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DRJ, Inc. v. City of St. Paul: LIQUOR | APPELLATE PROCEEDURE - no abuse not staying liquor license revocation; no independent. LIQUOR | appellate stay

DRJ, Inc., d/b/a Diva's Overtime Lounge,
City of St. Paul,
Filed November 13, 2007
Motion denied.
Toussaint, Chief Judge
St. Paul City Council
Council File #07-737
Marshall H. Tanick, Andrew J. Dawkins, Mansfield, Tanick & Cohen, 1700 US Bank
Plaza, South Tower, 220 South Sixth St., Minneapolis, MN 55402 (for relator)
John Choi, St. Paul City Attorney, Rachel A. Gunderson, Assistant City Attorney, 400
City Hall and Courthouse, 15 West Kellogg Boulevard, St. Paul, MN 55102 (for
Considered and decided by Toussaint, Chief Judge; Willis, Judge; and Minge,
A city councils refusal to stay a license revocation pending appeal does not
constitute an abuse of discretion when it is supported by findings that reflect the relators
past failure to comply with conditions imposed on the license and a balancing of the
potential harm to the relator against the potential harm to the public.
TOUSSAINT, Chief Judge
Relator DRJ, Inc., d/b/a Diva's Overtime Lounge, has been under the current
ownership and management since 2005. Respondent City of St. Paul issued various
licenses, including an on-sale liquor license, for the bars operations. Numerous
conditions were imposed on the licenses, including requirements for the operation of
videotaping surveillance equipment, retention of videotapes, and cooperation with law
enforcement authorities. In 2006, respondent revoked permission for the bar to remain
open until 2 a.m. In early 2007, hearings were held before two administrative law judges
on alleged violations of the license conditions and a variety of city regulations. In August
2007, the city council voted to revoke the licenses. Relator moved the city council for a
stay. In a written decision denying the stay, the city council cited relators failure to
abide by conditions previously imposed on the licenses and the large number of
violations, and it found that granting a stay so that the bar could continue operations
during the appeal would endanger the health and safety of . . . citizens.
Relator moves this court for a stay, urging us to give no deference to the councils
denial. Relator emphasizes the likely financial losses resulting from closure and the risk
that a vacant building may be susceptible to vandalism. Respondent argues that the city
councils denial of a stay does not constitute an abuse of discretion and it opposes the
relators motion.
There is no dispute that the license revocation decision by respondent constitutes a
quasi-judicial decision subject to review. See Minn. Ctr. for Envtl. Advocacy v. Metro.
Council, 587 N.W.2d 838, 842 (Minn. 1999) (describing three indicia of quasi-judicial
action). Unless there is a statute or ordinance prescribing a different process for judicial
review, a municipalitys quasi-judicial decisions are reviewable by way of a certiorari
appeal to this court. City of Minneapolis v. Meldahl, 607 N.W.2d 168, 171 (Minn. App.
2000) (affirming district courts dismissal, for lack of jurisdiction, of challenge to citys
order for condemnation and demolition of building). Because the decision being
challenged in this case was made by a local governmental unit that does not have
statewide jurisdiction, Minnesota Statutes chapter 606 governs the acts required to invoke
appellate jurisdiction and the time limit for appeal. See Heideman v. Metro. Airports
Commn, 555 N.W.2d 322, 323-24 (Minn. App. 1996) (applying chapter 606 and
distinguishing it from Minnesota Administrative Procedures Act).
No provision of chapter 606 addresses the granting of a stay pending appeal. See
Minn. Stat. 606.01-.06 (2006). The appellate rules provide that an agency or
governmental body whose decision is subject to certiorari review may stay enforcement
of the decision in accordance with Rule 108, which governs supersedeas bonds and
stays. Minn. R. Civ. App. P. 115.03, subd. 2 (b). In a certiorari appeal, the [a]pplication
for a supersedeas bond or a stay on other terms must be made in the first instance to the
agency or body. Id. But a party may seek review of the ruling on a request for a stay
pending appeal, or of the terms established by the agency or governmental body, by
making a motion to this court for review of that ruling. Id.
Rule 108 applies generally to all appeals and it also requires that a party seeking a
stay pending appeal apply in the first instance to the trial court. Minn. R. Civ. App. P.
