          IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Club 530, Inc.                     :
                                   :
            v.                     : No. 855 C.D. 2016
                                   : Argued: March 6, 2017
Pennsylvania Liquor Control Board, :
                 Appellant         :


BEFORE:     HONORABLE RENÉE COHN JUBELIRER, Judge
            HONORABLE JULIA K. HEARTHWAY, Judge
            HONORABLE DAN PELLEGRINI, Senior Judge


OPINION NOT REPORTED


MEMORANDUM OPINION BY
SENIOR JUDGE PELLEGRINI                              FILED: March 29, 2017


            The Pennsylvania Liquor Control Board (PLCB) appeals from an
order of the Court of Common Pleas of Lackawanna County (trial court) granting
reinstatement of Club 530, Inc.’s (Licensee) Restaurant Liquor License R-13112
(License) upon payment of all applicable license fees that would have been
payable on an annual basis since the date of revocation.


                                         I.
            When Licensee acquired the License for the premises located at 526
Lackawanna Avenue, Scranton, Pennsylvania (premises) in 2007, Licensee
requested that it be placed in safekeeping pursuant to Section 474.1 of the Liquor
Code.1 When the License was placed in safekeeping, PLCB’s Bureau of Licensing
(Bureau) advised Licensee that the safekeeping period would expire on November
9, 2010. See Section 474.1(b) of the Liquor Code, 47 P.S. § 4–474.1(b).


       1
          Act of April 12, 1951, P.L. 90, as amended, added by Section 21 of the Act of
December 9, 2002, P.L. 1653, 47 P.S. § 4–474.1. While Act 39 of June 8, 2016, P.L. 273,
changed some of the relevant language of Section 474.1 of the Liquor Code, all of the underlying
facts in this matter occurred prior to Act 39’s effective date, August 8, 2016. At all relevant
times, Section 474.1 of the Liquor Code provided, in pertinent part:

              (a) A restaurant, eating place retail dispenser, hotel, importing
              distributor and distributor licensee whose licensed establishment is
              not in operation for fifteen consecutive days shall return its license
              for safekeeping with the board no later than at the expiration of the
              fifteen-day period. The license may only be reissued from
              safekeeping in the manner set forth by the board through
              regulation.

              (b) The board may hold the license in safekeeping for a period not
              to exceed three consecutive years. Any license remaining in
              safekeeping for more than three consecutive years shall be
              immediately revoked by the Bureau of Licensing unless a transfer
              application or request for reissue from safekeeping has been filed
              prior to the expiration of the three-year period or unless the board
              has approved a request to extend the safekeeping for an additional
              year as set forth in subsection (g). . . .

              (c) In the event a transfer application filed prior to the expiration of
              the three-year period is disapproved by the board, then the license
              may remain in safekeeping so long as the licensee has submitted
              and the board has approved a request to extend the safekeeping for
              an additional year as set forth in subsection (g). Such request must
              be submitted within thirty days of the board’s decision
              notwithstanding any appeal filed in the matter; however, the fee set
              forth in subsection (g) shall be refunded if the board’s decision is
              overturned.

              (d) Any period of time in which the licensee allows the license to
              lapse by not filing a timely license renewal or license validation
(Footnote continued on next page…)

                                                 2
                In the following years, Licensee submitted renewal applications for its
License, which were approved by the Bureau. Desiring to take the License out of
safekeeping to operate a restaurant at the licensed premises, on October 27, 2010,
Licensee submitted an Application for Return of License from Safekeeping
(Return Application).2         (Reproduced Record (R.R.) at 65a.)              In response, the
Bureau sent a letter acknowledging Licensee’s timely Application and advising
that it would request an investigation for the premises. The letter stated, “[s]hould
the report of investigation disclose that the premises meet all Board requirements
and is not ready to be open and operating as a bone fide restaurant, then an
application for extension of safekeeping period . . . and a fee of $5000.00 will be


(continued…)

                shall be considered time in which the license was held in
                safekeeping for purposes of this section.

