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OAH 8-6020-19263-2 |
STATE OF
OFFICE OF ADMINISTRATIVE HEARINGS
FOR THE
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In
the Matter of the Adverse Actions Against the Retail Food – Restricted Food
Service, Retail Food C Grocery, and Cigarette – Tobacco Licenses held by Gas
It for Less & Food, Inc., d/b/a West 7th Market and the Gas
Station License Application Submitted by Gas It for Less & Food, Inc.,
d/b/a West 7th Market |
FINDINGS OF FACT, CONCLUSIONS AND RECOMMENDATION |
This matter came on for hearing before
Administrative Law Judge Eric L. Lipman on October 30 and November 9, 2007, at the
Office of Administrative Hearings. The hearing
record closed following the receipt of testimony and argument on November 9,
2007.
Rachel
Tierney, Assistant City Attorney, 400 City Hall,
STATEMENT OF ISSUES
Should the City of
Should the City of
Based upon all the proceedings herein,
the Administrative Law Judge makes the following:
FINDINGS OF FACT
1.
The West 7th
Market is a gas station located at
2.
Saddam Samaan,
on behalf of Gas It For Less and Food, Inc., applied to the City of
3.
Mr. Samaan’s
company, Samaan Fuel, Inc., has leasehold, purchase and security agreements
relating to the West 7th Market property.[3]
4.
Mr. Samaan’s
acquisition of West 7th Market is part of a larger series of transactions in
recent years, through which Mr. Samaan has acquired and operated gas stations in
5.
In February of
2004, Mr. Samaan, following a bench trial, was found guilty of 5th
Degree Criminal Sexual Conduct. While
Samaan maintains that the sexual touching underlying the verdict was part of a
romantic relationship with the complaining witness, the trial court found Samaan
guilty of nonconsensual touching of an adult female customer of an Amoco gas
station where Samaan was then working.[5]
Initial License
Application
6.
On January 24,
2007, Samaan applied for four separate licenses: (1) a gasoline station
license; (2) a retail food – restricted food service license; (3) a retail food
– grocery (for facilities 1001 to 3000 sq. ft.) license; and (4) a cigarette
and tobacco license.[6]
7.
On July 5, 2007,
in regular session, the St. Paul City Council denied all four of Samaan’s
license applications. The Council based
its decision upon Samaan’s failure to submit all of the documents that were
necessary to complete the application process.[7]
8.
On July 12, DSI
Deputy Director Christine Rozek sent Samaan additional written notification of
the denial of the license applications.
In her letter, she explained that as a result of the denial, West 7th
Market was not permitted to engage in sales of gasoline, groceries, malt
beverages, or tobacco products.[8]
July 13,
2007
9.
At 1:00 p.m. on
July 13, 2007, DSI Senior License Inspector Kris Schweinler and St. Paul Police
Sergeant David Schoen delivered a Notice of Denial and Order to Close to West
7th Market. Samaan was not present at
the
10.
On the same day,
July 13, Samaan reapplied to DSI for each of the four licenses: (1) a gasoline
station license; (2) a retail food – restricted food service license; (3) a retail
food – grocery (for facilities 1001 to 3000 sq. ft.) license; and (4) a cigarette
and tobacco license. Samaan paid the
required fees and completed forms that were necessary to reinitiate the license
application process.[10]
11.
At approximately
3:45 p.m. on July 13, Schweinler returned to the store to discover that the
retail store was open to customers and customers purchasing gasoline.[11]
12.
At approximately
4:00 p.m. on July 13, Schweinler contacted St. Paul Police Sergeant Daniel
Malmgren and advised Malmgren that the West 7th Market was subject to an Order
to Close.[12]
13.
Sergeant
Malmgren instructed St. Paul Police Officer Gary Carter to investigate the
premises. Officer Carter went to the
store and confirmed that it was open for business, serving retail customers and
undertaking sales of gasoline.[13]
14.
Sergeant Malmgren
joined Officer Carter at West 7th Market and questioned three customers – two
of whom had purchased items from the retail store, and one customer who
purchased both gasoline as well as store items.[14]
15.
When Sergeant
Malmgren and Officer Carter questioned the store clerk, Alexander Tsegay, Tsegay
handed the officers a receipt for a subsequent set of license applications – in
the apparent belief that remittance of the application fee authorized continued
operation.[15]
16.
Sergeant
Malmgren and Officer Carter watched Tsegay close the store and affix a sign to
the doorway of the store advising customers that the store was closed. Sergeant Malmgren advised Tsegay that Mr. Samaan
should further discuss the licensing issues with DSI.[16]
Further
Consultation with Licensing Officials
17.