108.01, subd. 1; see Minn. R. Civ. App. P. 101.02, subd. 4 (defining trial court to
include court or agency whose decision is being reviewed). Under rules 108.01 and
115.03, relator was required to make its motion for a stay pending appeal first to the city
council, subject to review by motion in this court. Relator insists that it is not seeking
review of [respondents] decision on the motion for a stay, but is moving this court in
the first instance to issue a stay. But the only authority cited for this request is Minn.
Stat. 14.65 (2006), a provision of the administrative procedures act that (a) has no
application to this appeal from a decision by a local governmental body and (b)
specifically recognizes the authority of an administrative agency to grant a stay pending a
certiorari appeal. Relators request is inconsistent with the provisions of the cited
appellate rules and we reject the invitation to consider the merits of [the] stay request
anew, without deference to the city councils decision.
Rule 108.01 provides several examples of the type of security that is likely to
protect a respondent who must delay enforcement of a favorable decision while an appeal
is pending, offering guidance to trial courts in a variety of factual scenarios. Minn. R.
Civ. App. P. 108.01, subds. 2-6. For instance, if an appeal is taken from a money
judgment, subdivision 3 indicates that the usual condition of the supersedeas bond will be
payment of the judgment (if affirmed) and all damages awarded on appeal. Id., subd. 3.
In effect, an appealing party can forestall immediate collection efforts by providing a
bond ensuring that the respondent will be able to collect in the future. See Barrett v.
Smith, 184 Minn. 107, 110, 237 N.W. 881, 882 (1931) (holding that appellants posting
of bond exceeding amount of money judgment provided adequate protection for
respondent and required that levies and garnishments be suspended). Subdivision 4
indicates that if an appeal is taken from a judgment directing the delivery of documents
or personal property, no bond may be necessary to protect the respondent, if the appellant
deposits the documents or property with a custodian appointed by the trial court or
agency. Minn. R. Civ. App. P. 115.03, subd. 4. When the documents or property are
deposited, the respondent is at little risk that a delay will impair the respondents ability
to enforce the decision.
Subdivision 6 reiterates that in certiorari appeals under rule 115, the trial court
may upon motion grant a stay of the order, judgment[,] or enforcement proceedings upon
such terms as to bond or otherwise as it considers proper for the security of the rights of
the adverse party. Id., subd. 6. If none of the specified subdivisions apply, enforcement
may not be impaired by the passage of time, and a cost bond may be sufficient to obtain a
stay. See id., subd. 7. But the trial court retains authority to establish the terms and
conditions of a stay pending appeal, and it may require a supersedeas bond even if not
specified in the rule, if it determines that the presumed security described in the
examples does not provide adequate security to the respondent. Id., subd. 8; see also
id., subd. 1 (requiring that trial court order and approve any stay pending appeal and
the amount and form of any bond or security).
In addition to the broad authority granted in rule 108.01 to determine whether and
on what terms to grant a stay pending appeal, other rules applicable to a particular case
may establish a presumption for or against the granting of a stay. See, e.g., Minn. R. Civ.
P. 62.02 (describing district courts discretion to suspend, modify, restore, or grant an
injunction and to require a bond or other security when appeal is taken from order on
injunctive relief); Minn. R. Juv. Prot. P. 47.03 (establishing presumption that order will
remain in effect pending appeal, but recognizing discretion of juvenile court to grant
stay); Minn. R. Juv. Delinq. P. 21.03, subd. 3 (requiring stay of further adult criminal
proceedings pending decision on appeal from certification of juvenile to stand trial as
adult). While many of the scenarios described in rule 108.01 focus on how best to
preserve the ability of the prevailing party to enforce a favorable decision after the appeal
has been decided, other rulesmost notably those governing stays in criminal cases
focus in part on the risk to others, including the public, if a stay is granted during the
pendency of an appeal. See Minn. R. Crim. P. 28.02, subds. 6-7 (establishing
presumption that execution of criminal sentence will not be stayed, and requiring court to
consider: (a) whether defendant is likely to serve entire sentence before appeal is decided;
(b) risk that defendant will not appear if appeal is unsuccessful; (c) likelihood that
defendant will commit serious crime or intimidate witnesses if stay is granted; and (d)
whether appeal is frivolous or taken for delay).