                                               ***

                (g)(1) A licensee whose license is subject to this section may, upon
                written request, apply to the board to allow the license to remain in
                safekeeping for an additional one year. The written request must
                be accompanied by a five thousand dollar ($5,000) fee for licenses
                placed in safekeeping from counties of the first class, second class,
                second class A, third class and fourth class and a fee of two
                thousand five hundred dollars ($2,500) for licenses placed in
                safekeeping from counties of the fifth through eighth classes. The
                board shall approve the request unless the license or licensee no
                longer meets the requirements of this act or the board’s
                regulations. . . .

47 P.S. § 4-474.1.

       2
           A Certificate of Occupancy was issued for the premises on the same day.




                                                 3
required and you will receive a letter advising you of such.” (R.R. at 56a.) The
letter also advised that Licensee’s Return Application “will be held in abeyance”
due to a conflict of interest issue in violation of Section 411(e) of the Liquor Code,
47 P.S. § 4-411(e), resulting from Licensee’s sole owner, Anthony J. Rinaldi, Sr.
also being the “President and CEO of Scranton Life Realty Co. which leases space
to Importer License No. I-683 . . . issued to Northern Wine & Spirits, Inc.
[(Northern Wine)] at 538 Spruce [Street], Suite #502, Scranton.” (R.R. at 56a-
57a.) Soon thereafter, Licensee notified the Bureau that the conflict had been
resolved.3


               By letter dated December 22, 2010, the Bureau notified Licensee that
at that time it could not approve removing the License from safekeeping because
the Bureau investigator’s report stated that the conflict issue still existed and a
current valid health license was not posted on the premises.4 The Bureau also
notified Licensee that “If an application for extension of safekeeping period is not
received within twenty (20) days of the date of this letter, the [L]icense will be
revoked by operation of law.” (R.R. at 59a.) This letter did not mention that
Licensee had a right to appeal. Licensee did not respond to this letter or take any
actions to extend safekeeping purportedly because Licensee did not receive it.

       3
        Licensee notified the Bureau that it resolved the conflict issue by letter dated December
7, 2010. However, because Licensee discovered that the letter was never actually received by
the Bureau, Licensee then faxed a copy of the letter on January 10, 2011.

       4
          Regarding the conflict issue, the Bureau “noted[ that] an application for correction to
license has been received for [Northern Wine’s] Importer License. . . . However, a transfer
application packet and required fee must be submitted as this is a place to place transfer.” (R.R.
at 58a.)




                                                4
              By letter dated January 25, 2011, later amended,5 the Bureau informed
Licensee that its License was revoked because “the premises was not issued a
health license at the time of investigation.” (R.R. at 40a.) It did not state as a
reason that the License was being revoked because of the conflict issue. The
Bureau then stated that Licensee “has the right to request a hearing on this matter,
provided the request is submitted in writing and is received within twenty (20)
days of the date of this letter.” (R.R. at 40a.) Licensee timely appealed.


                                              II.
              Before a hearing examiner, Gary Grochowski (Grochowski), a PLCB
licensing investigator, testified that he was assigned to investigate Licensee’s
Return Application and “upon investigation, the premises met all Board
requirements with the exception of having a valid health permit at the time. And
that was the last investigation that was done at the premises by myself.” (R.R. at
12a.)


              William Rinaldi, Licensee’s attorney,6 testified that he did not receive
the Bureau’s December 22, 2010 letter advising the reasons that the License was
not being returned from safekeeping. He stated that the premises had a valid health
license in March 2010, but the City of Scranton revoked the health license prior to
the Bureau’s inspection because the premises needed a certificate of occupancy.

        5
         The January 25, 2011 letter incorrectly provided that the License expired on November
9, 2011. On March 1, 2011, the Bureau sent an amended letter that corrected the expiration date
to November 9, 2010.

        6
          In October 2015, William Rinaldi withdrew his appearance on behalf of Licensee as a
result of objections by the PLCB.



                                              5
After renovations were completed and a certificate of occupancy was issued for the
premises on October 26, 2010, Licensee submitted its application to take the
License out of safekeeping the next day. William Rinaldi also notified the Bureau
that the conflict issue was resolved by letter dated December 7, 2010, and he
would contact the Bureau every few weeks to see if the conflict issue was resolved.
After discovering that the letter was never actually received by the Bureau, he
faxed the letter to the Bureau on January 10, 2011.


