STEVEN KOUGL, ET AL.
THE BOARD OF LIQUOR LICENSE COMMISSIONERS FOR BALTIMORE CITY
from the Circuit Court for Baltimore City. Videtta A. Brown,
BY: Peter A. Prevas (Prevas and Prevas on the brief) all of
Baltimore, MD. FOR APPELLANTS
BY: Shelley Johnson of Annapolis, MD. FOR APPELLEES
BEFORE: Woodward, Graeff, Arthur, JJ.
The eagle suffers little birds to sing, And is not careful
what they mean thereby, Knowing that with the shadow of his
wings He can at pleasure stint their melody[.]
Titus Andronicus, Act 4, Scene 4 (W. Shakespeare)
instant case, we are called upon to decipher the meaning of
the word " suffer," and its analogs, "
permit" and " allow." Specifically, we must
decide whether these terms, when used in rules governing the
conduct of holders of a liquor license in Baltimore City,
require proof of knowledge on the part of such licensees.
Steven Kougl, owns Club Harem, a Baltimore tavern and adult
entertainment business, and holds a liquor license for that
location issued by appellee, the Board of Liquor License
Commissioners for Baltimore City (" the Liquor
Board" ). On July 2, 2014, the Liquor Board charged
Kougl with violating three Liquor Board Rules related to
solicitation of prostitution, indecent exposure, and
violation of public morals, all occurring on April 25, 2013,
at Club Harem, when an employee exposed herself to an
undercover police officer and then solicited sexual
intercourse from the same officer. The Liquor Board found
Kougl guilty of all three violations and ordered that his
liquor license be suspended for one month. Kougl filed for
judicial review in the Circuit Court for Baltimore City,
which affirmed the decision of the Liquor Board.
appeal to this Court, Kougl raises four questions for our
review, which we have condensed and rephrased as two
1. Did the Liquor Board make sufficient findings of fact in
support of the three charged violations of the Liquor Board
2. Did the Liquor Board err in concluding that Kougl was
guilty of the three violations even though there was no
evidence that Kougl had knowledge of his employee's
reasons set forth herein, we answer both questions in the
affirmative, and thus reverse the judgment of the circuit
court and remand the case to that court for entry of a
judgment reversing the decision of the Liquor Board.
April 25, 2013, Detective Fletcher Jackson, a Baltimore City
police officer assigned to the Special Enforcement Section,
entered Club Harem in plain clothes to conduct a prostitution
investigation. Jamaica Brickhouse, a woman who worked at Club
Harem, approached Det. Jackson at the bar and asked if she
could join him. Det. Jackson said " sure," and
bought Brickhouse a drink. After some initial conversation,
Brickhouse exposed her breasts to Det. Jackson. Brickhouse
invited Det. Jackson to touch her breasts, which he did.
Brickhouse then suggested a lap dance or a trip to " the
VIP," where they could " do whatever up
there." Det. Jackson asked how much it would cost him to
have sex with Brickhouse; Brickhouse replied that it would
cost $170 " for the room," plus a tip for her
services. Det. Jackson said that he could tip $100, and
Brickhouse agreed. Brickhouse returned to the stage to
perform, and Det. Jackson notified other officers.
Brickhouse, however, was not issued a criminal summons until
December 10, 2013, almost eight months later.
months after the incident, on July 2, 2014, the Liquor Board
charged Kougl with violating three Liquor Board Rules related
to solicitation of prostitution in violation of Rule 4.17(a),
indecent exposure in violation of Rule 4.17(b), and violation
of public morals in violation of Rule 4.18. On July 17, 2014,
the Liquor Board held a hearing on the charges against Kougl.
Det. Jackson was the only witness for the prosecution; Kougl
testified in his own defense. The Liquor Board voted 2-1 that
Kougl was guilty of the three violations and suspended his
liquor license for one month.
