MATTHEW GRENIER [Note 1] vs. BOARD OF SELECTMEN OF SHREWSBURY & another. [Note 2]

BERRY, J. The board of selectmen of Shrewsbury (board), acting as the licensing authority for the town of Shrewsbury (town),denied the plaintiff Grenier's application for a license to sell used cars. The board based the denial on its "Policy Number 9" (Policy 9), [Note 3] which purports to cap at twenty the number of

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class 2 used car dealer licenses in the town. When Policy 9 was adopted in 1999, the board did not specify why that precise number would be the cap. Rather, all that was stated by the board was that twenty licenses would "sufficiently meet the needs of the public for the Town." Notwithstanding this, Policy 9 reserved unlimited and standardless discretion to the board to grant licenses beyond the purported cap. In this regard, Policy 9 provided that, even if the twenty-license limit was reached, class 2 used car dealer license applications would be accepted, and the board, in its unfettered discretion, could decide to grant a license in excess of the twenty-license cap, or could "at any time deny a request [beyond the cap] based on the public's interest already being met."

We reverse the judgment denying the plaintiff's complaint for declaratory relief. We conclude that to the extent Policy 9 purports to set a per se cap, it is invalid as it conflicts with the statute governing the grant of class 2 used car dealer licenses. [Note 4]

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See G. L. c. 140, § 59. [Note 5] Such a per se cap erases the case-by-case review which the statute requires. Furthermore, Policy 9 is not sustainable as matter of law because it lacks any discernible standards, rendering the policy so vague as to pose a risk of arbitrary and capricious application defying judicial review. "[V]ague laws that do not limit the exercise of discretion by officials engender the possibility of arbitrary and discriminatory enforcement." Caswell v. Licensing Commn. for Brockton, 387 Mass. 864 , 873 (1983). The vagaries of Policy 9 are tellingly reflected in the errant commentary of one board member concerning the review of the plaintiff's application and the ensuing denial thereof by the board. See note 8, infra, and accompanying text.

Furthermore, even if we assume that Policy 9 is valid, as applied in this case, the board's denial of the plaintiff's application under Policy 9 appears to rest on an outright and absolute rejection of Internet sales as not beneficial to the town, [Note 6] was not based on substantial evidence and was arbitrary and capricious.

1. Procedural and factual background. At the time of Policy

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9's adoption in 1999, there were twenty-three class 2 used car dealer licenses outstanding. All of these twenty-three licenses were protected as grandfathered when Policy 9 was adopted. For reasons not apparent on the record, over the years, the number of outstanding used car dealer licenses was reduced to twenty. Certain of these twenty existing licenses were transferred, with board approval, from previous holders to new licensees. Thus, the status quo of twenty licenses was locked in a process of transfers.

In 2007, the plaintiff applied for a class 2 used car dealer license. At this time, there were twenty such licenses outstanding. As submitted to the board, the plaintiff's business plan provided that through Internet auction sites, the plaintiff would purchase and sell high-end, luxury, antique, and vintage automobiles. The plaintiff planned to store only three to five cars inside in a garage owned by his father's construction company. The garage is located in a limited industrial zoning district in the vicinity of multiple other commercial operations.

The town's zoning board of appeals granted a variance to allow the proposed business to operate at the site. The police department, the treasurer's office, and the fire department approved the site for use as proposed by the plaintiff. The board, however, invoking Policy 9, voted to deny the plaintiff's application for a class 2 used car dealer license. Reduced to essentials, the board -- without adequate findings and consideration of the particular facts underlying the application -- rested the denial on the generalized concept that the public need was adequately met by the existing twenty licenses, and as previously noted, that out-of-State, Internet sales would not benefit the town.

The plaintiff filed a complaint in Superior Court, seeking entry of a judgment declaring that Policy 9 was invalid and in violation of G. L. c. 140, § 59. Beyond that declaration, the plaintiff also sought a declaration that the board's denial of the application was unlawful, not based on substantial evidence, and was arbitrary and capricious, and that, accordingly, an order should issue granting the plaintiff a class 2 license to sell used cars.

Following a bench trial, a Superior Court judge denied the requests for the entry of declaratory judgment and affirmed the decision of the board. First, with respect to the declaratory challenge to the validity of Policy 9, the judge held that the "[b]oard

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was well within both its executive and its legislative authority to enact Policy 9," and that Policy 9 was adopted in good faith by the board as the policy maker for the town. Second, in denying the request for declaratory judgment concerning the board's denial of the plaintiff's application, the judge reasoned that the plaintiff's business plan to sell used cars through the Internet did not advance the needs of the town, and that the board's denial determination was reasonable. We reverse for the following reasons.

