M Squared Enterprises v. St. George

2024 UT App 50

THE UTAH COURT OF APPEALS

M. SQUARED ENTERPRISES, INC.,
Appellant,
v.
ST. GEORGE CITY,
Appellee.

Opinion
No. 20220101-CA
Filed April 11, 2024

Fifth District Court, St. George Department
The Honorable Keith C. Barnes
No. 210500128

Phillip W. Dyer and Benjamin R. Dyer,
Attorneys for Appellant
Bryan J. Pattison and Tani Pack Downing,
Attorneys for Appellee

JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES JOHN D. LUTHY and AMY J. OLIVER concurred.

ORME, Judge:

¶1 The sole question presented in this appeal is whether the
plain language of section 10-8-41.6 of the Utah Code allows
St. George City (the City) to prohibit the operation of a retail
tobacco specialty business (sometimes, RTSB). M. Squared
Enterprises, Inc. dba St. George City Vapor Company
(M Squared) applied for an RTSB license. The City denied the
application based solely on its prohibition, pursuant to ordinance,
of the operation of RTSBs within city limits. M Squared appealed,
and the administrative hearing officer (the AHO) upheld the
City’s decision. M Squared appealed to the district court, which
in turn affirmed the decision of the AHO. And now, M Squared
appeals the district court’s decision. Because the district court’s
M. Squared Enters. v. St. George

interpretation of section 10-8-41.6 was correct, we affirm the
court’s decision.

BACKGROUND

¶2 In 2012, the City adopted section 3-9-4 of its city code (the
Ordinance), which expressly prohibits the operation of an RTSB
within the City. See St. George, Utah, Code § 3-9-4 (2023). Close to
a decade later, M Squared applied for an RTSB license from the
City, describing itself as “a high class tobacco retail business,
offering high quality cigars, pipe tobacco, vapor products, cbd,
kratom, etc.” The City denied M Squared’s application.

¶3 M Squared appealed, primarily based on the pivotal
question of whether the City could outright prohibit the operation
of RTSBs under section 10-8-41.6 of the Utah Code. The AHO
upheld the City’s decision.

¶4 Dissatisfied, M Squared appealed to the district court,
arguing that a plain reading of section 10-8-41.6 afforded a
municipality the ability to regulate, but not to absolutely prohibit,
the operation of RTSBs. M Squared argued that the plain terms
“regulate” and “requirement” could not be interpreted to mean
“prohibit” in the regulatory context. It posited that if our
Legislature intended to delegate the power to prohibit, it would
have included that specific language, as found in similar statutes. 1
M Squared argued that without specific language in section
10-8-41.6 allowing municipalities to “prohibit” RTSBs, the

1. M Squared compares section 10-8-41.6 of the Utah Code to
section 10-8-42, wherein our Legislature expressly allowed
municipalities to “prohibit,” among other things, the possession,
manufacture, sale, storage, importation, transportation,
distribution, or service of intoxicating liquors. See Utah Code Ann.
§ 10-8-42 (LexisNexis 2022).

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Ordinance was inconsistent with Utah law and was therefore
invalid.

¶5 The City argued that our Legislature’s delegation of the
state’s licensing power to municipalities included an express
provision that a municipality was not required to issue an RTSB
license. See Utah Code Ann. § 10-8-41.6(6)(a)(i) (LexisNexis Supp.
2023) (stating that “[n]othing in this section . . . requires a
municipality to issue a retail tobacco specialty business license”).
The City emphasized that M Squared’s argument was
“contaminated by its refusal to confront” this provision.

¶6 After a hearing, the district court affirmed the AHO and
memorialized its ruling in a written decision. 2 The court
concluded that the language of section 10-8-41.6 was
unambiguous and held that the Ordinance was “a lawful exercise
of the City’s authority.” The court concluded that the AHO’s
decision was based on a reasonable interpretation and “was not
arbitrary, capricious, or illegal.”

¶7 M Squared moved for a new trial pursuant to rule 59 of the
Utah Rules of Civil Procedure, arguing that the court’s decision
was “based on an error of law.” See Utah R. Civ. P. 59(a)(7).
M Squared asserted that the City did not have “unfettered
authority to prohibit/ban businesses when the Utah Legislature
has only afforded the City power to regulate businesses via
business licensing.” The City contended that M Squared remained
“steadfast in its refusal to confront the statutory text and basic
rules of interpretation.” The court again concluded that the
language of the statute is unambiguous and “[w]hen the plain
language is clear, the plain language reigns.” The court denied the
motion for a new trial, and M Squared appealed.

2. The transcript of the hearing was not provided, although the
transcript of the district court’s ruling from the bench was made
part of the appellate record.

