LLC v. State of Connecticut Department of Consumer Protection et al. (2012)

MEMORANDUM OF DECISION ON MOTION TO DISMISS

The plaintiff, Hayes Properties–Newington LLC, alleges that the defendant, department of consumer protection, division of liquor control, (the department) improperly denied the plaintiff a remonstrance hearing pursuant to General Statutes § 30–39.   The department had issued a permit to Falgun Bhatt, with a backer, Shivam, Inc. (Shivam), an intervening defendant, that became the subject of the proposed remonstrance.   The department has moved to dismiss this appeal for lack of subject matter jurisdiction.

On July 17, 2012, the court conducted a hearing on the jurisdictional facts in conjunction with the motion to dismiss.   The evidence at the hearing shows that the department issued a permit to Shivam on June 20, 2011.   On August 4, 2011, the plaintiff submitted at the offices of the department a purported remonstrance pursuant to § 30–39(c) that provides in part as follows:  “Any ten persons who are at least eighteen years of age, and are residents of the town within which the business for which the permit ․ has been applied for ․ may file with the department, within three weeks from the last date of publication of notice ․ a remonstrance containing any objection to the suitability of such applicant ․ Upon filing of such remonstrance, the department, upon written application, shall hold a hearing and shall give such notice as it deems reasonable of the time and place ․ At any time prior to the issuance of a decision by the department, a remonstrance may be withdrawn by the remonstrants ․ and the department may cancel the hearing ․”

On August 5, 2011, the remonstrance was transmitted to the computer of a paralegal employee for review.   The employee was not at work on that date, and she first saw the document on Monday, August 8, 2011, the last day for the filing of the remonstrance under § 30–39(c).  The paralegal referred to the department website to conduct a preliminary review of the remonstrance.   The website states that one of the form requirements for remonstrances is that “[e]ach page containing signatures must state (1) the location and (2) reasons for the objections.”

The remonstrance received by the department August 5, 2011, did not comply with the website requirements.   Knowing that the remonstrance had to be filed by midnight, August 8, the paralegal first telephoned the plaintiff's managing member and then the agent for service (an attorney for the plaintiff) listed on the remonstrance and explained the defects in the remonstrance.   Before midnight, the plaintiff's attorney filed with the department a second remonstrance, and above the signatures were set forth Shivam's location and a statement that the signers objected “for the reasons stated herein.”   Thirteen signatures, along with name, address and telephone numbers, followed.

The attorney testified in this court on July 17, 2012, that he was concerned to learn that the first remonstrance did not “pass muster.”   He was “spooked” by the possibility that this remonstrance would be rejected and “dropped everything” and “whipped into action” to submit a new document that was “bullet proof.”   He acted appropriately, as would any attorney under these circumstances, to meet the instructions of a staff member of the department.   (Transcript, pp. 97, 99–100.)   The paralegal and the attorney never discussed the status of the first remonstrance.  (Id., p. 99.)

On August 10, 2011, the department acknowledged “receipt of your remonstrance ․” The department also stated that after the department completed its investigation, the remonstrance would be scheduled for an hearing.  “A determination will be made at the time of the hearing as to whether or not a proper remonstrance against the application was filed.”

On August 29, 2011, Shivam's attorney wrote the following to each signer of the remonstrance:  Shivam's permittee “has instructed us to put you on notice that he will seek money damages from each and every one of you for making baseless, false and malicious allegations contained in a document you signed entitled ‘Remonstrance Containing Objections Application for Hearing and Designation of Agent for Service of Process.’  “ The attorney claimed that the signers' actions were an interference with his client's business opportunity and his business expectancy, a loss of investment opportunity, a loss of use of money, a loss of profit, and were malicious and vexatious.

The department's agent had no knowledge of Shivam's attorney's letter,¹ but received five withdrawals of signatures.   Four of these withdrawals were sent directly to the department's agent conducting the investigation and one was forwarded to the agent by Shivam.   Each withdrawal stated that he had been misinformed in signing the remonstrance.   The department wrote to the agent for service, the plaintiff's attorney, on November 21, 2011:  “Given the withdrawal of five signatures from the original thirteen signatures, the submission does not meet the statutory requirements for a valid remonstrance and the department cannot hold a hearing on your submission.”   This appeal followed.

