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Munjoy S. & A. Club. v. Dow
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MAINE SUPREME JUDICIAL COURT					Reporter of Decisions
Decision:	2000 ME 141
Docket:	Cum-99-471	
Argued:	January 6, 2000	
Decided:	July 21, 2000	




	[¶1]  Munjoy Social and Athletic Club (Munjoy) appeals from the
judgment entered in the Superior Court (Cumberland County, Crowley, J.)
denying its 80C appeal from the State Police denial in January of 1998 of
Munjoy's application for beano and games of chance licenses pursuant to 17
M.R.S.A. §§ 312,{1} 331{2} (1983 & Supp. 1999).  On appeal, Munjoy argues
that the State Police violated Munjoy's statutory and due process rights
when it denied Munjoy's applications without a hearing, and that, even if it
was not entitled to a hearing, there was insufficient evidence to support
denial of the applications.  Because we conclude that the State Police erred
by failing to hold a hearing before denying Munjoy's applications on the basis
that it is not a bona fide nonprofit organization, we vacate and remand for a
hearing.  Munjoy also appeals from the court's (Calkins, J.) dismissal of its
42 U.S.C. § 1983 claim against Malcolm Dow personally.  Munjoy contends
that the court improperly based its dismissal upon Dow's assertion of
immunity, and that, even if immunity were properly raised, Dow did not
enjoy immunity on the facts before the court.  We disagree and affirm the
	[¶2]  Because of the procedural posture of this case, it comes before
us on the investigative record created by the State Police prior to its denial
of Munjoy's license applications.  It appears that Munjoy is a social club that
has been in existence since 1949.  The club was both a fraternal and
charitable organization, meeting informally at social gatherings while also
contributing money and services to charities.  Membership had been on the
decline until 1993, when the club experienced a resurgence, growing to at
least 58 members in that year.  In February of that year, the club rented
facilities in Portland and applied for licenses to run beano and games of
chance.{3}  As part of the initial application process, the State Police required
Munjoy to provide minutes from two years of membership meetings, a
members list, affidavits of members, and two years of bank statements for
any club accounts, along with a copy of its by-laws, and its certificate of
incorporation.  Munjoy's applications were granted, and it was required to
send a representative to a workshop that reviewed the rules and regulations
governing beano and games of chance.
	[¶3]  The club ran its beano operation from its Portland location
until 1995, when it expanded and leased a hall of approximately 9,600
square feet in Scarborough.  Over the course of the next two years, the
gaming operation grew quite large; in the first six months of 1997 alone,
Munjoy grossed over a million dollars on this operation.  Throughout this
time, Munjoy applied for and was granted licenses by the State Police. 
Although it is not clear from the record before us, Munjoy appears to have
been granted monthly licenses in six month blocks.  The application process
for these subsequent licenses differed from the initial application.  Instead
of providing affidavits and other documents, Munjoy was assigned a number
and ordered to use that number in all subsequent applications.  Again, it is
not clear from the record before us, but it appears that the decisions to
grant the licenses from 1993 to 1997 were based upon the information
Munjoy initially submitted, along with any other evidence later added to
their file.{4}
	[¶4]  In mid-1997, the State Police began an investigation into
whether Munjoy was a "bona fide nonprofit organization."  This investigation
concluded in December of that year.  Approximately a month later, the State
Police denied Munjoy's applications.  The State Police informed Munjoy that
their investigation indicated that Munjoy "does not meet the requisite
qualification of being a 'bona fide nonprofit organization.'"  Munjoy protested
this decision and was allowed to file additional documents to supplement
the State Police's investigatory record.  The police issued a license for the
month of February while they reviewed Munjoy's filing, but again concluded
that Munjoy was not a "bona fide nonprofit organization" and therefore did
not qualify for the licenses.  At no point did the State Police hold a hearing
on Munjoy's applications.