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ISSUE AND STANDARD OF REVIEW

¶8 M Squared challenges the district court’s interpretation of
section 10-8-41.6 of the Utah Code, arguing that the plain
language indicates that a municipality has the power to regulate
their licensure but not to prohibit the operation of RTSBs. “We
review questions of statutory interpretation for correctness,
affording no deference to the district court’s legal conclusions.”
State v. Thurman, 2022 UT 16, ¶ 13, 508 P.3d 128 (quotation
simplified).

ANALYSIS

¶9 “When interpreting statutory language, our primary task
is to give effect to the intent of the legislature,” and “we determine
the statute’s meaning by first looking to the statute’s plain
language.” Mallory v. Brigham Young Univ., 2014 UT 27, ¶ 13, 332
P.3d 922 (quotation simplified). In so doing, “we assume the
legislature used each term advisedly and in accordance with its
ordinary meaning.” Id. (quotation simplified). But we “do not
view individual words and subsections in isolation.” Penunuri v.
Sundance Partners, Ltd., 2013 UT 22, ¶ 15, 301 P.3d 984. Instead, we
recognize “that each part or section [must] be construed in
connection with every other part or section so as to produce a
harmonious whole.” Id. (quotation simplified).

¶10 Section 10-8-41.6 comprises seven subsections, of which
subsections (2), (3)(a), and (6)(a) are of most relevance to the case
at hand. Subsection (2) specifies that “[t]he regulation of a retail
tobacco specialty business is an exercise of the police powers of
the state by the state or by delegation of the state’s police powers
to other governmental entities.” Utah Code Ann. § 10-8-41.6(2)
(LexisNexis Supp. 2023). Subsection (3) delegates the regulation
of RTSBs to local municipalities by specifically stating that “[a]
person may not operate a retail tobacco specialty business in a
municipality unless the person obtains a license from the

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municipality in which the retail tobacco specialty business is
located.” Id. § 10-8-41.6(3). And, even though licensure is wholly
delegated to the municipality, our Legislature imposes a number
of minimum requirements on a municipality’s grant of licensure,
such as certain proximity limits and the requirements for a health
permit and a state tax license. See id. § 10-8-41.6(4), (5). Subsection
(6)(a), however, expressly directs, “Nothing in this section:
(i) requires a municipality to issue a retail tobacco specialty
business license; or (ii) prohibits a municipality from adopting
more restrictive requirements on a person seeking a license or
renewal of a license to conduct business as a retail tobacco
specialty business.” Id. § 10-8-41.6(6)(a). We must interpret these
subsections with the intent “to produce a harmonious whole.”
Penunuri, 2013 UT 22, ¶ 15 (quotation simplified).

¶11 First, as M Squared recognizes, subsection (2) authorizes
the state to delegate the power to regulate RTSBs to “other
governmental entities.” Utah Code Ann. § 10-8-41.6(2). Next, we
note that subsection (3) provides that a person “may not” operate
an RTSB without a license from the local licensing jurisdiction.
Furthermore, in section 68-3-12 of the Utah Code, our Legislature
provides its rules of construction and states that its use of the
phrase “‘May not’ means that an action is not authorized and is
prohibited.” Id. § 68-3-12(1)(h) (LexisNexis 2021). Thus, we readily
conclude that our Legislature intentionally prohibited an RTSB
from operating without an RTSB license from the responsible
municipality. Finally, subsection (6)(a)(i) states that “[n]othing in
this section . . . requires a municipality to issue a retail tobacco
specialty business license.” Id. § 10-8-41.6(a)(i).

¶12 Interpreting section 10-8-41.6 with the intention of
producing a “harmonious whole,” our Legislature’s chosen
language plainly indicates that a person’s operation of an RTSB
“is not authorized and is prohibited,” id. § 68-3-12(1)(h), “unless
the person obtains a license from the municipality in which the
retail tobacco specialty business is located,” id. § 10-8-41.6(3)(a).

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Further, subsection (6)(a) plainly states that nothing in section
10-8-41.6 “requires a municipality to issue” an RTSB license. Thus,
based on the plain language of the statute, it is obvious that a
municipality may, in its discretion, prohibit the operation of
RTSBs by choosing to deny all applications for an RTSB license
within its licensing jurisdiction. And this is what the City has
chosen to do.

CONCLUSION

¶13 We conclude that the language of section 10-8-41.6 of the
Utah Code plainly delegates the power to license RTSBs to
municipalities. It further prohibits a person from operating an
RTSB without a license, expressly stating that nothing in that
section requires a municipality to grant licensure to an RTSB.
Therefore, we conclude that the Ordinance’s prohibition of RTSBs
does not exceed the statutory authority delegated to the City by
our Legislature.

¶14 Affirmed.

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