[Cite as Yohannes Parkwood, Inc. v. Ohio Liquor Control Comm., 2014-Ohio-2736.]


                            IN THE COURT OF APPEALS OF OHIO

                                 TENTH APPELLATE DISTRICT

Yohannes Parkwood, Inc.,                          :

                Appellant-Appellant,              :
                                                                         No. 13AP-974
v.                                                :                  (C.P.C. No. 13CV-3860)

Ohio Liquor Control Commission,                   :               (REGULAR CALENDAR)

                Appellee-Appellee.                :


                                       D E C I S I O N

                                    Rendered on June 24, 2014


                Law Offices of Marcell Rose Anthony, LLC, and Marcell Rose
                Anthony, for appellant.

                Michael DeWine, Attorney General, and Charles E. Febus, for
                appellee.

                  APPEAL from the Franklin County Court of Common Pleas

CONNOR, J.
        {¶ 1}   Appellant-appellant, Yohannes Parkwood, Inc. ("Yohannes"), appeals from
a judgment of the Franklin County Court of Common Pleas, affirming the order of
appellee-appellee, the Ohio Liquor Control Commission ("commission"), that affirmed a
tax non-renewal order of the Ohio Department of Commerce, Division of Liquor Control
("division"), ordering that Yohannes' liquor permit not be renewed. Because the trial court
abused its discretion, and the commission's order is not in accordance with law, we
reverse the order and remand the case with instructions.
I.      FACTS AND PROCEDURAL HISTORY

        {¶ 2} On January 7, 2013, the division mailed Yohannes, the owner of a small
carry-out store, a tax non-renewal order. The order informed Yohannes that its 2013-2014
renewal application would not be issued, because the division had received notice from
No. 13AP-974                                                                           2


the Ohio Tax Commissioner that Yohannes was liable for outstanding sales or withholding
tax, penalties, or interest, or that Yohannes had been assessed for unpaid taxes by the tax
department.
       {¶ 3} Yohannes appealed the division's tax non-renewal order to the commission.
The commission scheduled the appeal for a hearing on March 15, 2013.
       {¶ 4} At the March 15, 2013 hearing, the first witness called to testify by the
division was Becky Cassidy, a business collections supervisor in the Ohio Attorney
General's office. Cassidy authenticated exhibit C, which was a commission hearing report
stating that the attorney general's records demonstrated that Yohannes had outstanding
sales and withholding tax liabilities totaling $147,769.50. Cassidy stated that the
$147,769.50 figure came from "an audit provided by the Department of Taxation, certified
to us in 2009 for collection." (Tr. 6.) Cassidy indicated that the "original assessment was
$135,404.57." (Tr. 7.) The division then called Christine Tufford, an agent of the Ohio
Department of Taxation, to testify. The attorney representing the division asked Tufford
how much Yohannes owed on this claim, and Tufford responded that Yohannes was
"current, paid through and current with us, so we are making a recommendation for
renewal." (Tr. 8.) The remainder of the hearing consisted predominantly of a conversation
between the attorney representing the division and the attorney representing Yohannes.
The attorneys discussed an alleged settlement agreement between the attorney general's
office and Yohannes, who received aid from the Ethiopian Union of Ohio, Inc., to allegedly
settle the outstanding tax assessment.
       {¶ 5} On March 29, 2013, the commission mailed its order affirming the
division's tax non-renewal order to Yohannes. The order stated that "[u]pon consideration
of the evidence, the Commission finds that the Permit Holder is delinquent in filing sales
or withholding tax returns and/or has outstanding liability for sales or withholding tax,
penalties, or interest imposed by law." (Certified Record, 4.) On April 5, 2013, Yohannes
appealed the commission's order to the trial court.
       {¶ 6} In the trial court, Yohannes filed motions for an evidentiary hearing and to
supplement the record. The court denied both motions. Thereafter, the parties filed their
respective briefs with the court.
No. 13AP-974                                                                          3