	[¶5]  Following the denial of its licenses, Munjoy filed the present
action in Superior Court.  In addition to an 80C appeal of the denial of its
license applications, Munjoy also included a request for injunctive relief, a
claim for the violation of Maine civil rights law, and a section 1983 claim
against Chief Malcolm Dow in his personal capacity.  The State Police and
Dow answered the complaint, asserted qualified immunity as an affirmative
defense, and moved for dismissal on Munjoy's claims for section 1983
damages and for relief under Maine civil rights law.  The court granted the
motion.  Shortly thereafter, the court, finding that the license denials were
clearly supported by substantial evidence in the record, also denied the 80C
appeal and upheld the State Police determination that Munjoy was not a
bona fide nonprofit corporation.  Munjoy appeals from the judgment.  
	[¶6]  We consider Munjoy's 80C appeal first.  When the Superior
Court acts in its appellate capacity pursuant to M.R. Civ. P. 80C, we review
the administrative decision directly.  See Maine Bankers Ass'n v. Bureau of
Banking, 684 A.2d 1304, 1305-06 (Me. 1996).  "The standard of review is
limited to whether the [governmental agency] abused its discretion,
committed an error of law, or made findings not supported by substantial
evidence in the record."  Davric Maine Corp. v. Maine Harness Racing
Comm'n, 1999 ME 99, ¶ 7, 732 A.2d 289, 293.  We will vacate a decision
only if 
the administrative findings, inferences, or conclusions are:  (1) In
violation of constitutional or statutory provisions;  (2) In excess of
the statutory authority of the agency;  (3) Made upon unlawful
procedure;  (4) Affected by bias or error of law;  (5) Unsupported by
substantial evidence on the whole record;  or (6) Arbitrary or
capricious or characterized by abuse of discretion.
Hale-Rice v. Maine State Retirement Sys., 1997 ME 64, ¶ 8, 691 A.2d 1232,
	[¶7]  Munjoy argues that both Maine law and the United States
Constitution entitle it to a hearing on its license applications.  We address
Munjoy's state law contentions first.  Munjoy argues that its applications
were  renewals of existing licenses and therefore a hearing was required by
the Administrative Procedures Act.  Whether the Munjoy applications sought
the renewal of existing licenses is a matter of statutory interpretation and
therefore a question of law.  See Cook v. Lisbon Sch. Comm., 682 A.2d 672,
676 (Me. 1996).  We review questions of law de novo.  See Collins v. Trius,
Inc., 663 A.2d 570, 572 (Me. 1995).
	[¶8]  Munjoy is correct in its argument that if its applications are for
a renewal of its licenses, then it is entitled to an administrative hearing.  See
5 M.R.S.A. § 10003(1) (1989).  A hearing would also be required under the
beano and games of chance statutes if we were to find that the denial of
Munjoy's applications were a revocation of existing licenses.  See 17 M.R.S.A.
§§ 317-A, 343­p;A (Supp. 1999).  No hearing is required, however, if
Munjoy's applications are, as the State Police contend, applications for new
licenses rather than for the renewal of old licenses.  The State Police have
been given authority by the Legislature to administer the beano and games of
chance statutes.  "When the dispute involves an agency's interpretation of a
statute administered by it, the agency's interpretation, although not binding
on the Court, is accorded great deference and will be upheld unless the
statute plainly compels a contrary result."  Maine Bankers' Association, 684
A.2d at 1306; Davric Maine Corp., 1999 ME 99, ¶ 7, 732 A.2d at 293. 
Munjoy argues that the State Police have not been consistent in their
interpretation of the statutes.  Although, the police have consistently stated
that all applications are new, Munjoy argues that the State Police practice in
this area -- i.e., basing its subsequent grants of licenses upon information
garnered as part of Munjoy's initial application--indicates that even the State
Police considered Munjoy's application a renewal.
	[¶9]  Although we agree there is a superficial inconsistency between
the actions and words of the State Police, we are unable to agree that it
should affect our analysis of the statute.  Administrative practice cannot alter
statutory language.  Even if we were to accept Munjoy's contentions
regarding the State Police interpretation, the statutes compel the contrary
reading.  In stark contrast to other statutes that explicitly mention renewal
licenses,{5} the beano and games of chance statutes make no provision for
either the renewal or the reissuance of old licenses, which instead simply
expire upon the completion of their term.  Therefore, when the State Police
denied Munjoy's applications, they neither refused to renew nor revoked an
old license.  Munjoy has no statutory right to a hearing under Maine law.  
