Texas Alcoholic Bev. Comn. v. Mini Inc.

Citations: 832 S.W.2d 147; 1992 Tex. App. LEXIS 1456; 1992 WL 117298Docket: B14-91-00896-CV

Court: Court of Appeals of Texas; June 4, 1992; Texas; State Appellate Court

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The Texas Alcoholic Beverage Commission (TABC) appealed a district court's decision that reversed TABC's cancellation of Mini, Inc.'s alcoholic beverage permits, which allowed operation at Porky's Cabaret in Galveston County. The TABC had previously issued a notice of hearing for twenty-one alleged violations of the Alcoholic Beverage Code. Following a two-day administrative hearing and resumption in January 1991, the hearing examiner found eight violations and recommended a sixty-day suspension or a $9,000 civil penalty. Despite this, an assistant administrator later canceled Mini, Inc.'s permits based on detailed findings. After the TABC's motion for rehearing was denied, Mini, Inc. appealed to the district court, which ruled the TABC's cancellation lacked substantial evidence. The TABC contended this judgment was erroneous, emphasizing that the judicial review followed the substantial evidence rule as per the Texas Alcoholic Beverage Code. The appellate court noted that while it could assess the TABC's findings, it could not overturn the agency's decision merely due to conflicting testimony or insufficient evidence for a different outcome. Ultimately, the appellate court reversed the district court's judgment, reinstating TABC's order.

Resolution of factual conflicts is primarily the responsibility of the administrative body, with the substantial evidence rule designed to safeguard this role. It is not essential for the agency's conclusion to be correct; rather, there must be a reasonable basis in the record for the agency's actions. An agency's decision will be upheld if reasonable minds could reach the same conclusion as the agency did. The findings and decisions of an administrative agency are presumed to be backed by substantial evidence, placing the burden on the contestant to demonstrate a lack of such evidence at the time of the hearing. In this case, the appellee did not meet this burden in the district court, as the record indicated that the TABC's order was supported by substantial evidence.

The appellee's defense focused on alleged prejudicial treatment during the administrative process and argued that the breach of peace violation under section 28.11 of the Texas Alcoholic Beverage Code was unconstitutional due to vagueness. Section 28.11 allows the TABC to suspend or cancel a mixed beverage permit if a breach of peace occurs on licensed premises, is not beyond the permittee's control, and results from inadequate supervision. The court found the statute's language to be clear, stating that the appellee was aware of the obligation to supervise employees and control customers.

Additionally, the appellee claimed the TABC added a requirement not specified in the statute, which was deemed not to render the statute vague. The evidence from the administrative hearing supported the finding of a violation. The appellee also contended that the notice of hearing was vague, but the hearing examiner overruled this objection, confirming that the notice met the requirements outlined in the ATRA regarding the specifics that must be included.

The notice of hearing lacked specific identification of the supervised individual and the nature of supervision but met the requirements of section 13(b) by providing a concise statement of the asserted matters, including the date of the assault and assailant names. The appellee was adequately informed of the relevant facts and law regarding the Texas Alcoholic Beverage Commission's (TABC) case against them, fulfilling due process requirements. The TABC's assistant administrator identified eight violations of the Texas Alcoholic Beverage Code on the appellee's premises, including breaches related to public peace, service to intoxicated customers, employee intoxication, solicitation of alcohol for personal use, and drug offenses. Even if one violation was insufficient for permit cancellation, the presence of multiple violations justified the action.

The appellee claimed that the findings of fact did not conform to section 16(b) of the Administrative Procedure and Texas Register Act (APTRA), which requires separate findings and conclusions. However, since the findings were not expressed in statutory language, they did not require additional supporting facts. The assistant administrator's findings were deemed compliant with section 16(b). The appellee was not denied fair treatment in the administrative process, and the timing of the notice—ten months post-first violation—was deemed legally insignificant. The TABC's ongoing investigation and the discovery of additional violations negated any obligation to halt proceedings. 

Regarding the civil penalty, the appellee contended that it was a mandatory option; however, section 11.64 clarifies that such a penalty applies only to license suspensions, not cancellations. The TABC had discretion in imposing penalties, which the assistant administrator exercised without abuse. The court found substantial evidence supporting the TABC's decision and determined that the appellee's rights were not violated, resulting in the reversal of the district court's judgment and reinstatement of the TABC's order.