In re Kacey's, Inc.

In re Kacey's, Inc. (2004-159); 178 Vt. 567; 879 A.2d 450

2005 VT 51

[Filed 03-May-2005]

                                 ENTRY ORDER

                                 2005 VT 51

                      SUPREME COURT DOCKET NO. 2004-159

                             FEBRUARY TERM, 2005

  In re Kacey's, Inc. d/b/a Kacey's	}	APPEALED FROM:
                                        }
                                        }
                                        }	Liquor Control Board
                                        }	
  	                                }
                                        }	DOCKET NO. 10348-00001


             In the above-entitled cause, the Clerk will enter:

       ¶  1.  Licensee appeals from a Liquor Control Board decision
  revoking its first- and third-class licenses to sell alcoholic beverages
  for on-premises consumption.  Licensee contends the Board abused its
  discretion by basing the revocations on: (1) illegal drug activity that was
  not reasonably discoverable; (2) unsupported findings concerning the
  licensee's reputation; and (3) uncharged conduct and hearsay evidence.  We
  affirm.  

       ¶  2.  Licensee operates a pub, known as Kacey's, in St. Albans,
  Vermont.  Reports of drug activity at the establishment led to an
  investigation by the Vermont Drug Task Force.  The investigation involved
  the use of undercover police officers, one of whom testified at the hearing
  before the Board that he bought cocaine from the pub's manager, Perry
  Paradee, on four separate evenings between July 2002 and January 2003.  The
  officer testified that on each occasion he would enter the pub, locate
  Paradee, and indicate that he wished to purchase cocaine.  The officer
  would then meet Paradee in the bathroom, and Paradee would hold his foot
  against the door to prevent others from entering.  The officer would then
  make the purchase, and both would exit.  On each occasion, the powder
  field-tested positive for cocaine, a determination later confirmed by
  laboratory testing.  On one occasion when they entered the bathroom, the
  officer observed an individual snorting lines of cocaine from the toilet
  lid.  

       ¶  3.  In addition to the four separate cocaine purchases from
  Paradee, the officer also recalled that on one occasion he arranged to
  purchase cocaine from a woman he met at Kacey's, and later completed the
  purchase in the parking lot of the pub.  The officer also recounted an
  incident in which he asked Paradee for some "weed," and Paradee then
  approached another patron, who subsequently handed the officer a film
  canister containing a leafy substance which the officer determined to be
  marijuana.  The officer testified, and the Board found, that these drug
  transactions, combined with Paradee's freedom of movement in and out of the
  bar area and kitchen, making of change, and frequent use of the telephone
  demonstrated that Paradee had essentially "set up shop" to sell drugs at
  Kacey's.  The officer observed other transactions at Kacey's not involving
  Paradee in which the telephone would ring, an individual would answer and
  later enter the bathroom with another patron, and the two would then exit
  in tandem some ten to fifteen seconds later.  This behavior suggested to
  the officer that other drug transactions were regularly occurring on the
  premises.     

       ¶  4.  Kacey's owner, Kirk Boucher, testified that he typically worked
  at the pub preparing food or doing paper work from early morning to
  mid-afternoon.  Boucher stated, and the Board found, that he was not on the
  premises when any of the drug sales occurred.  Boucher claimed that he had
  no knowledge or suspicion of drug trafficking at Kacey's during the events
  in question.  Nevertheless, the Board found that the drug activity
  described by the undercover officer could have been observed by Boucher or
  any other "ordinary alert and interested person;" that Boucher could have
  observed the activity by visiting the premises during the evening hours,
  and could have taken steps to curtail it; and that by failing to do so
  Boucher breached his affirmative duty to become aware of, and prevent,
  prohibited conduct on the premises, in violation of General Regulation No.
  41 of the Liquor Control Department, which provides, in part, that "[n]o
  disturbances, brawls, fighting, unlawful conduct shall be permitted or
  suffered upon any licensed premises." (FN1)  The Board concluded that the
  appropriate penalty for the violation was revocation of licensee's first-
  and third-class licenses.  This appeal followed.
                                             