      {¶ 7} On October 25, 2013, the trial court issued a decision and judgment entry
affirming the commission's March 29, 2013 order. The trial court noted that the appeal
was taken pursuant to R.C. 119.12. The court then noted that Yohannes' liquor permit was
not renewed pursuant to R.C. 4303.271, "as a consequence of an alleged delinquency in
the payment of withholding and sales taxes." (Decision, 2.) The court noted that "[u]pon
review of the transcript of the hearing before the Liquor Control Commission it is clear
that appellant was delinquent in payment of sales taxes and assessments." (Decision, 2.)
The trial court concluded that the commission's order was in accordance with "the express
mandate of R.C. 4303.271." (Decision, 3.)
II.   ASSIGNMENTS OF ERROR

      {¶ 8} Yohannes appeals, assigning the following errors:

             I. Whether the trial court erred by not applying the standard
             of review for administrative appeals announced in Henley v.
             Youngstown Bd. of Zoning Appeals, (2000) 90 O. St. 3d 142,
             147-8 where the Ohio Supreme Court held that a reviewing
             court must determine whether the administrative order is
             "…unconstitutional,       illegal,    arbitrary,   capricious,
             unreasonable, or unsupported by the preponderance of
             substantial, reliable and probative evidence."

             II. Whether the trial court erred in not granting an evidentiary
             hearing to accept additional evidence of Mr. Begashaw's
             testimony regarding settlement and whether the standard
             should be more than "due process," but rather should be more
             akin to a corollary administrative appeal evidentiary hearing
             statute, O.R.C., Section 2506.03.

             III. Whether the trial court erred in not transmitting the
             supplemental record when it denied Appellant's motion
             because it confused the Division of Liquor Control, the first
             step in the administrative process, with the Ohio Liquor
             Control Commission, Appellee, the second step. Mr.
             Begashaw testified on settlement at the Division of Liquor
             Control.

             IV. Whether the trial court erred when it affirmed the decision
             of the Appellee particularly since the Ohio Department of
             Taxation testified that Appellant was current in sales tax
             payments and recommended full renewal of its liquor license
No. 13AP-974                                                                            4


              and the OAG testified to a 2009 assessment. O.R.C., Section
              4303.271(D)(2)(a) mandated a decision in favor of Appellant.

              V. Whether Appellant received "due process" and "equal
              protection" as guaranteed by the Fourteenth Amendment to
              the U.S. Constitution.

III.   FIRST ASSIGNMENT OF ERROR - STANDARD OF REVIEW

       {¶ 9} Under R.C. 119.12, a common pleas court, in reviewing an order of an
administrative agency, must consider the entire record to determine whether reliable,
probative, and substantial evidence supports the agency's order and the order is in
accordance with law. Univ. of Cincinnati v. Conrad, 63 Ohio St.2d 108, 110-11 (1980). The
common pleas court's "review of the administrative record is neither a trial de novo nor
an appeal on questions of law only, but a hybrid review in which the court 'must appraise
all the evidence as to the credibility of the witnesses, the probative character of the
evidence, and the weight thereof.' " Lies v. Veterinary Med. Bd., 2 Ohio App.3d 204, 207
(1st Dist.1981), quoting Andrews v. Bd. of Liquor Control, 164 Ohio St. 275, 280 (1955).
The common pleas court must give due deference to the administrative agency's
resolution of evidentiary conflicts, but "the findings of the agency are by no means
conclusive." Conrad at 111. The common pleas court conducts a de novo review of
questions of law, exercising its independent judgment in determining whether the
administrative order is "in accordance with law." Ohio Historical Soc. v. State Emp.
Relations Bd., 66 Ohio St.3d 466, 471 (1993).
       {¶ 10} An appellate court's review of an administrative decision is more limited
than that of a common pleas court. Pons v. Ohio State Med. Bd., 66 Ohio St.3d 619, 621
(1993). The appellate court reviews factual issues to determine whether the court of
common pleas abused its discretion in determining that the administrative action either
was or was not supported by reliable, probative and substantial evidence. Alternative
Residences, Two, Inc. v. Ohio Dept. of Job and Family Servs., 10th Dist. No. 04AP-306,
2004-Ohio-6444, ¶ 17. See also Blakemore v. Blakemore, 5 Ohio St.3d 217, 219 (1983)
(" 'abuse of discretion' connotes more than an error of law or judgment; it implies that the
court's attitude is unreasonable, arbitrary or unconscionable."). Absent an abuse of
discretion, a court of appeals may not substitute its judgment for that of an administrative
No. 13AP-974                                                                               5


