ORDERS:
STATEMENT OF THE CASE
This matter is before the Administrative Law Court (“ALC” or “Court”) for a final order and decision following a contested case hearing pursuant to S.C. Code Ann. §§ 1-23-310 et seq. (2005 & Supp. 2008), S.C. Code Ann. § 1-23-600(B) (Supp. 2008), and S.C. Code Ann. § 61-2-260 (Supp. 2008). The petitioner, Club Nu’voe Social Club, Inc., d/b/a Club Nu’voe (“Petitioner”), applied for an on-premises beer and wine permit pursuant to S.C. Code Ann. §§ 61-4-500 et seq. (2009), and a nonprofit private club liquor-by-the-drink license pursuant to §§ 61-6-1600 et seq. (2009) for the location at 10290 Lynches River Road, Lynchburg, South Carolina 29080. Jerry L. Locklair, and Russell Sawyer (“Protestants”) filed written protests to the Petitioner’s application. Respondent South Carolina Department of Revenue (“Department”) denied the application pursuant to S.C. Code Ann. § 61-4-525 and § 61-6-1825 (2009) due to the receipt of the Protestants’ valid public protests.
After notice to the parties and the Protestants, the Court held a hearing on this matter on October 7, 2009. Both parties, and Protestants appeared at the hearing. Evidence was introduced and testimony presented.
After carefully weighing all of the evidence, the Court finds that the Petitioner’s application for this location should be denied.
FINDINGS OF FACT
Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, and taking into consideration the burden of persuasion by the parties, the Court makes the following Findings of Fact by a preponderance of the evidence.
Evidence was presented regarding the relevant statutory criteria. Notice of the time, date, place, and subject matter of the hearing was given to all parties and the Protestants.
The Petitioner seeks an on-premises beer and wine permit, and a nonprofit private club liquor-by-the-drink license for the location. The location is inside the County limits of Sumter. Notice of the application was lawfully posted at the location and published in a newspaper of general circulation.
The Petitioner has been operating since February 25, 2009 as a private members-only club under a 120 day temporary beer & wine, and 120 day temporary liquor by the drink license at the location under the name of Club Nu’voe. Petitioner is incorporated in the state of South Carolina as a non-profit corporation. The Petitioner’s purpose, as listed in its bylaws, is to preserve and promote academic excellence and human welfare, offer scholarships, give performances, and sponsor a variety of activities, including workshops, and dances. Priscilla Goodman, the only officer of the nonprofit corporation and its registered agent, testified that the club has not engaged in any of the types of activities listed in the bylaws as the purpose of the nonprofit corporation. She stated that the nonprofit corporation hopes to make some contributions to a local church at some time in the future and that any assets of the corporation would go to the church upon dissolution of the nonprofit corporation. Based on Petitioner’s inability to articulate any specific plans related to the purpose for which the organization was purportedly organized, I find that Club Nu’voe was organized primarily to obtain a license to sell alcoholic beverages and is operated primarily for the purpose of selling alcoholic beverages.
Priscilla Goodman testified that she does not know what the requirements are for membership in Club Nu’voe. I find that although Priscilla Goodman purports to be the sole officer and principal of Club Nu’voe Social Club, Inc., her daughter, Makeba Goodman, performs the day-to-day management of the club. Makeba Goodman is not listed as a principal of the business on the Application for Retail Beer, Wine, and Liquor license.
The bylaws provide that dues of $500 or $250 are required for membership in Club Nu’voe, however, Makeba Goodman, testified that she makes the decisions concerning club membership by meeting with applicants and that no dues are actually collected. She also testified that each member is allowed to bring two guests into the club. Based on the evidence presented, I find that Club Nu’voe does not have a definite and fixed method of electing persons to membership in the organization and that the method of membership selection described in the organization’s bylaws is not followed.
The location is not within 500 feet of any church, school, or playground. However, I find it is approximately 300 to 400 feet from a residence and fifty (50) feet from a motel that is also utilized as the residence for the motel manager’s family.
Priscilla and Makeba Goodman’s testimony at the hearing did not demonstrate evidence that Club Nu’voe has an effective plan for preventing underage drinking in the club. Priscilla Goodman seemed confused as to whether the legal drinking age is 18 or 21. Individuals who are under the age of 21 are allowed into the club and are issued armbands to show that they are not allowed to buy or drink alcohol. There are no precautions taken that would prevent an underage patron from removing the armband and purchasing and consuming alcohol.
The Protestants testified to several concerns with the location and operation of the club. Collectively, the concerns are shootings and other violence in and around the club, noise, and loitering. Of particular concern is the loud music that disturbs nearby residents inside their homes late at night; reckless driving by patrons leaving the club; and gunfire coming from the club or its parking lot.