       ¶  5.  Licensee first contends the Board abused its discretion in
  determining that it "permitted or suffered" drug trafficking to occur on
  its premises.  Licensee notes Boucher's undisputed testimony that he had no
  knowledge of the transactions, and argues that he could not, through
  reasonable diligence, have discovered them because they were by nature
  "subtle and covert" and "undetectable to an untrained observer."  In
  reviewing the Board's ruling "we presume the reasonableness and validity"
  of decisions within its expertise, "and require a clear and convincing
  showing to overcome the presumption."  In re Capital Investment, Inc., 150
  Vt. 478, 480, 554 A.2d 662, 664 (1988).  We will not disturb the Board's
  factual findings unless they are clearly erroneous.  Id. at 480-81, 554 A.2d  at 664.  Furthermore, absent compelling indication of error, we will
  uphold the Board's interpretation of the administrative regulations and
  statutes within its purview.  Id. at 482, 554 A.2d  at 665.  Thus, we have
  specifically upheld the Board's interpretation of the phrase "permitted or
  suffered" under Regulation No. 41 "as charging the licensee with the
  affirmative duty to become aware of and prevent prohibited conduct by its
  patrons."  Id. (Emphasis supplied).            
   
       ¶  6.  The evidence and findings support the Board's conclusion that
  licensee failed to satisfy this affirmative duty.  As noted, the Board
  found that the drug activities as described by the undercover officers were
  apparent "to any ordinary alert and interested person," and therefore could
  have been discovered by Boucher through the exercise of reasonable
  diligence.  In support of this finding, the Board cited the undercover
  officer's testimony describing the frequently repeated scenario in which,
  following a telephone call or conversation, two individuals would enter the
  bathroom together, stay for ten or fifteen seconds, and then exit at almost
  the same time.  The Board also noted the officer's relative ease in
  arranging frequent purchases of cocaine and, on one occasion, marijuana
  from Paradee and other patrons, and the officer's recollection of entering
  the bathroom and observing an individual snorting cocaine from a toilet
  lid.  These findings are supported by the evidence, and reasonably support
  the conclusion that Boucher-or any ordinary alert and interested
  person-could have detected what was happening through the exercise of
  reasonable diligence. 

       ¶  7.  Licensee also contends that the Board's decision is based on
  the unreasonable assumption that Boucher should have been present "during
  all hours of operation" seven days a week.  This was not, however, the
  Board's finding.  It found, rather, that Boucher had an affirmative duty to
  engage in some supervision or inspection during the critical evening hours,
  and that the illegal drug activities could have reasonably been discovered
  if Boucher "had been on the premises at least some of the time during the
  evening hours."  These findings and conclusions were reasonable and
  supported by the evidence, and therefore can not be disturbed on appeal. 
  Id. at 481, 554 A.2d  at 664 (Board's decision must be upheld "[i]f there
  exists any reasonable basis to support the Board's actions").

       ¶  8.  Licensee next contends the Board's decision is based
  upon unsupported findings that drug trafficking at Kacey's had been
  occurring for a period of "months or longer" and that Kacey's had developed
  a "reputation" in the St. Albans area as a place where drugs could be
  bought and sold.  The evidence, however, amply supported the Board's
  inference that drug dealing had been occurring at Kacey's for a substantial
  period of time.  Furthermore, the Board's carefully qualified finding that
  Kacey's had developed a reputation for drug dealing-"not to everyone of
  course but to those elements of society who are interested"-was a
  reasonable inference from the relative ease and frequency of the controlled
  purchases of cocaine by the undercover officer, and the volume of other
  apparent drug dealing observed by the officer.  See In re Tweer, 146 Vt.
  36, 39, 498 A.2d 499, 501 (1985) (Board's inferential finding must be
  upheld where the "inference was not clearly erroneous"). 