              The hearing examiner filed an opinion recommending the License
should not be revoked pursuant to Section 474.1(b) of the Liquor Code because
“Licensee properly requested . . . that the [L]icense be reissued out of safekeeping .
. . [and] this lack of a valid [health] permit was not the fault of the Licensee. Also,
other various miscommunications led to Licensee’s unpreparedness.” (R.R. at
113a-114a.)


              The PLCB, however, rejected this recommendation and issued an
order revoking the License because Licensee had adequate notice of what would
happen if it did not promptly extend the safekeeping period. Licensee appealed to
the trial court, and a de novo hearing was held.


                                         III.
              Before the trial court, Mark Seitzinger (Seitzinger), former Director of
the Department of Licensing, Inspections and Permits for the City of Scranton,
testified that although he was scheduled to perform a health inspection for
Licensee’s premises on December 3, 2010, he never actually made this



                                          6
appointment because he had a conflicting doctor’s appointment on the same day.
Seitzinger explained that it was his responsibility to conduct the health inspection
for the premises on that day because “we were kind of left without a health
inspector, per se. But as the director of the department, it kind of fell onto me to
handle the day-to-day duties of the department.” (R.R. at 174a.) Seitzinger then
acknowledged that Licensee’s premises had a prior health license, and indicated he
was not aware of any change that would have affected the issuance of a health
license for the premises.


             Anthony J. Rinaldi, Sr. testified that in addition to being the sole
owner of Licensee, he is also the owner of the Scranton Life Realty Company
(Scranton Life), which owns the building where Northern Wine was located, and
500 Lackawanna Development Company (Lackawanna Development), which
owns the building where Licensee’s premises are located. He testified that after
his attorney, William Rinaldi, notified him about the conflict, Northern Wine
moved within a month.


             Elmo Rinaldi, owner of Northern Wine, testified that his company
was located in the Scranton Life Building since 1997, but after being advised of the
conflict, he physically moved out of the building by December 7, 2010. However,
due to certain complications and conflicting advice that he received from the
Bureau, this conflict issue was not resolved until August 2011, when the location
of Northern Wine was officially deemed transferred.




                                         7
             William Rinaldi testified that the first time he learned of the conflict
with Northern Wine was in late November 2010 during a different PLCB
inspection for a different liquor license and property that already had a valid health
license. Two weeks later, he met Grochowski to conduct an inspection of the
premises. He also scheduled for Seitzinger to conduct a health license inspection
on the same day, explaining that “[w]e had done a few [of these arrangements] in
the last three years prior to this.” (R.R. at 263a.) However, when Seitzinger failed
to keep the appointment, Grochowski advised William Rinaldi that “he won’t be
back until [PLCB] tells him the conflict is resolved.” (R.R. at 384a.) Four days
later, William Rinaldi sent a letter to the PLCB notifying it that the conflict no
longer existed because Northern Wine moved its office. Because a response was
never provided by the PLCB, he later faxed the same letter to the PLCB as well.
William Rinaldi denied ever receiving the December 22, 2010 Determination
Letter.


             Concluding that it had discretionary authority to account for a
licensee’s curative efforts when renewing a liquor license, the trial court reversed
the PLCB’s order refusing reinstatement of the License because:

                     [Licensee] made every good faith effort to
             successfully reinstate its license. It expended time,
             energy, and financial resources to address the problems
             that led to the underlying reasons to deny reinstatement.
             As for the “conflict” caused by [Northern Wine], the
             record reflects that immediate action was taken to move
             its office to a different building. With respect to the lack
             of a health inspection, we find that [Licensee] took every
             step possible to renew the health certificate. The failure
             to do so was simply outside its control. Finally, we find
             Attorney [William] Rinaldi’s testimony that he did not


                                          8
              receive PLCB’s correspondence directing payment for
              safekeeping to be both credible and compelling. . . . It is
              clear that PLCB was giving [Licensee] and the other
              Rinaldi Licensees conflicting and confusing directives.
              Accordingly, we give consideration to the pattern of
              perplexing and complicated instructions provided by
              PLCB in determining that [Licensee’s] failures were not
              indicative of abuse of its licensing privilege.


