole principal applicant and the questionable qualifications of the proposed manager, and, given all the combination of these and other factors, the Authority rationally decided not to grant the application.

Further, petitioner was not unfairly prejudiced by the past licensees’ failures, as the Authority’s determination was not solely based on that history (cf. Matter of 512-3rd St. v New York State Liq. Auth., 217 AD2d 1010, 1010 [4th Dept 1995] [“The prior history of the premises, standing alone ... is insufficient to warrant disapproval of the application”]). Rather, in conjunction with a number of factors, including the complete lack of experience of the sole principal owner in managing or supervising a bar/tavern/cabaret with a liquor license and the questionable qualification of the proposed manager, the Authority properly considered this history as it related to the “community impact” of licensing a nightclub at that location (see Matter of 21 Group, Inc. v New York State Liq. Auth., 115 AD3d 509, 509 [1st Dept 2014], lv denied 24 NY3d 908 [2014]).

A fair reading of the Authority’s determination demonstrates that community opposition to the proposed establishment was not the sole basis for the determination, and thus the majority’s concern in that regard is unfounded. Further, contrary to the majority’s claim that there is no evidence of community or police opposition, petitioner conceded below that the police have expressed concerns about this application, and petitioner failed to meet with the Community Board to attempt to resolve the objections the community had to licensing the location, including the objections received to petitioner’s earlier applications. In fact, in its determination the Authority found the following: “We remain concerned with the fact that it appears that the applicant has failed to meet with the Community Board to attempt to resolve the objections that the neighborhood has to licensing this location. In addition, the applicant concedes that the local police have expressed reservations about another nightclub being opened at this location, given the incidents that have taken place here in the past.”

At the Liquor Authority’s August 2015 hearing, Authority Chairman Bradley stated that the Community Board had problems with petitioner’s application because it was a problem location and petitioner was proposing a similar nightclub at a location that had a history of violence and safety issues. Petitioner’s counsel responded that petitioner was aware that the Community Board had concerns. In addition, Chairman Bradley noted that the location was a violent place and a “[p]o-lice focal point.” Petitioner’s counsel acknowledged that when he contacted the police regarding the application the police expressed concerns about, among other things, unruliness, the lack of control, and excessive capacity levels. Chairman Bradley also remarked that the history of violence at the location, which had a similar business model to this application, should not be minimized as it was extensive and included shootings and stabbings.

Although it is not the role of this Court, the majority appears to be challenging the fact finding of the Liquor Authority with regard to community and police opposition. Further, by stressing the fact that the police and Community Board did not appear at the SLA hearing, the majority creates a burden where none exists. “It is for the administrative agency to determine the credibility of the witnesses, to weigh the evidence and to draw inferences therefrom, and this Court cannot substitute its judgment, on conflicting evidence or on conflicting inferences for that of the Agency” (Irvington Enters. v Duffy, 155 AD2d 335, 336 [1st Dept 1989]; see also Matter of Pell, 34 NY2d at 232; Matter of Peckham v Calogero, 12 NY3d 424, 431 [2009] [if there is rational basis for a determination, reviewing court “must sustain the determination even if the court concludes that it would have reached a different result than the one reached by the agency”]). Moreover, it was undisputed that the police expressed concerns about the application and they were thus not required to appear at the hearing. Nor is there a basis to question the Authority’s concerns about petitioner’s failure to meet with the Community Board, or the Community Board’s concerns about the application.

The fact that the Community Board did not attend the Liquor Authority’s hearing is not germaine to the Liquor Authority’s finding that the Community Board had a problem with petitioner’s application. At the hearing, petitioner had acknowledged the Community Board’s concern regarding the application due to safety issues at the location. The majority’s purported concern that the Community Board had not attended the hearing is a nonissue and a red herring.

The Authority’s determination was neither based on speculation nor on conclusory reasons, as suggested by the majority. Rather, it was based on an undisputed violent history at the premises, the established questionable experience of the proposed manager, community and police opposition, and the owner’s lack of experience. While the Authority cannot see into the future with perfect accuracy, there were facts in this record to support the Authority’s concerns about future violations (see Matter of Circus Disco v New York State Liq. Auth., 51 NY2d 24, 36 [1980]), and the Authority and community residents should not have to wait until such violations occur.

While there may be some evidence that might support petitioner’s application for a liquor license, including a supporting letter from a City Council Member, it is not our place to substitute our judgment for that of the Authority, which made a reasonable decision and did not abuse its discretion (.see Pell, 34 NY2d at 232).

I would therefore reverse the decision of the motion court granting the amended petition brought pursuant to CPLR article 78 and annulling the Liquor Authority’s determination, dated February 16, 2016, vacate the judgment, and dismiss this proceeding.