On July 19, 2007,
Samaan returned to the DSI office and spoke with DSI Project Facilitator Reid
Soley. During this meeting, Samaan
agreed in writing not to sell gasoline at the West 7th Market until: (1) completion
of the required thirty-day neighborhood notice period and (2) issuance of a gasoline
license by the City of
18.
The gas station license,
if promptly issued at the close of the comment period, would have been effective
on September 16, 2007.[18]
July 31,
2007
19.
On July 31,
2007, DSI Inspector Jeff Fischbach stopped at West 7th Market and noted that
several vehicles were at the pumps dispensing gasoline.[19]
August 6,
2007
20.
By way of a
letter dated August 6, 2007, DSI Deputy Director Rozek sent Samaan a letter at
his business address informing him that the neighborhood notice period for his
gas station license had begun and that the comment period would close on September
7, 2007. The letter included a
bold-lettered statement reading: “Your Gas Station License has not yet been
issued.” The letter also included a bold-lettered
disclaimer, stating that the letter itself was “not an indication that [the]
application [would] be granted.”[20]
August 8,
2007
21.
On August 8,
2007, Sergeant Schoen received information that West 7th Market was still
selling gasoline. Sergeant Schoen drove to
the market in his personal vehicle, and with his wife, in an attempt to
purchase gasoline. The store appeared to
be open for business and Schoen did not observe any signage informing customers
that gasoline was not for sale.
22.
Sergeant
Schoen’s wife attempted to pre-pay for a purchase of gasoline inside the retail
store but was informed by the clerk on duty that the gasoline pump would only
operate by using a credit card in the mechanism on the pump. Sergeant Schoen’s wife followed this
direction and purchased $15.00 of gasoline, for which she received a receipt.[21]
August 9,
2007
23.
Following the
report of Sergeant Schoen’s gasoline purchase on August 8, St. Paul Police
Officer Brian Casey was dispatched to the West 7th Market on August 9, 2007. Officer Casey instructed the store clerk that
the establishment was not permitted to sell gasoline. The clerk indicated that he was aware of the
prohibition.[22]
24.
Later that same
day, while in the vicinity, St. Paul Police Sergeants Schoen and Gromek stopped
across
August 21,
2007
25.
On August 21,
2007, Sergeant Schoen again returned to West 7th Market with his wife,
traveling in his personal vehicle. He
noted that the store was open for business.
A sign on the top of gas pumps read: “All gas is pre-pay.” A smaller sign affixed to the pump read: “Out
of gas.” [24]
26.
Sergeant
Schoen’s wife went inside the retail store to inquire if the West 7th
Market was indeed out of gasoline. The
clerk asked Mrs. Schoen how much she needed and accepted $5.00 in cash for the
purchase of $5.00 worth of gasoline. Following
this transaction, Mrs. Schoen was able to dispense $5.00 worth of gasoline into
the couple’s vehicle.[25]
August 31,
2007
27.
Sergeant Schoen
received a phone call from Armentia McNeal, who claimed that she had purchased
gasoline from West 7th Market that morning.[26]
28.
Ms. McNeal told
Sergeant Schoen that although there were signs on the pumps reading, “Out of
Gas,” the store clerk had informed her that cash purchases of gasoline were still
possible. Indeed, Ms. McNeal reported to
Sergeant Schoen that she did, in fact, purchase $30 worth of gasoline by paying
the store clerk in cash.[27]
September
4, 2007
29.
On September 4,
2007, DSI Senior License Inspector Schweinler purchased $36 worth of gasoline
from the West 7th Market. She paid with
a credit card and obtained a receipt from the store clerk.[28]
Based upon the foregoing Findings of Fact, the
Administrative Law Judge makes the following:
CONCLUSIONS
1.
The
Administrative Law Judge and the St. Paul City Council have jurisdiction to
hear this matter pursuant to Minn. Stat. § 340A.415 and St. Paul Legislative
Code § 310.05.
2.
The City of
3.
The City of
4.
Section 310.06
(b) (6) (c) of the
5.
Similarly,
Section 310.06 (b) (6) (b) of the Saint Paul Legislative Code authorizes
adverse action against a license applicant where the applicant “has been
convicted of a crime that may disqualify said applicant from holding the
license in question under the standards and procedures in Minnesota Statutes
chapter 364.”
6.
Members of the
Department of Safety and Inspections (“DSI”) may investigate gas stations
within city limits at “various and reasonable times” to ensure compliance with
all applicable regulations.[30]
7.
As the party
proposing that a certain action be taken, the City has the burden of proving
facts at issue by a preponderance of the evidence.
8.
On at least one
occasion, West 7th Market violated the City’s closure order and sold retail
items without a valid license.
9.
On multiple
occasions, despite the City Council’s application denial in July and DSI’s
subsequent orders, West 7th Market sold gasoline without a valid license.
