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Liquor stores may challenge competitors’ licenses, Md. court says

Judge Kathryn Grill Graeff wrote in the majority opinion joined by Judge Christopher B. Kehoe that "Old Republic became vested with subrogation rights to Countrywide’s claim pursuant to Old Republic’s pre-existing insurance policy with Countrywide.”

Judge Kathryn Grill Graeff wrote that existing licensees should not be required to show a specific loss, as such evidence would not become available until several months after the competitor’s license is granted.

Holders of alcohol licenses may challenge the license issued to a would-be competitor so long as they can show a “likelihood” of economic harm from the competition, Maryland’s second highest court has ruled.

In its reported decision, the Court of Special Appeals said current license holders need not present testimony or documentation of exactly how much money they would lose due to the competition to have standing to challenge the licensing board’s action.

The court’s ruling enables a licensed Crisfield convenience store owner to pursue his challenge to the Somerset County board’s approval of a license to the owner of a similar store less than two miles away.

Hiteshbhai Patel’s challenge had been dismissed by the Somerset County Circuit Court, which said he lacked standing because he had not shown he was “aggrieved” by the board’s approval of a beer and wine license for Azaz Azam. To be aggrieved under the state licensing law, a licensee “must demonstrate a specific economic injury,” the circuit court held in a decision the Court of Special Appeals vacated.

The appellate court said the General Assembly expressly intended that alcohol licensing boards consider the competitive effect on existing businesses. The court added that existing licensees should not be required to show a specific loss, as such evidence would not become available until several months after the competitor’s license is granted.

“As Mr. Patel notes, in the typical case, a person appealing the decision to issue an alcoholic beverages license to a nearby competitor will not have, in the limited time frame in which an appeal will be heard, specific data in the form of sales lost,” Judge Kathryn Grill Graeff wrote for the court. “Accordingly, to establish that he or she is aggrieved by the issuance of a license to a nearby competitor, the existing licensee need only demonstrate the likelihood of harm due to increased competition.”

In its 3-0 decision filed Thursday, the court distinguished the state’s liquor licensing laws, which call for competitive harm to be considered, from county zoning ordinances, which are designed to protect nearby property owners regardless of economic effect.

“It is not the function of county zoning ordinances to provide economic protection for existing businesses,” Graeff wrote.

“The alcoholic beverages laws, by contrast, do address competition and specifically require the board to consider, in determining whether to issue a license, ‘the number and location of existing licensees of the license applied for,’” Graeff added, quoting from Maryland Code Article 2B, which governs alcohol licensure.

Patel’s attorney, John K. Phoebus, said the court’s ruling “wasn’t a surprise” in light of Article 2B.

Existing license holders are not “the average Joe on the street” complaining about another beer vendor, said Phoebus, of Anthenelli, Phoebus & Hickman LLC in Crisfield.

“When it comes to another liquor licensee in the same community with the same type of liquor license, they are particularly aggrieved,” he added. “They don’t have to show specific pecuniary loss.”

William R. Hall, the board’s attorney, said he did not challenge Patel’s standing on appeal and considers the case involving Azam to be moot as he is no longer in business. The board has since issued a beer and wine license to the new owner of Azam’s old convenience store, a decision also being challenged by Patel, Hall said.

“The first movie is all over with and now we have part two,” added Hall, a Salisbury solo practitioner.

Azam’s attorney, Kirk G. Simpkins, did not return telephone messages seeking comment Monday on the court’s decision. Simpkins is with Simpkins & Simpkins P.A. in Princess Anne.

The case arose on Dec. 29, 2011, when the Board of License Commissioners for Somerset County issued a Class A beer and wine license to Azam, who operated the Somers Cove convenience store in Crisfield.

Patel, who operates Big Willey’s convenience store under a similar license, challenged the issuance in circuit court, only to be turned away due to lack of standing.

Patel then sought review by the Court of Special Appeals.

Graeff was joined in the opinion by Judges Patrick L. Woodward and Raymond G. Thieme Jr., a retired judge sitting by special assignment.

The Court of Special Appeals issued its decision in Hiteshbhai Patel v. Board of License Commissioners for Somerset County, No. 1522, September Term 2015.

 


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