       ¶  9.  Finally, licensee contends the Board relied on improper
  evidence of three kinds.  First, licensee asserts that the Board violated
  its due process rights by relying on the officer's testimony about other
  drug transactions that were not specifically alleged in the notice of
  hearing.  The statutory notice provision requires a "short and plain
  statement of the matters at issue."  3 V.S.A. § 809(b)(4).  The test of
  adequacy is "whether or not the parties were given an adequate opportunity
  to prepare and respond to the issues raised in the proceeding." In re Green
  Mountain Power Corp., 131 Vt. 284, 293, 305 A.2d 571, 577 (1973); accord In
  re Twenty-Four Vt. Utilities, 159 Vt. 363, 369, 618 A.2d 1309, 1312-13
  (1992).   Here, the notice of hearing together with several attached
  violation reports gave ample notice to licensee of the six separate drug
  transactions that were alleged and found as violations.  In re Hot Spot,
  Inc., 149 Vt. 538, 540-41, 546 A.2d 799, 801 (1988) (notice requirement
  satisfied by "narrative report of the alleged facts" set forth in
  investigator's reports).  Although licensee argued below that other drug
  transactions observed by the officers were not readily detectable by the
  untrained observer, the record does not show that licensee objected to the
  testimony on the ground that it was outside the scope of the charges or
  that licensee was unprepared to respond to the testimony.  Accordingly, the
  issue was not preserved for review on appeal.  See Town of Hinesburg v.
  Dunkling, 167 Vt. 514, 523-24, 711 A.2d 1163, 1166 (1998) (objection to
  constitutional adequacy of notice of violation must be raised below to
  preserve issue for review on appeal).  Nor does licensee demonstrate how,
  if at all, it was prejudiced by the alleged lack of notice.  See State v.
  Ingerson, 2004 VT 36, ¶¶ 4-6, 176 Vt. 428, 852 A.2d 567 (to justify
  reversal, party must show that he or she did not have actual notice of
  charges or an adequate opportunity to defend).  Accordingly, we find no
  error warranting reversal of the judgment. 
   
       ¶  10.  Licensee further contends that the Board erred in finding a
  violation based on the undercover officer's purchase of cocaine from a
  patron in Kacey's parking lot.  Licensee asserts that the State had
  withdrawn the allegation, and that it failed to present evidence to support
  it.  The State adduced specific testimony in support of the allegation,
  however, and at no point offered to withdraw the violation.  Finally,
  licensee contends the Board erred in admitting, over objection, a state
  trooper's hearsay testimony that State laboratory tests confirmed that the
  substances purchased by the officers were cocaine.  We note, however, that
  regardless of whether the testimony was admissible under the more "relaxed"
  rules applicable in administrative proceedings, In re Desautels Real
  Estate, Inc., 142 Vt. 326, 335, 457 A.2d 1361, 1365 (1982), alternative
  evidence confirmed the identity of the substance as cocaine, including
  field tests admitted without objection, and the officer's testimony based
  on extensive training and experience identifying substances as illegal
  drugs.  See State v. DeFranceaux, 170 Vt. 561, 562, 743 A.2d 1074, 1075
  (1999) (mem.) (court may rely on officer's affidavit identifying illegal
  substance where it adequately sets forth officer's skill, training and
  experience).  Licensee additionally contends the Board erred in admitting
  hearsay testimony as to what Paradee told the undercover officer when the
  officer asked for drugs.  Licensee does not, however, identify the specific
  statements that were allegedly improperly admitted, nor how they were
  prejudicial in light of the ample evidence-apart from any hearsay
  testimony-describing the drug sales from Paradee. See Paradis v. Kirby, 138
  Vt. 524, 528, 418 A.2d 863, 865 (1980) ("When claims of error  are made, it
  is incumbent upon the claimant to show that he has been prejudiced as a
  result.").  Therefore, we discern no basis to disturb the judgment.  

       Affirmed.


                                       BY THE COURT:


                                       _______________________________________
                                       Paul L. Reiber, Chief Justice

                                       _______________________________________
                                       John A. Dooley, Associate Justice

                                       _______________________________________
                                       Denise R. Johnson, Associate Justice

                                       _______________________________________
                                       Marilyn S. Skoglund, Associate Justice

                                       _______________________________________
                                       Frederic W. Allen, Chief Justice (Ret.),
                                       Specially Assigned


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                                  Footnotes


FN1.  General Regulation No. 41 provides in its entirety as follows:

    It shall be the duty of all licensees to control the conduct of
    their patrons at all times.  No person shall carry or consume
    alcoholic beverages while dancing.  No disturbances, brawls,
    fighting, unlawful conduct shall be permitted or suffered upon any
    licensed premises; nor shall such premises be conducted in such a
    manner as to render said premises or the streets, sidewalks or
    highway adjacent thereto a public nuisance.