10.
The City
established by a preponderance of the evidence that, through repeated
violations, the Licensee engaged in a pattern of conduct demonstrating a
failure to comply with applicable law.
11.
The City Council
could reasonably conclude upon this record that Mr. Samaan’s 2004 conviction
for Criminal Sexual Conduct in the 5th Degree, for acts which
occurred while on duty at a gas station and convenience store in Lakeville,
Minnesota, “directly relate to the position of employment sought or the
occupation for which the license is sought” as those terms are used in
Minnesota Statutes § 364.03 (2).
12.
Similarly, the
City Council could reasonably conclude from the records detailing Mr. Samaan’s
2005 probation violations,[31] that
he did not produce “evidence showing compliance with all terms and conditions
of probation” as those terms used in Minnesota Statutes § 364.03 (3) (a) (2).
13.
The Memorandum
that follows below explains the reasons for these Conclusions. To the extent that the Memorandum includes
matters that are more appropriately characterized as Conclusions, the
Administrative Law Judge adopts these and incorporates those items by reference.
14.
Further, the
Administrative Law Judge adopts as Conclusions any Findings of Fact that are
more appropriately described as Conclusions.
Based upon the above Conclusions, the Administrative
Law Judge makes the following:
RECOMMENDATION
It is hereby recommended that the St. Paul City Council
revoke West 7th Market’s Retail Food and Tobacco licenses and deny its current application
for a Gas Station license.
Dated: December 6, 2007 _s/Eric L. Lipman________________
ERIC
L. LIPMAN
Administrative
Law Judge
Reported: Digitally
recorded
No transcript prepared
This report is a
recommendation, not a final decision.
The Saint Paul City Council will make a final decision after a review of
the record and may adopt, reject, or modify these Findings of Fact,
Conclusions, and Recommendation.[32] Pursuant to Saint Paul Legislative Code §
310.05 (c-1), the City Council shall not make a final decision until the
parties have had the opportunity to present oral or written arguments to the
City Council. Parties should contact Shari Moore, City Clerk, City of
MEMORANDUM
As noted above, Section 310.06 (b) (6) (c) justifies
adverse action when a licensee has “engaged in or permitted a pattern or
practice of conduct of failure to comply with laws reasonably related to the
licensed activity.”
The hearing record demonstrates that West 7th Market
sold retail items (on at least one occasion) and gasoline (on numerous
occasions) without the city licenses authorizing such sales.
While Samaan and West 7th Market argue
that the City’s general practice is to permit license applicants to undertake
the trades for which licenses are required while the license applications are
pending, such that it is inequitable to require them to wait until the actual
licenses are issued before undertaking licensed activities, the proof of this
practice falls far short of the proof required of estoppel.[33] There is not evidence in the record to
support the claim that any government official led Samaan to believe that
gasoline could be sold in advance of the issuance of the required license – and
indeed, officials took the unusual step of memorializing contrary instructions
and having Saaman acknowledge these with his signature.[34] Estoppel does not lie upon these facts.
Alternatively, Samaan and West 7th Market
argue that any requirements for licensure are bounded by, and subordinate to,
“commercial realities.” Suggesting that it would be commercially unreasonable
for West 7th Market to suspend retail operations (and gasoline
sales) until the required licenses are obtained, the Licensee argues that
adverse regulatory action should not lie.
Yet, Samaan points to no law for the proposition that the City of
Likewise important, the hearing record makes clear that
avoiding unauthorized gasoline sales was always within Samaan’s powers. He acknowledges that he closely monitored the
amounts of gasoline that were dispensed on any given day as well as the supply
that remained in the station’s underground tanks.[36] Additionally, Samaan was able to withdraw the
gasoline from the tanks at West 7th Market (so as to avoid further
unauthorized sales), and ultimately arranged for this to be done; but avoided
doing so for several weeks because the withdrawal involved a $1 per gallon
surcharge. Accordingly, the hearing
record makes clear that Samaan knew that: (a) he was not authorized to
undertake gasoline sales at West 7th Market; (b) such sales were
occurring; and (c) unauthorized gasoline sales could have been ended earlier,
and compliance with regulation achieved, through payment of a $1 per gallon
surcharge for removal of the gasoline supply.
Adverse
action is appropriate in this case because the Licensee engaged in a consistent
pattern of misconduct in direct disobedience of the City Council’s licensing
actions and the directives of DSI.