18, 2014, Kougl filed a Petition for Judicial Review in the
circuit court. On March 2, 2015, Kougl filed his Memorandum,
in which he argued that (1) the Liquor Board's decision
was not based on substantial evidence, because " [t]here
[wa]s nothing in [Det. Jackson's] testimony to indicate
that the [l]icensee knew, allowed or permitted this type of
activity, which is needed to sustain the violations" ;
(2) its decision was unreasonable and arbitrary, because the
Chairman of the Liquor Board stated that a licensee "
would be responsible for actions of an employee"
regardless of " whether the [l]icensee knew or did not
know or allowed or did not allow or permitted or did not
permit" the prohibited activity; and (3) the Liquor
Board failed to make specific findings of fact and
conclusions of law as required. On April 15, 2015, the Liquor
Board filed its Response to Kougl's Memorandum, in which
it contended that (1) its decision was based on substantial
evidence; (2) its decision was reasonable; and (3) the Liquor
Board made sufficient findings of fact and conclusions of
22, 2015, the circuit court held oral argument and issued an
oral ruling affirming the decision of the Liquor Board. On
May 28, 2015, the court entered its order affirming the
Liquor Board's decision. On June 22, 2015, Kougl filed a
timely notice of appeal.
Maryland law provides by statute that the action of a local
liquor board is presumed to be proper and places the burden
of proof upon the licensee to show that the decision
complained of was arbitrary, fraudulent, unsupported by
substantial evidence, illegal, or against the public
interest. Md. Code (1957, 2011 Repl. Vol), Art. 2B, §
16-101(e)(1)(i). This Court has explained appellate review of
a Liquor Board's decision as follows:
While the last sentence of § 16-101(e)(1)(i) expressly
permits the trial court, under certain circumstances, to hear
additional evidence, the court may hear such evidence only to
ascertain the veracity of findings of fact and conclusions of
law reached by the Board. As the section does not authorize
appeals de novo, the trial court may not hear
additional evidence on matters not addressed by the Board.
This Court has consistently explained that judicial review of
a decision by the Board is similar to review of decisions by
most other administrative agencies. It is a cardinal rule of
administrative appeals that a reviewing court . . . shall
apply the substantial evidence test to final decisions of an
administrative agency such as the Board, but it must not
itself make independent findings of fact or substitute its
judgment for that of the agency.
Judicial review of administrative action differs from
appellate review of a trial court judgment. In the latter
context the appellate court will search the record for
evidence to support the judgment and will sustain the
judgment for a reason plainly appearing on the record whether
or not the reason was expressly relied upon by the trial
court. However, in judicial review of agency action the court
may not uphold the agency order unless it is sustainable on
the agency's findings and for the reason stated by the
Blackburn v. Bd. of Liquor License Comm'rs for Balt.
City, 130 Md.App. 614, 623-24, 747 A.2d 725 (2000)
(emphasis added) (citations and internal quotation marks
Of course, the reviewing court may substitute its judgment
for that of the [Liquor] Board on questions of law."
Id. at 624. In deciding whether to substitute its
judgment on a question of law, a court should accord a degree
of deference to the position of the administrative agency.
Md. Aviation Admin. v. Noland, 386 Md. 556, 572, 873
A.2d 1145 (2005). " Thus, an administrative agency's
interpretation and application of the statute which the
agency administers should ordinarily be given considerable
weight by reviewing courts." Id. " An
agency conclusion will not be upheld upon review, however, if
based upon an error of law." Hoyle v. Bd. of Liquor
License Comm'rs for Balt. City, 115 Md.App. 124,
129, 692 A.2d 1 (1997).
Findings of Fact
There is no express requirement that the Board set forth
specific findings of fact and conclusions of law. In order
for any meaningful review to be conducted, however, the Board
must do so, at least informally." Blackburn,
130 Md.App. at 624 (citation omitted).
argues that the Liquor Board did not make sufficient findings
of fact to allow for meaningful judicial review.
Specifically, Kougl contends that the Liquor Board's
decision consists of the following two statements, neither of
which contain any findings of fact:
All right. The verdict is responsible for all three charges.
The police department is not on trial here. Mr. Kougl is. And
bar owners or licensees are responsible for the conduct of
their employees, as I have said before, in all cases, in all
bars, in the city of Baltimore.
All right, my finding is responsible to all three charges and
close him for one month, effective immediately.
to Kougl, the above statements were insufficient to support a
legal conclusion that Kougl violated the Rules at issue.
Liquor Board responds that there is no requirement that it
set forth specific findings of fact so long as its informal
findings are sufficient to allow for " meaningful
appellate review." Furthermore, the Liquor Board argues
that it made informal findings of fact that were "
sufficient for this Court to determine whether substantial
evidence supports the Board's conclusion that Kougl
violated the three Liquor Board Rules as charged." We
agree with the Liquor Board and shall explain.
previously indicated, Kougl, as the licensee, was charged
with violating Rules 4.17(a), ...