(Trial Court Opinion at 11-12.) Based on those findings, the trial court held that
revocation was not warranted and Licensee was entitled to reinstatement of its
License upon payment of all applicable license fees that would have been payable
on an annual basis since the date of revocation. The trial court also refused to
impose annual safekeeping fees for the years following Licensee’s appeal from the
Adjudication Letter because the License was not actually in “safekeeping” but in
jeopardy. This appeal by PLCB followed.7


                                              IV.
                                              A.
              On appeal, the PLCB contends that pursuant to Section 474.1 of the
Liquor Code, 47 P.S. § 4–474.1, the trial court lacked discretionary authority to
reinstate the License because it was in safekeeping for more than three years
without extension, and Licensee failed to obtain a valid health license and resolve
the conflict issue prior to the Bureau’s investigation of the premises.


       7
          Our scope of review in a liquor license renewal case is limited to a determination of
whether the trial court’s findings of fact are supported by substantial evidence and whether the
trial court committed an error of law or abused its discretion. Pennsylvania Liquor Control
Board v. Bartosh, 730 A.2d 1029 (Pa. Cmwlth. 1999).




                                               9
                In appeals arising under Section 464 of the Liquor Code,8 the trial
court may make its own findings and reach its own conclusions based upon those
findings even when the evidence it hears is substantially the same as the evidence
presented to the PLCB. Two Sophia’s, Inc. v. Pennsylvania Liquor Control Board,
799 A.2d 917 (Pa. Cmwlth. 2002). While the trial court may modify, sustain or
reverse a PLCB decision to deny the license renewal even if there is substantial
evidence to support the PLCB’s findings, the trial court may do so only where its
findings are supported by substantial evidence in the record as a whole. Id. at 922
n.5. If the PLCB has discretion to take an action, the trial court can exercise the
same discretion under Section 464 of the Code. U.S.A. Deli, Inc. v. Pennsylvania
Liquor Control Board, 909 A.2d 24 (Pa. Cmwlth. 2006).


                Section 474.1(b) of the Liquor Code provides, in pertinent part:

                (b) The board may hold the license in safekeeping for a
                period not to exceed three consecutive years. Any
                license remaining in safekeeping for more than three
                consecutive years shall be immediately revoked by the
                Bureau of Licensing unless a transfer application or

      8
          47 P.S. § 4–464 provides, in part:

                The said appeal shall act as a supersedeas unless upon sufficient
                cause shown the court shall determine otherwise. The court shall
                hear the application de novo on questions of fact, administrative
                discretion and such other matters as are involved, at such time as it
                shall fix, of which notice shall be given to the board. The court
                shall either sustain or over-rule the action of the board and either
                order or deny the issuance of a new license or the renewal or
                transfer of the license or the renewal of an amusement permit to
                the applicant.




                                                10
             request for reissue from safekeeping has been filed
             prior to the expiration of the three-year period or
             unless the board has approved a request to extend the
             safekeeping for an additional year as set forth in
             subsection (g). . . .


47 P.S. § 4–474.1(b) (emphasis added).


             Section 474.1(b) requires the automatic and mandatory revocation of a
liquor license that is held in safekeeping for more than three years “unless a . . .
request for reissue from safekeeping has been filed prior to the expiration of the
three-year period. . . .” 47 P.S. § 4–474.1(b). When such a request has been made,
revocation of the license is no longer automatic. The PLCB recognized as much
when it placed the License in “abeyance” for several months while determining
whether to return the License from safekeeping.


             What was before the trial court was not whether there was an
automatic revocation but whether the License should be revoked because Licensee
did not successfully complete all the requirements to have the License reissued.
Because the trial court determined that Licensee made every good faith effort to
successfully reinstate its License but failed to do so for reasons beyond its control,
the trial court acted within its discretion not to revoke the License.


                                          B.
             Even if the trial court properly exercised its discretion in not revoking
the License, the PLCB contends that the trial court erred when it reinstated the




                                          11
License rather than returning it to safekeeping and requiring payment of all the
attendant fees since 2010 – approximately $35,000.00.