Severity of
the Proposed Sanction
Samaan and West 7th Market argue that
denial of the pending gas station application and revocation of their other
licenses is an unduly harsh result that is at odds with the presumptive
sanctions listed in St. Paul Legislative Code Section 310.05 (m). As the Licensee points out, according to the
presumptive penalty grid, license revocation is a sanction that would not
ordinarily follow until the licensee’s fourth appearance before the City
Council. The City counters that if the
City Council is presented with “substantial and compelling reasons” to do so, the
Council may upwardly depart from the presumptive sanction, provided that it
details these reasons in writing.
The Administrative Law Judge agrees with the City
that an upward departure from the presumptive penalty is both possible and appropriate
in this case. West 7th Market’s actions
through July, August, and early September of 2007 constitute multiple
infractions of the licensing regulations – and the existence of these serial
infractions support an upward departure from the presumptive penalty grid.[37] Likewise important, while Section 310.05 (m)
(v) suggests that license revocation of licenses would ordinarily only follow
after a fourth appearance before the Council, on four distinct regulatory
violations within a 24 month period,[38]
the Licensee has committed eight violations of the regulations within a short
two month period. The number of direct
and extraordinary interventions by City officials (including two forced
closures by police officers on the same day), and the serial failure of the
Licensee to maintain compliance following these interventions, makes clear that
this is not the ordinary case.
Revocation of West 7th Market’s current licenses, and denial of its
pending gas station license, is solidly grounded upon this record.
E.L.L.
[1] See generally, Exs. 1, 6, C and D.
[2] See, Exs. 2, 3 4, 5 and 20.
[3] See, Exs. 2, C and D.
[4] See, Ex. 5 at 6; Testimony of Saddam
Samaan.
[5] See, Exs. 21, 25 and 26; Test. of
[6]
Exs. 3 at1 and 5 at 1.
[7] Ex. 4 at 2.
[8] Ex. 4 at1;
Testimony of Kristina Schweinler.
[9] Test. of K.
Schweinler
[10] Ex. 5-1; Test.
of S. Samaan.
[11] Exs. 6 and
22; Test. of K. Schweinler.
[12] Test. of K.
Schweinler.
[13] Ex. 7 at 6; Testimony
of Daniel Malmgren; Testimony of Gary Carter.
[14] Exs. 7 at 6
and 7.
[15] Ex. 7 at 7;
Test. of D. Malmgren.
[16]
[17] Ex. 8;
Testimony of Reid Soley.
[18] See generally, Ex. 1 at 5; Testimony of
Jeff Fischbach.
[19] Ex. 19 at 1; Test.
of J. Fischbach.
[20] Ex. 9.
[21] Exs. 11 at 1
and 2; Test. of D. Schoen.
[22] Ex. 10 at 3;
Testimony of Brian Casey.
[23] Ex. 12; Test.
of D. Schoen.
[24] See, Exs. B-1, B-2, B-4, B-5.
[25] Exs. 13 at 2
and 3; Test. of D. Schoen.
[26] Ex. 14 at 3;
Test. of D. Schoen.
[27]
[28] Ex. 15 at 3;
Test. of K. Schweinler.
[29]
[30]
[31] See, Ex. 26.
[32] Saint Paul Leg. Code §§ 310.05 (c-1), 310.06.
[33] See, e.g., Kmart Corp. v. County of Stearns, 710 N.W.2d 761, 771 (Minn. 2006)
(“A governmental agency may be estopped from taking an enforcement action when
the plaintiff demonstrates '[1] that the defendant, through his language or
conduct, induced the plaintiff [2] to rely, in good faith, on this language or
conduct [3] to his injury, detriment or prejudice'”) (citing Ridgewood Dev. Co. v. State, 294 N.W.2d 288, 292
(Minn. 1980)); AAA Striping Services Co.
v. Minnesota Dept. of Transp., 681 N.W.2d 706, 720 (Minn. App. 2004)
(“Affirmative misconduct, rather than simple inadvertence, mistake, or
imperfect conduct is required for estoppel to be applied against the
government”) (citing REM-Canby, Inc. v. Minn. Dep't of Human
Servs., 494 N.W.2d 71, 74 (Minn. App. 1992)).
[34] Ex. 8; Test.
of R. Soley.
[35] Compare generally, State v. Lindquist,
214 N.W. 260, 261 (Minn. 1927) ("The arbitrary denial of a proper
application for a license or permit may entitle the applicant to a remedy; but
he cannot do the prohibited act in defiance of a valid ordinance and then be
heard to say in defense that the refusal of the license or permit was
arbitrary"); see also, City of St.
Paul v. Superior Dairy Fresh Milk Co., 244 N.W.2d 737, 738 (Minn. 1976)
(Defendant's possession of a license from the Commissioner of Agriculture for
the manufacture and distribution of dairy products did not relieve defendant
from complying with municipal licensing requirements for vending machines which
defendant maintained within city).
[36] See, Test. of
[37]
[38]