The first issue for the court is the nature of the suit in this court that seeks a review of the canceled hearing.   It is clear from the pleadings of both the complaint and the amended complaint that this is an appeal under § 4–183(a) to review the final decision of an administrative agency.²  See complaint, December 28, 2011, paragraphs 34, 35;  amended complaint, February 1, 2012, paragraphs 35, 36.

Subject matter jurisdiction requires that an administrative appeal be taken from a final decision, § 4–183(a).   A final decision is defined as the “agency determination in a contested case.” § 4–166(3).   A contested case is one where a hearing is required by state statute or regulation. § 4–166(2).   As the Appellate Court stated in Canterbury v. Rocque, 78 Conn.App. 169, 175, 826 A.2d 1201 (2003):  “In other words, the court has read § 4–166(2) as manifesting a legislative intention to limit contested case status to proceedings in which an agency is required by statute to provide an opportunity for a hearing to determine a party's legal rights or privileges ․ If a hearing is not statutorily mandated, even if one is gratuitously held, a contested case is not created.” ³  (Internal quotation marks omitted.)

Canterbury sets forth the leading cases for its holding, Summit Hydropower Partnership v. Commissioner of Environmental Protection, 226 Conn. 792, 800–01, 629 A.2d 367 (1993) and Dadiskos v. Connecticut Real Estate Commission, 37 Conn.App. 777, 782, 657 A.2d 717 (1995).  Canterbury also stands for the general proposition, although the Appellate Court did not apply it to the facts of Canterbury itself, that while a statute may mandate an hearing, this right to a hearing may be defeated by subsequent events.   In such a case, where a mandatory hearing becomes unavailable, there is no subject matter jurisdiction under § 4–183 to take an administrative appeal.

Under this analysis, the plaintiff argues first that the initial remonstrance is still valid, and still has ten signatures.   It argues that a hearing was therefore mandated by § 30–39(c), and the court has jurisdiction under § 4–183 to determine whether the department had the right to deny a hearing.   The plaintiff maintains this position for two reasons:  (1) the initial remonstrance was never withdrawn by the plaintiff's agent and (2) the paralegal employee wrongly concluded that it was invalid.   The plaintiff's first point is one of fact.   Based on the hearing held on July 17, 2012, the court concludes that the plaintiff's agent for service received a courtesy telephone call from the paralegal and knowing that the paralegal found the remonstrance defective, he determined to file a second remonstrance.   There is no indication in the evidence that the second remonstrance was anything other than a replacement for the first.   Indeed, several different signatures were gathered for the second remonstrance and the plaintiff's attorney added the language required by the department website.   Under a time deadline, the attorney acted expeditiously to file the second remonstrance, acting appropriately to meet the instructions of the department staff.

The actions of the attorney, while not specifically expressed, “essentially nullified” the first remonstrance.   See Euclid Ave. Trust v. City of Boise, 146 Idaho 306, 310, 193 P.3d 853 (2008).⁴  The court has taken into account the circumstances under which the second remonstrance was filed in determining that the first no longer has legal validity.

Secondly, the plaintiff argues that the paralegal's actions in reviewing the first remonstrance were illegal.   The plaintiff contends that there is nothing in § 30–39 that authorized the department to engage in a preliminary review.   It also argues that the imposition of the requirements of “permittee location” and “reasons above the signatures” were only found in the department website.   According to the plaintiff, the department is reading requirements into § 30–39(c) that exceed the words of the statute.   No regulation has been issued to introduce these requirements.   The department replies that it may conduct a facial review of a remonstrance and may, in the public interest, determine what form the remonstrance is to take, without adopting formal regulations.