	[¶10]  Munjoy next argues that the failure to provide a hearing was a
violation of its procedural due process rights under the United States
Constitution.  "The requirements of procedural due process [protect
citizens against] the deprivation of interests encompassed by the Fourteenth
Amendment's protection of liberty and property."  Board of Regents v. Roth,
408 U.S. 564, 569 (1972).  Though the Constitution protects property
interests, it does not create such interests, nor does the Constitution
protect those interests that are nothing more than a unilateral and abstract
expectation of a future benefit.  See id. at 577.  To determine whether
Munjoy has an interest in these licenses, we turn to "existing rules or
understandings that stem from an independent source such as state law--
rules or understandings that secure certain benefits and that support claims
of entitlement to those benefits"  Id. at 577.  Thus, we look to the beano and
games of chance statutes to determine if Munjoy has a "legitimate claim of
entitlement" to a new license.  See id.  If Munjoy does have such a protected
interest in the licenses it applied for, "the right to some kind of prior
hearing is paramount."  See id. at 569-70.
	[¶11]  Generally, licenses do not create a protected property
interest when broad discretion is vested in a state official or agency to deny
or approve the application.  See Gonzales v. Commissioner, Dep't of Pub.
Safety, 665 A.2d 681, 683 (Me. 1995).  In such cases, an applicant has little
more than an abstract or unilateral expectation in that license.  See id.;
Paron v. City of Shakopee, 32 N.W.2d 603, 609 (Minn. 1948) (noting that
Minnesota courts are without power to control the decision of agencies
issuing liquor licenses beyond preventing arbitrary or capricious decisions),
Movers Warehouse, Inc. v. City of Little Canada, 71 F.3d 716 (8th Cir. 1995)
(noting that state authority could not issue bingo license without approval of
municipality and that municipality had unfettered discretion in deciding
whether to issue its approval).  Cf Gregory v. Town of Pittsfield, 479 A.2d
1304, 1307-08 (Me. 1984) (holding that statutorily mandated de novo
review of need eliminated anything more than an abstract expectancy in
Maine general assistance benefits).  On the other hand, "[i]f a benefit is a
matter of statutory entitlement for persons qualified to receive them, then
the government has created a property interest in that benefit." Federal
Lands Legal Consortium ex rel Robart Estate v. United States, 195 F.3d
1190, 1197 (10th Cir. 1999); see also Zeus Corp. v. City of Decorah, Iowa,
957 F.Supp. 1093, 1096 (N.D. Iowa 1996) (noting that licenses create
property rights "where state law mandated renewal upon satisfaction of
certain substantive prerequisites").  Although the licensing statutes grant a
degree of discretion to the State Police, the scope of that discretion does
not include the legal and factual determination whether an organization is a 
bona fide nonprofit organization of the appropriate type
	[¶12]  The beano statute provides that the "Chief of the State Police
may issue licenses to operate beano or bingo games to any . . . bona fide
nonprofit charitable, educational, political, civic, recreational, fraternal,
patriotic, religious or veterans' organization . . . ."  17 M.R.S.A. § 314 (Supp.
1999) (emphasis added).{6}   At a minimum, the statute grants the State
Police discretionary authority to withhold all licenses, and arguably
discretionary authority, for example, to issue licenses to some or all of the
types of organizations listed within the statute, or to limit the total number
of licenses issued in a given period of time.  Munjoy's applications were not
denied on the basis of such discretionary authority.  Munjoy was excluded as
an eligible applicant because of a factual and legal determination that it is
not a bona fide nonprofit organization.  Whatever range of discretion is
granted under the statutes, whether a particular organization is an eligible
applicant is not a matter of discretion.
	[¶13]  Because the Chief of the State Police has not exercised his
discretion to limit those organizations who are eligible for a license, once
applicants make a threshold showing that they are a bona fide nonprofit
organization of the particular type generally issued licenses, they have a
legitimate expectation that the license will issue.  Munjoy made this showing
through the materials it submitted with its first application.{7}  Munjoy
therefore has a protected property interest in the license; the State Police
must afford Munjoy a hearing before the State Police may deny Munjoy's
application on the basis that it is not a bona fide nonprofit organization. 
