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Supreme Court, Appellate Division, First Department, New York.

IN RE: SOHO ALLIANCE, et al., Petitioners-Respondents, v. The NEW YORK STATE LIQUOR AUTHORITY, et al., Respondents, Ginx, Inc., doing business as Lola, Respondent-Appellant.

Decided: August 31, 2006

MARLOW, J.P., WILLIAMS, GONZALEZ, SWEENY, CATTERSON, JJ. Pryor Cashman Sherman & Flynn LLP, New York (Eric D. Sherman of counsel), for appellant. Barry Mallin & Associates, P.C., New York (Barry Mallin of counsel), for respondents.

Order, Supreme Court, New York County (Marilyn Shafer, J.), entered December 2, 2005, which, inter alia, granted the application of petitioners community groups and individuals to annul respondent State Liquor Authority's determination to grant respondent-appellant a liquor license, and directed the Authority to cancel the liquor license, unanimously reversed, on the law, without costs, the order to cancel the liquor license vacated and the matter remanded to the Authority for a more detailed recitation of its reasons for finding that the granting of the liquor license is in the public interest.

Supreme Court correctly observed that the Authority failed to articulate its reasons for finding that the granting of the subject liquor license is in the public interest, and thus in accordance with Alcohol Beverage Control Law § 64(7)(f) (retail liquor license for on-premises consumption may not be issued for a premises within 500 feet of three or more existing licensed premises except upon a finding that such license would be in public interest, which finding is to be made after consultation with the municipality or community board and a hearing on notice to the applicant and the municipality or community board).

 Nevertheless, this was an insufficient reason for annulling the Authority's determination.   As respondent-appellant Lola asserts, 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 Pell v. Bd. of Education, 34 N.Y.2d 222, 356 N.Y.S.2d 833, 313 N.E.2d 321 [1974] ).   In the instant case, the Authority conducted the statutory hearing, and in its five-page decision granting the liquor license reviewed the reasons given by both parties, for and against, granting the license.   In granting the license and stating that it did so having considered “all the facts and circumstances” as well as “the criteria set forth in Section 64, subdivision 6-a of the Alcoholic Beverage Control Law” it may be surmised that the Authority adopted as its own the reasons of those in favor of the license.   But the Authority does not expressly state so.

Nevertheless, petitioners' reliance on our decisions in Matter of Waldman v. New York State Liq. Auth., 281 A.D.2d 286, 722 N.Y.S.2d 142 [2001] and Cleveland Place Neighborhood Assn. v. New York State Liq. Auth., 268 A.D.2d 6, 709 N.Y.S.2d 12 [2000], is misplaced.   In the former, the Authority's statement of reasons was contained in just two short sentences, which we deemed to be a “perfunctory recitation” (281 A.D.2d at 286, 722 N.Y.S.2d 142). In the latter, we found that there was no record of any meeting and thus no way to ascertain if the meeting satisfied the statutory hearing requirement (268 A.D.2d at 12, 709 N.Y.S.2d 12).   Neither set of circumstances is applicable to the instant case.   Here, the Authority conducted a hearing, and produced a five-page report leading to its determination.

What is missing from the Authority's decision is a specific expression of its reason or reasons for its finding that granting a liquor license is in the public interest.  CPLR 7806, however, permits us to remit the matter to the Authority for further proceedings (Matter of Rochester Colony, Inc. v. Hostetter, 19 A.D.2d 250, 241 N.Y.S.2d 210 [1963] ).

Thus, we reverse the judgment, vacate the direction to the Authority to cancel the liquor license, and remit to the Authority, pursuant to CPLR 7806, directing it only to properly state its reasons for granting the liquor license.

On remand, there need be no further “consultation” with the Community Board.   It is clear that the Community Board was given notice of the hearing and that its vote against the license was considered by the Authority.   The statute does not require any further Authority consultation with the Community Board beyond the notice and opportunity to be heard that was given.

Finally, the remand is without prejudice to further article 78 litigation in the event that petitioners wish to challenge the Authority's findings.