Whalla v. Pennsylvania Liquor Control Board
176 A.3d 1080
| Pa. Commw. Ct. | 2018Background
- Kirpal Whalla purchased a Pennsylvania restaurant liquor license (No. R-7484) at an IRS tax sale on May 2, 2012; the license remained titled to Mortrapp, Inc. and in IRS possession.
- Whalla filed three applications with the PLCB Bureau of Licensing in July 2013 seeking (1) retroactive renewal for Aug. 1, 2011–July 31, 2013, (2) retroactive validation for Aug. 1, 2012–July 31, 2013, and (3) renewal for Aug. 1, 2013–July 31, 2015.
- The Bureau objected because the applications were untimely and lacked mandatory tax clearances from the Department of Revenue and Department of Labor and Industry (each marked “NOT CLEAR”).
- A hearing examiner recommended denial; the PLCB adopted the recommendation under Sections 470(a) and 477 of the Liquor Code (timeliness, late‑filing fees, and required tax clearances).
- The Erie County Court of Common Pleas affirmed after a stipulated‑facts de novo review; Whalla argued federal preemption under the Supremacy Clause, citing 26 U.S.C. §6339(c) (federal sale discharges junior encumbrances).
- The Commonwealth Court affirmed, holding the applications were untimely (Whalla did not seek nunc pro tunc relief or pay late fees) and declined to reach the preemption claim as the record was inadequate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PLCB erred by denying license renewal/validation because IRS sale discharged state tax liens (preemption under Supremacy Clause) | Whalla: IRS sale under 26 U.S.C. §6339(c) discharged Mortrapp’s state tax encumbrances, so tax‑clearance requirement is irrelevant and preempted | PLCB: Liquor Code requires timely applications with state tax clearances; Board lacks authority to approve absent clearances; state law governs renewal/validation | Court did not decide preemption because applications were untimely and record lacked evidence on timing of tax liabilities; affirmed denial |
| Whether applications were timely or eligible for nunc pro tunc relief | Whalla: (implicit) late filings should be excused given circumstances of IRS sale and his purchase | PLCB: Section 470(a) requires filing before deadlines or payment of late fees and showing reasonable cause; nunc pro tunc relief discretionary and requires extraordinary circumstances; no fees or justification were provided | Applications untimely; Whalla failed to request or substantiate nunc pro tunc relief and did not pay late filing fees; denial affirmed |
| Whether PLCB could act without tax clearances from Revenue and Labor & Industry | Whalla: federal sale eliminated state encumbrances making clearances unnecessary | PLCB: Section 477 requires tax clearance and prohibits approval when departments report noncompliance; Board cannot substitute its own clearance | PLCB properly enforced statutory tax‑clearance requirements; absence of clearances supported denial (but court did not reach preemption merits) |
Key Cases Cited
- Arena Beverage Corp. v. Pennsylvania Liquor Control Bd., 97 A.3d 444 (Pa. Cmwlth. 2014) (nunc pro tunc relief requires extraordinary circumstances)
- In re Borough of Riegelsville from Bucks County Bd. of Assessment & Revision of Taxes, 979 A.2d 399 (Pa. Cmwlth. 2009) (standards for nunc pro tunc relief/extraordinary circumstances)
- Goodfellas, Inc. v. Pennsylvania Liquor Control Bd., 921 A.2d 559 (Pa. Cmwlth. 2008) (scope of appellate review of trial court’s de novo review under Liquor Code)