            Notwithstanding the trial court’s discretionary authority, Section
474.1(a) of the Liquor Code provides:

            (a) A restaurant, eating place retail dispenser, hotel,
            importing distributor and distributor licensee whose
            licensed establishment is not in operation for fifteen
            consecutive days shall return its license for safekeeping
            with the board no later than at the expiration of the
            fifteen-day period. The license may only be reissued
            from safekeeping in the manner set forth by the board
            through regulation.


47 P.S. § 4–474.1(a) (emphasis added.) The PLCB’s regulations provide:

            (a) A restaurant, hotel or club catering liquor license or
            retail dispenser eating place or hotel malt beverage
            license authorized under the Liquor Code will not be
            issued, renewed or transferred by the Liquor Control
            Board for any premises unless the application for the
            license, renewal or transfer avers that the proper
            municipal or State authorities have found that the
            premises to be licensed, or for which an application is
            filed for a new license or the renewal or transfer of a
            license, meet all the sanitary requirements for a public
            eating place in the municipality where the place to be
            licensed is operated, as provided by statute, ordinance
            or regulation and that documentary evidence thereof
            is, and shall at all times be, displayed on the licensed
            premises.


40 Pa. Code § 5.41(a) (emphasis added.)


                                        12
             Here, the trial court was bound by the PLCB’s regulation prohibiting
reissuance of a restaurant liquor license given that the premises still, to this day,
fail to meet all sanitary requirements for a public eating place in the municipality –
i.e., a valid health license. Until that occurs, the License cannot be taken out of
safekeeping and the trial court cannot reinstate the License. That does not mean,
however, that the appropriate remedy is to place the License back into safekeeping
and to impose annual safekeeping fees for each year the License has been revoked.


             A liquor license is either:      in safekeeping, which requires annual
safekeeping fees; active, which requires renewal and validation fees; or revoked,
which obviously has no fee. Prior to revocation, the License was in safekeeping;
but when the PLCB revoked the License, it was no longer in safekeeping and
Licensee could not request it be taken out of safekeeping to make it active. Just as
in Ball Park’s Main Course, Inc. v. Pennsylvania Liquor Control Board, 641 A.2d
713 (Pa. Cmwlth. 1994) (en banc), overruled in part by Two Sophia’s, 799 A.2d at
919 n.3, where we held that a licensee did not continually have to file renewal
applications when an appeal was taken from a PLCB decision denying renewal
because there is nothing to renew, there is no requirement here that Licensee pay
fees for a license that did not exist. See also Section 464 of the Liquor Code, 47
P.S. § 4-464 (“The said appeal shall act as a supersedeas unless upon sufficient
cause shown the court shall determine otherwise.”).


             Given all of the above, we vacate that portion of the trial court’s order
reinstating the License because Licensee has not shown it has met the requirements
to have the License reissued. Accordingly, we remand to the trial court for further



                                         13
remand to the PLCB for Licensee, within 60 days of the date of this decision, to
either submit an application for extension of safekeeping period along with the
appropriate safekeeping fee, as recently amended,9 or apply for reissuance and then
timely demonstrate that the Licensee’s premises is fully in compliance with the
PLCB regulations and the Liquor Code with no past fees being due.



                                       _________________________________
                                       DAN PELLEGRINI, Senior Judge




Judge Cosgrove did not participate in the decision in this case.




      9
         Effective August 8, 2016, annual safekeeping fees for Lackawanna County are
$10,000.00 and validation and renewal application fees are $700.00.



                                         14
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA


Club 530, Inc.                     :
                                   :
            v.                     : No. 855 C.D. 2016
                                   :
Pennsylvania Liquor Control Board, :
                 Appellant         :




                                     ORDER


             AND NOW, this 29th day of March, 2017, it is hereby ordered that the
Court of Common Pleas of Lackawanna County’s (trial court) order dated April
26, 2016, is affirmed in part and vacated in part, and this matter is remanded to the
trial court for further proceedings consistent with this opinion.


             Jurisdiction relinquished.



                                          _________________________________
                                          DAN PELLEGRINI, Senior Judge