When local governmental units exercise their licensing authority, especially in
connection with the sale of liquor, they must determine whether continued operations will
be detrimental to the public good. Sabes v. City of Minneapolis, 265 Minn. 166, 171,
120 N.W.2d 871, 875 (1963) (footnote omitted) (describing judicial deference to
discretion of city council determining whether to revoke liquor licenses). Briefing on this
appeal is not complete and the merits of the revocation decision are not yet before us, but
the public interest and the potential risk to the public are equally applicable to the issue of
a stay pending appeal. When determining whether or not to grant a stay pending appeal,
the trial court or governmental unit must balance the appealing partys interest in
preserving the status quo, so that effective relief will be available if the appeal succeeds,
against the interests of the public or the prevailing party in enforcing the decision and
ensuring that they remain secure in victory while the appeal is pending. See 3 Eric. J.
Magnuson & David F. Herr, Minnesota Practice 108.1, at 389-90 (2007) (describing
rule 108.01 as striking balance between these competing interests).
The trial court or agency balancing these competing interests and determining the
form and amount of security required to adequately protect the public and the prevailing
party is making a discretionary decision. An appellate court reviewing a decision
regarding a stay pending appeal will interfere only when there is a demonstrated abuse of
discretion. State by Clark v. Robnan, Inc., 259 Minn. 88, 90, 107 N.W.2d 51, 53 (1960)
(concluding there was no basis for interference with the discretion exercised by the
district court in continuing [a] temporary injunction during the pendency of appeal); see
also Miller v. City of St. Paul, 363 N.W.2d 806 (Minn. App. 1985) (affirming denial of
temporary injunction to stop revocation of liquor licenses), review denied (Minn. Apr. 26,
1985). But even when a deferential abuse-of-discretion standard applies, there must be
adequate findings and a record for the appellate court to review. State v. Cassidy, 567
N.W.2d 707, 710 (Minn. 1997) (applying general rule on need for adequate record in
criminal case involving discretionary decision regarding conduct of trial in absentia).
The findings of the trial court or agency must be sufficiently detailed to demonstrate that
all relevant factors were actually considered. Stich v. Stich, 435 N.W.2d 52, 53 (Minn.
In this case, the city councils written decision reflects that it considered whether
the imposition of operating conditions could adequately protect the public, in the event
that a stay were granted, but it concluded that relators history of violating existing
conditions made compliance unlikely and that continued operation of the bar posed a
danger to public health and safety. Relator correctly notes that some of the past
violations, including, arguably, those related to oversized temporary signs, may pose little
immediate danger to public safety. But municipal restrictions on the conduct of
businesses are presumed to promote the public interest, and the burden of establishing
that ordinances and regulations do not promote the public health, morals, safety,
convenience, or general welfare, so that the restrictions are not within the police power, is
on the party attacking the validity of a regulation. City of St. Paul v. Dalsin, 245 Minn.
325, 329, 71 N.W.2d 855, 858 (1955). Relator certainly has not established that all past
violations are unrelated to the public interest. Accordingly, it was appropriate for the city
council to consider those violations when determining whether the imposition of
additional conditions would adequately protect the public interest. We note that relator
did not propose any conditions to protect the public interest and counsels
characterization of the bar as a nuisance-free operation is not consistent with the
limited record now before us.
The likely financial impact on relator of denying a stay is both obvious and
serious. But that impact must be balanced against the public interests that would be
affected if the bar were to continue its operations while the appeal is pending. See, e.g.,
BAL, Inc. v. City of St. Paul, 469 N.W.2d 341, 343 (Minn. App. 1991) (describing impact
on neighbors of disturbing conditions at bar and concluding that record supported
determination that business endangered safety, health, morals, comfort[,] or repose of
. . . members of the public). In many cases, especially those involving sanctions from
which effective relief may be unavailable months later, when the appeal is eventually
decided on the merits, it is likely that the imposition of operating conditions will
adequately protect the public. Ensuring that the appealing party can obtain effective
relief, if it prevails on appeal, is a crucial consideration in determining whether and on
what terms to grant a stay pending appeal. The revocation in this case has both
immediate consequences (because the bar is closed) and long-term consequences
(because revocation appears to preclude future use of the property as a bar, even by a new
owner). Relator can still obtain effective relief from some of these consequences, if the
appeal succeeds. In this case, and on the limited record available to us, we conclude that
the city council did not abuse its discretion when it denied relators motion for a stay.
Motion denied.


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