agency or the common pleas court. Pons at 621. An appellate court, however, has plenary
review of purely legal questions. Big Bob's, Inc. v. Ohio Liquor Control Comm., 151 Ohio
App.3d 498, 2003-Ohio-418, ¶ 15 (10th Dist.).
       {¶ 11} Yohannes' first assignment of error asserts that the trial court erred by not
applying the standard of review for administrative appeals announced in Henley v. City of
Youngstown Bd. of Zoning Appeals, 90 Ohio St.3d 142 (2000). In Henley the court
analyzed the proper "standard of review to be applied by common pleas courts and courts
of appeals in R.C. Chapter 2506 administrative appeals." Id. at 147. Yohannes concedes
that the instant case is an appeal from an order of the commission, "pursuant to O.R.C.,
Section 119.12." (Appellant's brief, 19.) As Henley did not concern an appeal under R.C.
119.12, but rather concerned an appeal under Chapter 2506 of the Revised Code, the
standard of review discussed in Henley is inapplicable to the instant case. Yohannes' first
assignment of error is overruled.
V.     FOURTH ASSIGNMENT OF ERROR – COMMISSION'S ORDER NOT IN
       ACCORDANCE WITH LAW

       {¶ 12} Yohannes' fourth assignment of error asserts the trial court erred in
affirming the commission's March 29, 2013 order, as a representative from the Ohio
Department of Taxation testified that Yohannes had satisfied all sales/withholding tax
filing requirements, and was eligible for a full renewal. For the reasons that follow, we
agree with Yohannes and sustain this assignment of error.
       {¶ 13} In its decision affirming the commission's order, the trial court stated that it
had reviewed the hearing transcript, and that "[b]ased upon the strong testimony of the
representative of the Ohio Department of Taxation and the representative of the Ohio
Attorney General's office, it is clear that due to non-payment of assessments and sales tax
liabilities, appellant was delinquent to the extent of over $145,000." (Decision, 2.)
However, at the hearing before the commission, Tufford, an agent in the liquor group of
the sales and use tax division of the Ohio Department of Taxation, testified as follows:
              BY MR. RZYMEK:

              Q. In regards to Exhibit D, Ms. Tufford, are you familiar with
              Exhibit D?

              A. Uh-huh.
No. 13AP-974                                                                          6



             Q. And how much is owed on in regards to this claim?

             A. They're current, paid through and current with us, so we
             are making a recommendation for renewal.

             Mr. RZYMEK: Okay. So any objection on Exhibit D being
             admitted? They are recommending a full renewal.

             MS. ANTHONY: A full renewal? Is - -

             THE WITNESS: The             Department     of   Taxation     is
             recommending that, yes.

             MS. ANTHONY: A full renewal of his liquor permit?

             THE WITNESS: Correct, but the Attorney General's office
             isn't.
(Tr. 8.)

       {¶ 14} Exhibit D is a letter from Tufford to the commission through the Ohio Tax
Commissioner, Joseph W. Testa. The letter identifies Yohannes Parkwood, Inc., as the
permit holder, identifies Yohannes' liquor permit number and vendor's license number,
and notes the renewal period of February 2013. The letter then states that "[o]ur records
indicate that the above referenced permit holder has now satisfied all Sales/Withholding
Tax filing requirements for the above referenced renewal period and is now eligible for
Full Renewal of the permits." (Emphasis sic.) (State's exhibit D.)
       {¶ 15} The foregoing testimony and documentary evidence demonstrate that the
department of taxation considered Yohannes current and "paid through" with the
department of taxation. (Tr. 8.) The trial court abused its discretion when it ignored
Tufford's testimony, as well as exhibit D, and represented in its decision that a
representative from the department of taxation testified that Yohannes was delinquent to
the extent of over $145,000. The trial court appears to have arbitrarily ignored Tufford's
testimony and exhibit D.
       {¶ 16} Moreover, in the instant action, Tufford's testimony and exhibit D
demonstrate that the commission's order is not in accordance with law. In the January 7,
2013 tax non-renewal order, the division informed Yohannes that "Ohio law provides that
your permit shall not be renewed by the Division of Liquor Control until this Division is
No. 13AP-974                                                                              7