	[¶14]  Because the definition of a "bona fide nonprofit . . .
organization" is sure to arise on remand, we briefly address that question
now in the interest of judicial economy.  This term is not defined in the
statute, and, though the Legislature has authorized "the State Police Chief to
adopt rules to ensure that licenses are issued only to bona fide nonprofit
organizations," L.D. 2325, Statement of Fact at 7 (111th Legis. 1984), no
such rules have been called to our attention.  Munjoy argues that the term
merely indicates that the organization must satisfy the requirements of Title
13-B, Maine's nonprofit corporation statute.{8}  We disagree.  As the above
discussion illustrates, the demonstration that an organization complies with
Title 13-B is relevant primarily as part of that organization's threshold
proffer that it is an eligible applicant.  The statute itself, however, indicates
that a further demonstration than simple nonprofit status is required. 
Section 343(7) declares that  "[t]he establishment of organizations which
exist primarily to operate games of chance and do not have a bona fide
nonprofit charitable, educational, political, civic, recreational, fraternal,
patriotic, religious or public safety purpose" is considered undesirable.  17
M.R.S.A. § 343(7) (Supp. 1999). 
	[¶15]  There is much diversity within the community of nonprofit
organizations holding licenses.{9}  We conclude, however, that the term is
placed within the statute to deal with the problem of "shell nonprofit
organizations."   See Governor's Advisory Committee On Gambling, Win, Lose or
Draw: Gambling in Maine 12 (1997) (defining shell nonprofit organizations as
a "dead organization is reactivated and used as a front for a Beano license"). 
The key to identifying a bona fide nonprofit organization therefore does not
revolve solely around its legal existence as a nonprofit corporation.  The
licensing statutes focus also upon the organization's primary purpose.  If, at
the time of application, the organization exists primarily to provide
employment to its officers, directors, or employees through the operation of
beano and games of chance, then it is not a bona fide nonprofit organization. 
Thus, it is not enough for an organization to have some charitable, fraternal,
etc. goals if the bulk of an organization's reason for being is not the
furtherance of those goals, but instead is the organization's gaming
operations.  The beano and games of chance statutes are not meant to
regulate a gambling industry, but instead to provide specified types of
socially desirable nonprofit organizations with a fund raising tool.  
	[¶16]  Finally, we turn to Munjoy's contention that the Superior
Court erred when it dismissed Munjoy's section 1983 claim.  "A motion to
dismiss tests the legal sufficiency of the complaint[;] . . . we examine the
complaint in the light most favorable to the plaintiff to determine whether it
sets forth . . . facts that would entitle the plaintiff to relief . . . ."  See McAffee
v. Cole, 637 A.2d 463, 465 (Me. 1994).  A complaint "should not be
dismissed unless it is beyond doubt that no relief can be granted under any
facts that might be proved to support the plaintiff's claim."  Webb v. Haas,
665 A.2d 1005, 1009 (Me. 1995).  Munjoy alleged that Dow's actions denied
it equal protection, that Dow infringed upon Munjoy's liberty interests, and
that Dow infringed upon Munjoy's procedural due process rights.  Dismissal
was proper as to the first two of these claims because Munjoy failed to plead
facts that would support recovery under either theory.
	[¶17]  As to the third of Munjoy's claims,  Dow asserted, as an
affirmative defense, that he enjoyed qualified immunity.  Contrary to
Munjoy's contentions, immunities and other affirmative defenses "may be
raised by a motion to dismiss if facts giving rise to the defense appear on the
face of the complaint."  Shaw v. Southern Aroostook Community Sch. Dist.,
683 A.2d 502, 504 (Me. 1996).  Because Munjoy specifically sued Dow for
"monetary damages pursuant to section 1983" arising from Dow's official
actions, Dow's motion to dismiss may raise the immunity issue.  See
Andrews v. Department of Environmental Protection, 1998 ME 198, ¶ 11,
716 A.2d 212, 217. 
	[¶18]  Qualified immunity "shield[s] governmental employees from
law suits and liability for their discretionary actions." Webb, 665 A.2d at
1010, Andrews, 1998 ME 198, ¶ 11, 716 A.2d at 217.  "A public official
claiming qualified immunity . . . must establish either that he or she did not
violate the plaintiff's rights or that given the state of the law a reasonable
official would not have understood that he [or she] was doing so." Andrews,
1998 ME 198, ¶ 11, 716 A.2d at 217 (internal quotations omitted).  A right
is clearly established if "the contours of the right [are] sufficiently clear that
a reasonable official would understand that what he is doing violates that
right.  The unlawfulness must be apparent in light of preexisting law."  Id. ¶
12, 716 A.2d at 217.  Although we now conclude that Munjoy had a right to a
hearing, our discussion amply illustrates that this right was not so clearly
established that Dow would have understood that his actions violated
Munjoy's rights.