The court does not have to resolve this issue, because the plaintiff has not established any prejudice from the department paralegal's procedure that required the plaintiff to file a second remonstrance.   The second remonstrance was filed and accepted by the department ⁵ on the same day as the paralegal noted the defects in the first remonstrance.   It was officially acknowledged by the department and an investigation began on its accuracy.   It was only because five signatures were withdrawn from the second remonstrance that the hearing was voided.⁶  Prejudice to the appellant is required before any error may be addressed in an administrative appeal.   See Goldberg v. Insurance Department, 207 Conn. 77, 83, 540 A.2d 365 (1988) (“ordinarily the validity of an administrative regulation can be challenged only by one directly harmed by its application”);  Santiago v. Commissioner of Motor Vehicles, 134 Conn.App. 668, 675, 39 A.3d 1224 (2012);  Moraski v. Connecticut Board of Examiners of Embalmers & Funeral Directors, 291 Conn. 242, 260–61, 967 A.2d 1199 (2009).   Therefore whether the department illegally rejected the first remonstrance or not, on the very day the first remonstrance was reviewed, the second remonstrance was accepted, and it was clearly proceeding to a hearing.

The plaintiff also argues that the hearing was improperly canceled only because the signers were illegally pressured to withdraw.   There has been no factual showing, however, that the department was aware of the attorney's letter;  the agent for the department acted properly based on the available information.

There was no right to a hearing after the signatures were withdrawn from the second remonstrance.   Without a right to a mandatory hearing, there is no subject matter jurisdiction and the administrative appeal must be dismissed.   The department's motion to dismiss is therefore granted.

Henry S. Cohn, Judge

FOOTNOTES

FN1. The transcript of the hearing on July 17, 2012 contains no evidence that the department or its employees had any knowledge at all of any letter sent by the attorney representing Shivam regarding the second remonstrance.   The department agent was aware that five persons withdrew their signatures, with a similarity to the withdrawals in some instances.   It was aware also that one withdrawal had been sent to Shivam and forwarded to the department..  FN1. The transcript of the hearing on July 17, 2012 contains no evidence that the department or its employees had any knowledge at all of any letter sent by the attorney representing Shivam regarding the second remonstrance.   The department agent was aware that five persons withdrew their signatures, with a similarity to the withdrawals in some instances.   It was aware also that one withdrawal had been sent to Shivam and forwarded to the department.

FN2. It is not, for example, an action for an injunction or an action for a mandamus..  FN2. It is not, for example, an action for an injunction or an action for a mandamus.

FN3. Subsequently, the legislature expanded the hearing requirement to include state regulations..  FN3. Subsequently, the legislature expanded the hearing requirement to include state regulations.

FN4. Euclid also contains a statement by the filer that he was only relying on the second filing, but the court also found, as here, that since the second filing was approved, “no final action was either necessary or taken on the first set of applications.”  Id. This is the rule for court pleadings as well.  Wesley v. DeFonce Contracting Co., 153 Conn. 400, 404, 216 A.2d 811 (1966) (amended complaint superceded original complaint)..  FN4. Euclid also contains a statement by the filer that he was only relying on the second filing, but the court also found, as here, that since the second filing was approved, “no final action was either necessary or taken on the first set of applications.”  Id. This is the rule for court pleadings as well.  Wesley v. DeFonce Contracting Co., 153 Conn. 400, 404, 216 A.2d 811 (1966) (amended complaint superceded original complaint).

FN5. Further, the court has concluded that the first remonstrance was in fact withdrawn by the conduct of the attorney..  FN5. Further, the court has concluded that the first remonstrance was in fact withdrawn by the conduct of the attorney.

FN6. The plaintiff contests the acceptance of one of the withdrawals as it was received by Shivam's attorney and forwarded to the department.   Even if this withdrawal were not counted, the four other withdrawals received by the department were sufficient to end the right to a hearing..  FN6. The plaintiff contests the acceptance of one of the withdrawals as it was received by Shivam's attorney and forwarded to the department.   Even if this withdrawal were not counted, the four other withdrawals received by the department were sufficient to end the right to a hearing.

Cohn, Henry S., J.