notified by the Tax Commissioner that the tax delinquency liability or assessment has
been resolved. R.C. 4303.271(D)(2)(A)." R.C. 4303.271(D)(2)(a) provides as follows:
              Except as provided in division (D)(4) of this section, the
              division of liquor control shall not renew the permit of any
              permit holder the tax commissioner has identified as being
              delinquent in filing any sales or withholding tax returns or as
              being liable for outstanding sales or withholding tax,
              penalties, or interest as of the first day of the sixth month
              preceding the month in which the permit expires, or of any
              permit holder the commissioner has identified as having been
              assessed by the department on or before the first day of the
              third month preceding the month in which the permit expires,
              until the division is notified by the tax commissioner that the
              delinquency, liability, or assessment has been resolved.

(Emphasis added.)

       {¶ 17} R.C. 4303.271(D)(2)(a) thus prohibits the division from renewing a permit
of any permit holder the tax commissioner has identified as being delinquent, having
outstanding tax liability, or as having been assessed by the department, until the tax
commissioner notifies the division that the delinquency, liability or assessment has been
resolved. See also R.C. 4303.27 (liquor permits are only issued for a one-year period).
Thus, under R.C. 4303.271(D)(2)(a), notice from the tax commissioner to the division that
the delinquency, liability, or assessment has been resolved is conclusive evidence that the
tax debt has been extinguished.
       {¶ 18} Here, the record contains both testimony from a representative of the
department of taxation, and a letter from the department of taxation through the tax
commissioner, indicating that Yohannes is paid through and current on its tax debt. Thus,
the commission had before it evidence from the tax commissioner that the liability or
assessment had been resolved. Compare Krafcik v. Liquor Control Comm., 10th Dist. No.
03AP-1152, 2004-Ohio-2131, ¶ 9 (finding that the commission's order denying the
renewal of Krafcik's liquor permit for failure to file tax returns was supported by reliable,
probative, and substantial evidence where the record contained testimony from "an
employee with the Ohio Department of Taxation, [who] testified that the permit holder
had delinquent returns spanning approximately a five-year period").
No. 13AP-974                                                                           8


       {¶ 19} Although Cassidy testified before the commission that the $147,769.50
assessment from 2009 remained outstanding, R.C. 4303.271(D)(2)(a) provides that the
division shall not renew a liquor permit under that section, until the division receives
evidence from the tax commissioner, not the attorney general, that the delinquency,
liability, or assessment has been resolved. Tufford's testimony and exhibit D were the only
evidence from the tax commissioner before the commission, and that evidence
demonstrated that Yohannes was current on its tax liability. Accordingly, the
commission's order affirming the tax non-renewal order of the division is not in
accordance with R.C. 4303.271(D)(2)(a), and thus not in accordance with law. See R.C.
119.12. We further note that, although Yohannes has argued in the trial court and in this
court that Tufford's testimony demonstrates that Yohannes is current on its tax liability,
the commission has not attempted to address Yohannes' argument regarding Tufford's
testimony at any stage of this appeal.
       {¶ 20} Based on the foregoing, we sustain Yohannes' fourth assignment of error
and reverse the judgment of the Franklin County Court of Common Pleas affirming the
order of the commission affirming the division's tax non-renewal order. Pursuant to R.C.
4303.271(D)(2)(a), and in conjunction with Tufford's testimony and exhibit D, the
commission erred in not vacating the division's tax non-renewal order. Our ruling on
Yohannes' fourth assignment of error has rendered Yohannes' second, third, and fifth
assignments of error moot.
IV.    DISPOSITION

       {¶ 21} Having overruled Yohannes' first assignment of error, but having sustained
Yohannes' fourth assignment of error, thereby rendering Yohannes' second, third, and
fifth assignments of error moot, we reverse the judgment of the Franklin County Court of
Common Pleas. The case is remanded to the Franklin County Court of Common Pleas
with instructions that the court vacate the commission's March 29, 2013 order, as such
order is not in accordance with law, and instruct the commission to enter a new order
consistent with this decision and in accordance with law.
                                Judgment reversed and case remanded with instructions.

                    SADLER, P.J. and LUPER SCHUSTER, J., concur.
                               _________________