2. Discussion. The requests for declaratory relief in this case are intertwined with the standards for judicial review under the used car dealer licensing statute, G. L. c. 140, § 59. Under that statute, an appellate court focuses on both "whether the decision of the [board] is based upon an error of law or is unsupported by substantial evidence." Ludvigsen v. Dedham, 48 Mass. App. Ct. 682 , 685 (2000).

The used car dealer licensing statute imposes on a licensing board a requirement "to determine the facts and to pass upon the application in each instance under the serious sense of responsibility imposed upon [it] by [the board's] official position[] and the delicate character of the duty entrusted to [it]" (emphasis added). Roslindale Motor Sales, Inc. v. Police Commr. of Boston, 405 Mass. 79 , 83-84 (1989), quoting from Mosey Café v. Licensing Bd. for Boston, 338 Mass. 199 , 205 (1958). This responsibility for case-by-case review, as required by the licensing statute, must be based on neutral and defined standards. These are not present in Policy 9.

Furthermore, while there is broad discretion in reviewing license applications by a municipal authority, that discretion is not unfettered. See Roslindale Motor Sales, Inc. v. Police Commr. of Boston, 405 Mass. at 82; Goldie's Salvage, Inc. v. Board of Selectmen of Walpole, 31 Mass. App. Ct. 726 , 730 (1992). The integrity of a licensing scheme depends upon standards that ensure fair and even-handed review of applications by the board, and a framework for judicial review of whether a particular decision is arbitrary and capricious, or based upon error of law. See Ludvigsen v. Dedham, supra. Policy 9 fails in these respects, as the policy lacks any fundamental standards. See, e.g., Turnpike Amusement Park, Inc. v. Licensing Commn. of Cambridge,

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343 Mass. 435 , 437-438 (1962) (licensing authority's policy of denying all applications for new and renewed licenses to operate pinball machines not supported by enabling statute and was arbitrary and capricious); Beard v. Salisbury, 378 Mass. 435 , 440-441 (1979) (invalidating town by-law prohibiting removal of sand, loam, or gravel from land not in public use because by-law exercised power provided by neither enabling statute nor home rule amendment).

As noted, Policy 9 purports to be predicated on a capped maximum number of twenty class 2 licenses -- notwithstanding that no such cap is provided for by the licensing statute. See G. L. c. 140, § 59. The board contends that Policy 9 is not a hard cap, but rather a flexible guideline, which, the board submits, is not in conflict with the licensing statute. We are not so persuaded. [Note 7] Rather than a flexible guideline with set borders, Policy 9 is a borderless zone in which the board may make unfettered and render decisions absent adherence to defined standards.

Even assuming that Policy 9 were not invalid, there is an independent basis to set aside the board's action in this case. Because Policy 9 lacks standards, it allows for arbitrary and capricious application, such as occurred in this case. [Note 8], [Note 9] From all that appears of record, the plaintiff's proposal would have had

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limited negative impact in that there would be only five cars in the industrial garage; none would be stored outside. The plan was approved by the town's police department, the fire department, the treasurer's office, and the zoning board of appeals. These particularized case-by-case facts underlying the plaintiff's application were not adequately addressed by the board, leaving the decision unsupported by substantial evidence. "When a decision contains conclusions that do nothing more than repeat regulatory phrases, and are unsupported by any facts in the record, we are constrained to conclude that the decision is 'unreasonable, whimsical, capricious or arbitrary,' and therefore invalid." Wendy's Old Fashioned Hamburgers of N.Y., Inc. v. Board of Appeal of Billerica, 454 Mass. 374 , 386 (2009), quoting from Roberts v. Southwestern Bell Mobile Sys., Inc., 429 Mass. 478 , 486 (1999).

For the foregoing reasons, the judgment of the Superior Court is vacated. A new decree shall enter declaring that

1. Policy 9 enacted by the board of selectman in 1999 with respect to class 2 used car dealer licenses subject to the State statutory scheme set forth in G. L. c. 140, § 59, is invalid, [Note 10]

and

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2. The plaintiff is entitled to a class 2 used car dealer license subject to the business plan set forth in the plaintiff's application, and to all applicable provisions of the statute.

The case is remanded for proceedings consistent with this opinion.

So ordered.