Zamarripa v. Q & T Food Stores, Inc.

929 P.2d 1332, 1997 Colo. LEXIS 41, 1997 WL 9112
CourtSupreme Court of Colorado
DecidedJanuary 13, 1997
Docket95SC510
StatusPublished
Cited by35 cases

This text of 929 P.2d 1332 (Zamarripa v. Q & T Food Stores, Inc.) is published on Counsel Stack Legal Research, covering Supreme Court of Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Zamarripa v. Q & T Food Stores, Inc., 929 P.2d 1332, 1997 Colo. LEXIS 41, 1997 WL 9112 (Colo. 1997).

Opinion

Justice HOBBS

delivered the Opinion of the Court.

We granted certiorari to review four questions 1 regarding the court of appeals decision in Q & T Food Stores, Inc. v. Zamarripa, 910 P.2d 44 (Colo.App.1995). This appeal is brought to us by the director of the State Lottery Division (Director) who contends *1335 that the Lottery Division (Division) properly revoked three lottery sales agent licenses issued for convenience stores in Montrose, Colorado. These licenses were held by Q & T Food Stores, Inc. (Q & T), a family-owned Colorado corporation. The revocation was based on the Director’s conclusion that because a family member, K.J.L., who had recently been added by Q & T as an officer and managing agent of the corporation, had been convicted of sexual assault on his daughter, Q & T lacked the requisite character to continue as a lottery sales agent. This conviction was held by the Director to be presumptive and conclusive evidence that the licenses must be revoked.

The Director’s revocation decision was entered after an evidentiary hearing before an Administrative Law Judge (ALJ). The ALJ had entered detailed findings of fact and conclusions of law and recommended to the Director that the licenses not be revoked because “the offense which K.J.L. committed bears no relation whatever to the Lottery or its operation.” The Director accepted the ALJ’s findings of evidentiary facts but entered an order revoking the three licenses, on the basis that: “Sexual assault on a child is a public matter and a reflection of lack of good character ... the Lottery does not have to consider rehabilitation as did the Administrative Law Judge.”

To become final, when a felony conviction is involved in consideration of Lottery license actions, the Director’s order requires review by the Felony Review Panel (Panel). That Panel summarily affirmed the Director’s revocation order. Pursuant to a stipulation between the Agency and Q & T, K.J.L. resigned from the management of the family corporation during the pendency of these judicial review proceedings.

On review of the state agency action, the district court upheld revocation of the three licenses. The court of appeals set aside the revocation order and directed reinstatement of Q & T’s licenses. We agree in part. The Director’s revocation order was arbitrary and capricious because the license revocations were not in accord with the agency’s statutory authority. The court of appeals, however, proceeded to find that K.J.L. was a person of good character. This finding was improper and must be set aside as beyond the scope of appellate review. The court’s appellate function was fulfilled when it determined that this revocation proceeding could not be sustained under the applicable law. Accordingly, we affirm in part and reverse in part the judgment of the court of appeals.

I.

Q & T operates three convenience stores in Montrose, Colorado, selling gasoline, certain alcoholic beverages, food, and other miscellaneous goods, including lottery tickets. We shall employ the initials of certain persons in this proceeding to respect the privacy interests of the victim of the criminal offense, as the court of appeals did in its opinion.

K.D.L. incorporated Q & T in April of 1981, and at all times has been the sole shareholder, president, and a director of the corporation. On February 1, 1990, K.J.L., K.D.L.’s adult son, moved to western Colorado in order to manage the family stores because of his father’s impending retirement.

As part of the annual license renewal process, under the applicable regulation of the Lottery Commission, 2 Q & T was required to submit to the Division an individual history record of each owner, partner, principal officer, and managing agent, as well as each stockholder who owned 10% or more of the company. On September 10, 1991, Q & T submitted its application for license renewal. The individual history record for K.J.L., a newly added officer and managing agent of Q & T, disclosed a 1985 felony incest conviction, on a plea of guilty, for fondling his eleven-year-old daughter. Prior to moving to west- *1336 era Colorado, K.J.L. successfully completed a sentence of probation which involved mental health treatment and family therapy.

The Division renewed each of the three licenses with an issue date of October 1,1991, and an expiration date of October 1, 1992. Shortly thereafter, the Division commenced a license revocation proceeding against Q & T. In its notice of hearing dated October 21, 1991, the Division alleged that section 24-35-206(4)(e), (h), and (i), 10A C.R.S. (1988), 3 of the Lottery statute rendered Q & T ineligible for sales agent licenses because one of its officers, K.J.L, had been convicted of sexual assault on a child. The Division, the Director, and the Panel throughout this proceeding have relied on section 24-35-206(4)(e), preventing issuance of a license to: “Any person who is not of good character and reputation, notwithstanding the provisions of section 24-5-101, in the community in which he resides.” Under section 24-35-206(4)(h) & (i), the lack of good character and reputation of a person who is an officer, director, managing agent, or participant in the management or sales of lottery tickets or shares, is attributed to the corporation.

The ALJ determined that KJ.L.’s conviction was not a proper basis for license revocation because a conviction used to disqualify a licensee must be related to promoting honesty in the conduct of the Lottery and K.J.L.’s conviction did “not involve any fraud, dishonesty, gambling, or any other matters even arguably related to the Lottery.” Based on testimony and documentary evidence at the hearing, the ALJ found that K.J.L. had undergone intensive therapy over a four year period, had been employed as the manager of a Denver area convenience store during this time while serving his sentence of probation, and was an outstanding employee whose character was “trustworthy, honest and disciplined.” K.J.L.’s daughter testified that a normal father/daughter relationship had been established. 4 In light of all the evidence, the ALJ found that the Division had failed to prove that Q & T was unfit to continue holding the licenses and concluded that K.J.L.’s “prior conviction [did] not form an appropriate basis for revocation of Q & T’s lottery license.”

The Director, nevertheless, issued an order revoking Q & T’s three licenses. The Director concluded that a child sexual assault conviction “does bear a relationship to the Lottery operation as we are responsible for maintaining and protecting the public interest and trust in the Lottery.” The Director determined that the Agency was barred from, or need not consider, any evidence of K.J.L.’s or Q & T’s character and reputation *1337 other than K.J.L.’s conviction and the circumstances surrounding it. 5

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Bluebook (online)
929 P.2d 1332, 1997 Colo. LEXIS 41, 1997 WL 9112, Counsel Stack Legal Research, https://law.counselstack.com/opinion/zamarripa-v-q-t-food-stores-inc-colo-1997.