Opinion
No. 1 CA-CV 14-0215
02-03-2015
PATRIOTS LAND GROUP, LLC, a Florida Limited Liability Company, Plaintiff/Appellant, v. STATE OF ARIZONA ex rel. THE DEPARTMENT OF LIQUOR LICENSES AND CONTROL, an agency of the State of Arizona, Defendant/Appellee.
COUNSEL Charles E. Buri, PLC, Phoenix By Charles E. Buri Counsel for Plaintiff/Appellant Arizona Attorney General's Office, Phoenix By Michael Raine Counsel for Defendant/Appellee
NOTICE: NOT FOR OFFICIAL PUBLICATION. UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL AND MAYBE BE CITED ONLY AS AUTHORIZED BY RULE. Appeal from the Superior Court in Maricopa County
No. CV2013-016562
The Honorable Michael J. Herrod, Judge
AFFIRMED
COUNSEL Charles E. Buri, PLC, Phoenix
By Charles E. Buri
Counsel for Plaintiff/Appellant
Arizona Attorney General's Office, Phoenix
By Michael Raine
Counsel for Defendant/Appellee
MEMORANDUM DECISION
Judge Randall M. Howe delivered the decision of the Court, in which Presiding Judge Margaret H. Downie and Judge Patricia K. Norris joined. HOWE, Judge:
¶1 Patriots Land Group, LLC ("Patriots") appeals the dismissal of its complaint for lack of standing. For the following reasons, we affirm.
FACTS AND PROCEDURAL HISTORY
¶2 Patriots, a Florida LLC, leases computers, software, and furniture to Arizona non-profit organizations. The Benevolent and Protective Order of Elks (the "Elks Club"), Club #2656, leased a "Non-Profit Donation Based Sweepstakes Program" from Patriots. Patriots and the Elks Club have a contractual relationship pursuant to which the Elks Club paid Patriots a onetime set-up fee of $1,250 for the program, and the Elks Club received 40% (later 45%) of the net donations from the program. Patriots was paid the remaining net revenue.
¶3 The Elks Club holds a liquor license from the Arizona Department of Liquor Licenses and Control (the "Department"). In 2012, the Department began investigating the Elks Club for knowingly permitting unlawful gambling on a licensed premise in violation of A.R.S. § 4-244(26). The unlawful gambling at issue was the sweepstakes program the Elks Club leased from Patriots. After concluding its investigation in October, the Department informed the Elks Club that the program constituted unlawful gambling, charged the club with one violation of § 4-244(26), and ordered it to immediately stop the program. The Elks Club complied.
¶4 In February 2013, the Department filed an administrative complaint against the Elks Club seeking disciplinary action for knowingly permitting unlawful gambling. After a hearing, the Administrative Law Judge ("ALJ") concluded that the Elks Club knowingly permitted unlawful gambling on the licensed premises in violation of § 4-244(26). The ALJ noted, "[T]he operation of the machines in conjunction with the potential monetary prize does not fall within any of the exclusionary categories establishing legal gambling." The ALJ ordered a civil penalty of $200.00 because although aware of the Elks Club's activity, the Department did not notify the club that the activity constituted unlawful gambling until October 2012; and the Elks Club immediately complied with the Department's order.
¶5 Upon review of the ALJ's decision, the Department's Director adopted the decision without modification. The Elks Club appealed the decision and order to the State Liquor Board. The Board adopted "the Director's decision in whole." Pursuant to the Administrative Review Act, A.R.S. §§ 12-901 to 914, the Elks Club filed a complaint in superior court for review of the Board's order. That court affirmed the Director's decision and order and the Board's order affirming the Director's decision and order. The Elks Club then appealed the superior court's order, which is currently pending before our Court. See 1 CA-CV 14-0793.
¶6 In October 2012, the Elks Club stopped sending Patriots monthly payments for the sweepstakes program. In December 2013, Patriots filed a complaint against the Department seeking declaratory and injunctive relief. Patriots argued that a declaratory judgment was necessary because the sweepstakes programs "do not constitute gambling under Arizona law and they are not unlawful under A.R.S. § 4-244(26)." Further, injunctive relief was necessary because unless the Department "is restrained by this Court from citing Plaintiff's Arizona customers for using its sweepstakes equipment and from filing administrative Complaints against them for knowingly permitting unlawful gambling, Plaintiff will be irreparably damaged."
¶7 The Department moved to dismiss the complaint. It argued that Patriots did not "have standing to request injunctive or declaratory relief against the Department on behalf of its customers for action that [had] not actually occurred." Moreover, the Department's administrative proceedings had already determined that Patriots' sweepstakes programs were, in fact, gambling.
