3613 Ltd. v. Department of Liquor Licenses & Control

978 P.2d 1282, 194 Ariz. 178, 293 Ariz. Adv. Rep. 30, 1999 Ariz. App. LEXIS 61
CourtCourt of Appeals of Arizona
DecidedApril 20, 1999
DocketNo. 1 CA-CV 98-0035
StatusPublished
Cited by11 cases

This text of 978 P.2d 1282 (3613 Ltd. v. Department of Liquor Licenses & Control) is published on Counsel Stack Legal Research, covering Court of Appeals of Arizona primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
3613 Ltd. v. Department of Liquor Licenses & Control, 978 P.2d 1282, 194 Ariz. 178, 293 Ariz. Adv. Rep. 30, 1999 Ariz. App. LEXIS 61 (Ark. Ct. App. 1999).

Opinion

OPINION

THOMPSON, Presiding Judge

¶ 1 A business operating a “topless” bar and its owner appeal from the trial court’s affirmance of an administrative decision that suspended their liquor license unless the controlling person ceased her business association with a convicted felon.1 Appellants raise a number of constitutional challenges to the applicable statute. We reject those challenges and affirm the trial court.

FACTUAL AND PROCEDURAL HISTORY

¶2 On April 7, 1994, the Arizona State Liquor Board granted a spirituous liquor license to appellant Elizabeth Brazee, the agent for, president, and 100% shareholder of 3613 Limited. The City of Phoenix requested a rehearing, which was granted and held on February' 2,1995.

¶ 3 The director of the Department of Liquor (department) participated in the rehearing and objected to the issuance of the license based on an allegation that Dennis Mondavano, who had two felony convictions, was actually managing the business. Mondavano’s convictions were for possession of narcotic drugs in 1987 and conspiracy to defraud the United States/I.R.S. in 1988. He had been released from federal prison in January 1991 after serving more than three years of a four year sentence on the federal conspiracy charge.

¶ 4 The State Liquor Board voted four to three to uphold the original license application approval. However, a department investigator who had investigated the relationship between Brazee and Mondavano reported that some of Mondavano’s testimony at the rehearing was false. By letter dated February 16, 1995, the department told Brazee to cease her business association with Mondavano because the association created a reasonable risk that she would fail to conform to the law. The department issued a complaint against 3613 Limited and Brazee in August 1995.

¶ 5 The complaint alleged that Brazee was knowingly associated with Mondavano, a convicted felon who had engaged in racketeering, which provided grounds for disciplinary action under Ariz.Rev.Stat. Ann. (A.R.S.) § 4-210(A)(12). Section 4-210(A)(12) provides:

(A) The director may suspend, revoke or refuse to renew any license issued pur[181]*181suant to this chapter for any of the following reasons:
(12) The licensee or controlling person knowingly associates with a person who has engaged in racketeering, as defined in Section 13-2301, or has been convicted of a felony, and the association is of such a nature as to create a reasonable risk that the licensee will fail to conform to the requirements of this title or of any criminal statute of this state.

¶ 6 The hearing officer found that after Mondavano was released from prison, he met Brazee, who was then in her mid~70’s. Mondavano and Brazee became friends. In late 1992 or early 1993, Mondavano disclosed to Brazee that he was a convicted felon. Shortly thereafter, she began paying him $1500 a month for personal services and investment advice.

¶ 7 Brazee looked for commercial real estate investments, and Mondavano learned of a real estate investment in a topless bar; Brazee purchased a majority interest in the realty for the establishment. After consulting with Mondavano and her son, Brazee decided to build and operate a topless bar. Mondavano located a site, which Brazee purchased, and after she received the liquor license, she engaged Mondavano as the construction project manager.

¶8 Mondavano became an employee of 3613 Limited in the late fall of 1994. The hearing officer found that his duties for the licensee included continuing oversight of remaining construction and improvements; compiling, checking and calling in employee time; coordinating maintenance; maintaining and repairing equipment; maintaining and reviewing files, reports, and journals; correlating sales figures for sales tax returns; sitting in on some interviews; and preparing checks for Brazee’s signature. He also assisted in closing registers, writing newspaper and radio advertisements, selecting name entertainment, bartending, and working as a doorman. His personal services to Brazee included investment and general advice, transportation, opening mail, keeping records, completing deposit slips, collecting rent from tenants who occupy a portion of the realty, and auditing and reviewing rents received for property tax purposes. Brazee considered Mondavano her best friend, trusted his judgment, and would have had him run the licensed business except for her belief that he could not be licensed.

¶ 9 The hearing officer concluded that the evidence clearly showed that the nature of the association was such that Mondavano could exercise a great deal of influence over Brazee as the licensee. According to the hearing officer, the evidence did not show that Brazee would allow herself to violate the law based on Mondavano’s influence. The hearing officer found, however, that Mondavano had ample opportunity to “cause [Brazee] to fail to conform to the law,” and that under A.R.S. § 4-210(B)(2) Brazee would be liable for the acts or omissions of her employees. The hearing officer thus concluded that the duties and other activities engaged in by Mondavano as part of his association with and employment by the licensee were such that he had ample opportunity to cause the licensee to fail to conform to the law.

¶ 10 As to the question whether Mondavano would or was likely to cause the licensee to violate Title 4 or any criminal law, the hearing officer noted that the state did not present any specific evidence that Mondavano was engaged in or planning activities that would cause the licensee to run afoul of the law. However, the hearing officer found that Mondavano’s untruthful testimony concerning his felony convictions showed that he could not be relied upon to conform to the requirements of Title 4 or any criminal statute.

¶ 11 The hearing officer recommended that the licensee be found in violation of A.R.S. § 4-210(A)(12) and that the license be suspended until the licensee and Brazee “terminate all association, whether formal or informal, including but not limited to, business, employer-employee, contractual, advisory, with Dennis Mondavano, as such association relates to the organizational, operational or other business activities in any form, of the corporate licensee.” The suspension would [182]*182not take effect if Brazee signed a statement of full compliance with the order.

¶ 12 The director of the department adopted the findings and conclusions of the hearing officer and ordered the suspension of the license unless Brazee terminated her business association with Mondavano. The licensee, 3613 Limited, appealed the director’s order to the State Liquor Board. In its appeal, 3613 Limited argued that the statute at issue was unconstitutionally vague and that the director should have adopted rules for enforcing the statute. The board affirmed the director’s order.

¶ 13 Brazee and 3613 Limited filed a complaint for review of the administrative decision. They argued that the department’s administrative order should be reversed because (1) A.R.S. § 4-210

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Bluebook (online)
978 P.2d 1282, 194 Ariz. 178, 293 Ariz. Adv. Rep. 30, 1999 Ariz. App. LEXIS 61, Counsel Stack Legal Research, https://law.counselstack.com/opinion/3613-ltd-v-department-of-liquor-licenses-control-arizctapp-1999.