	The entry is:
The judgment on Munjoy's 80C appeal is vacated.  Remanded to
the Superior Court with instructions to remand to the State
Police for further proceedings consistent with the opinion
herein.  In all other respects, the judgment is affirmed.

Attorneys for plaintiff: Marshall J. Tinkle, Esq., (orally) David M. Hirshon, Esq. Tompkins, Clough, Hirshon & Langer, P.A. P O Box 15060 Portland, ME 04112-5060 Attorneys for defendant: Andrew Ketterer. Attorney General Donald Macomber, Asst. A. G. (orally) 6 State House Station Augusta, ME 04333-0006
FOOTNOTES******************************** {1} . The statute provides, in pertinent part: "No person, firm, association or corporation shall hold, conduct or operate the amusement commonly known as 'Beano' or 'Bingo' for the entertainment of the public within the State unless a license therefor is obtained from the Chief of the State Police." 17 M.R.S.A. § 312 (Supp. 1999). {2} . The statute provides, in pertinent part: "No person, firm, corporation, association or organization shall hold, conduct or operate a game of chance within the State unless a license therefor is obtained from the Chief of the State Police . . . ." 17 M.R.S.A. § 331(1) (1983). {3} . Munjoy has operated what is commonly referred to as low stakes beano. "Low stakes Beano is commonly conducted in churches or other non-profit groups." Governor's Advisory Committee on Gambling, Win, Lose or Draw: Gambling in Maine 12 (1997). Prizes are strictly limited in low stakes beano: "[N]o single prize may exceed $400 in value and . . . no more than $1,400 in total prizes may be awarded on any one occasion." 17 M.R.S.A. § 317 (Supp. 1999). High stakes beano, on the other hand, may only be conducted by "any federally recognized Indian tribe." 17 M.R.S.A. § 314-A(1) (Supp. 1999). There are no limits upon the prizes that may be awarded in a high stakes beano game. See id. § 314-A(2). {4} . From time to time, the State Police requested additional information about Munjoy and its gaming operations. Though the results from these requests appear to have been placed in Munjoy's file, those requests were not made in connection with Munjoy applications or decisions to be made on those applications. {5} . See, e.g., 7 M.R.S.A. § 1015 (1989); 8 M.R.S.A. § 271 (Supp. 1999); 22 M.R.S.A. § 2494 (1992); 28-A M.R.S.A. § 652(3) (Supp. 1999). {6} . The games of chance statute is substantially similar: "Notwithstanding other provisions of law, the Chief of the State Police may issue a license to operate a game of chance . . . to a bona fide nonprofit charitable, educational, political, civic, recreational, fraternal, patriotic or religious organization . . . any of which must be founded, chartered or organized in this State before applying for a license." 17 M.R.S.A. § 332(1) (Supp. 1999). {7} . We stress that Munjoy's interest in the license is not dependent upon the conduct of the State Police in issuing prior licenses. {8} . According to that statute, "'[n]onprofit corporation' means a corporation, no part of the income or profit of which is distributable to its members, directors or officers." 13-B M.R.S.A. § 102(9) (1981). {9} . The Governor's Committee on Gambling has listed three categories of organizations offering beano and games of chance: (1) non-profit charities that have an IRS designation (e.g. the Catholic church). These organizations donate most or all of their revenue to charity; (2) Non-profit groups without an IRS designation that donate some of the revenues to charitable organizations and (3) non-profit organizations without IRS designation that use the majority, if not all, of the revenues for their own organization's benefit with only a small amount going to charitable causes. All three types of organizations are operating within the scope of the law. Governor's Advisory Committee On Gambling, Win, Lose or Draw: Gambling in Maine 40 (1997). Munjoy would fall within either the second or third category.