¶8 The trial court agreed with the Department and dismissed the complaint for lack of standing. It noted that Patriots did not have standing and was "seeking an advisory opinion." Patriots was seeking injunctive relief "as the vendor to liquor department licensees to which it sells gaming equipment that is used to run sweepstakes," but the Department had "determined through the administrative process that, in the case of one licensee, the sweepstakes constitute illegal gaming." The court also noted that the Elks Club, the Department's licensee, had a plain and speedy remedy on appeal from the administrative decision. Patriots timely appealed.
DISCUSSION
¶9 Patriots argues that the trial court erred by dismissing its complaint for lack of standing because the allegations in the complaint demonstrate a justiciable controversy for which declaratory and injunctive relief is appropriate. Standing is a question of law that we review de novo. Karbal v. Ariz. Dep't of Revenue, 215 Ariz. 114, 116 ¶ 6, 158 P.3d 243, 245 (App. 2007). Because Patriots has not established that its rights, status, or legal relations have been affected by a statute and that it has suffered a distinct and palpable injury from the Department's action, it does not have standing. Therefore, we affirm the trial court's dismissal order.
¶10 The question of standing in Arizona does not raise constitutional concerns because, unlike the United States Constitution, the Arizona Constitution contains no case or controversy requirement. Id. at 116 ¶ 7, 158 P.3d at 245. As a matter of sound judicial policy, however, persons seeking redress in Arizona must first establish standing to sue. Bennett v. Napolitano, 206 Ariz. 520, 525 ¶ 19, 81 P.3d 311, 316 (2003). Standing generally requires "an injury in fact, economic or otherwise, caused by the complained-of conduct, and resulting in a distinct and palpable injury giving the plaintiff a personal stake in the controversy's outcome." Strawberry Water Co. v. Paulsen, 220 Ariz. 401, 406 ¶ 8, 207 P.3d 654, 659 (App. 2008). Specifically, the injury must be "particularized" and to the plaintiffs "themselves." Bennett v. Brownlow, 211 Ariz. 193, 196 ¶ 17, 119 P.3d 460, 463 (2005).
¶11 Moreover, under the Arizona Declaratory Judgment Act, a plaintiff seeking declaratory judgment must be someone whose rights, status, or other legal relations have been affected by a statute. A.R.S. § 12-1832. Further, the claim for declaratory judgment "must be based on a real, not theoretical controversy," and the plaintiff "must have a sufficient, concrete interest at stake so that a court may answer the questions presented in relation to those interests." Klein v. Ronstadt, 149 Ariz. 123, 124, 716 P.2d 1060, 1061 (App. 1986). Thus, the plaintiff must demonstrate an "actual, concrete harm" that is not "merely some speculative fear." Id. If no standing is established, courts generally decline jurisdiction. See Brownlow, 211 Ariz. at 195-96 ¶¶ 14-16, 119 P.3d at 462-63 (providing that standing raises prudential concerns and is only waived "on rare occasions").
¶12 Here, Patriots has not established that it has standing to sue the Department. Although Patriots seeks declaratory judgment, it has not identified a statute that has affected its rights, status, or legal relations. Additionally, Patriots has not established that it suffers an injury, let alone one that is distinct and palpable, from the Department's action. Patriots alleged that it has not received monthly leasing payments from the Elks Club because of the Department's action against the club. But Patriots' alleged loss of monthly payments is due to the Elks Club not performing its contractual obligation, not the Department's action against the club for violating Arizona law. Moreover, Patriots has not demonstrated that the alleged harm is actual and concrete and not merely some speculative fear. Patriots claims that the Department's conduct disrupted "Patriots' contractual relationships with customers and [deprived] Patriots of income it would otherwise derive from those relationships." But then Patriots admits that the Department has only "disciplined one of Patriots' customers." Thus, the customer relationships that Patriots claims the Department is disrupting is merely speculation. This is further supported by Patriots' statement that it was "informed and believes that the Department has decided to cite Patriots' other Arizona customers for offering sweepstakes using its equipment," yet no evidence supports this claim. Patriots' sheer speculation does not give it standing to sue. Consequently, because Patriots has not established that its rights, status, or legal relations have been affected by a particular statute and that it has suffered a distinct and palpable injury, not merely some speculative fear, from the Department's action, it does not have standing. The trial court did not err in dismissing the complaint.
The Department argues that Patriots' suit is a collateral attack on its administrative action against the Elks Club. In view of our holding that Patriots does not have standing, we need not address this issue.
CONCLUSION
¶13 For the foregoing reasons, we affirm.