Petitioner testified that it was willing to stipulate to the following conditions upon the license to address the concerns raised by the protestants:
1. The club would close by 11 p.m. on Mondays, Tuesdays, Wednesdays and Thursdays;
2. All music will be turned off by 12 a.m. and the club will close by 1 a.m. on Friday and Saturday;
3. The club will be closed on Sundays;
4. The volume of the music will be adjusted so that it cannot be heard outside the club at any time; and
5. No loitering would be allowed on the premises.
I find based on the evidence presented that Club Nu’voe as it has operated under the temporary license has played loud music that has disturbed nearby residents in their homes late at night; has allowed disorderly patrons to loiter outside the club; has caused potential customers to leave the nearby hotel because of noise and/or unruly patrons loitering outside the club; and has been the site of violence and gunfire.
Priscilla Goodman testified that the police were summoned to the club premises due to a shooting in the parking lot, but denied any knowledge of the circumstances surrounding the incident or the outcome of any police investigation. I find that the Petitioner’s failure to investigate a serious violent incident on the club premises and implement security measures to prevent similar incidents in the future to be convincing evidence that Petitioner is not suited to manage an establishment selling beer, wine and liquor.
CONCLUSIONS OF LAW
Based upon the foregoing Findings of Fact, the Court concludes the following as a matter of law.
Jurisdiction
Jurisdiction over this case is vested with the South Carolina Administrative Law Court pursuant to §§ 1-23-310 et seq., § 1-23-600(B), and § 61-2-260. “[T]he issuance or granting of a license to sell beer or alcoholic beverages rests in the sound discretion of the body or official to whom the duty of issuing it is committed[.]” Palmer v. S.C. Alcoholic Beverage Control Comm’n, 282 S.C. 246, 248, 317 S.E.2d 476, 477 (Ct.App. 1984); See also Wall v. S.C. Alcoholic Beverage Control Comm’n, 269 S.C. 13, 235 S.E.2d 806 (1977). The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S.C. Cable Television Ass’n v. S. Bell Tel. & Tel. Co., 308 S.C. 216, 222, 417 S.E.2d 586, 589 (1992). Furthermore, a trial judge who observes a witness is in the best position to judge the witness’s demeanor and veracity and to evaluate the credibility of his testimony. See e.g. Woodall v. Woodall, 322 S.C. 7, 10, 471 S.E.2d 154, 157 (1996); Wallace v. Milliken & Co., 300 S.C. 553, 556, 389 S.E.2d 448, 450 (Ct.App. 1990).
Nonprofit Organization
To qualify for a license to sell alcoholic liquors by the drink, a business must be a bona fide nonprofit organization, or conduct a business bona fide engaged primarily and substantially in the preparation and serving of meals or furnishing of lodging. S.C. Code Ann. § 61-6-1820(1). In this case Petitioner’s application is based upon its status as a nonprofit organization. The Department of Revenue has promulgated regulations setting forth what constitutes a bona fide nonprofit organization under the statute:
A. Every initial and/or renewal application for a Sale and Consumption of Alcoholic Liquors License to a bona fide nonprofit organization shall be an association, organization or a nonprofit corporation organized and existing under the laws of the State of South Carolina and operated solely and exclusively for social, benevolent, patriotic, recreational or fraternal purposes but not for pecuniary gain or profit, no part of the net earnings of which inures to the direct benefit of any member or shareholder, it being the intent of Section 61‑6‑1600 of the Code that a license shall not be granted to or held by an organization which is, or has been, organized and operated primarily to obtain or hold a license to sell alcoholic beverages, but only to a bona fide nonprofit organization with limited membership to which the sale of alcoholic beverages is incidental to the main purpose of the organization.
B. The bona fide nonprofit organization must have a definite fixed method of electing persons on an individual basis to membership in the organization; such method must be described in the club’s bylaws and must bear some reasonable relation to the object and purpose of the organization.
C. It shall be maintained by its bona fide members through the payment of monthly, quarterly or annual fees or dues.
D. The affairs and management of such nonprofit organization shall be conducted by a board of directors, executive committee or similar governing body chosen by the members at a regular meeting held at some periodic interval but at least on an annual basis. Provided, however, that nonprofit organizations operated for the benefit of universities and similar public institutions [IRS Code Section 501 (c) (3)] may be governed by a board or committee notwithstanding this provision as provided in the by‑laws of the organization.
E. Upon dissolution, liquidation or final termination of the operations of the organization, its residual assets must not inure to the direct benefit of any member or shareholder but must be turned over to one or more nonprofit organizations which are organized and operated for charitable purposes or for such other purposes as are authorized under Section 61‑6‑1600.
F. No member, officer, agent or employee of such nonprofit organization shall be paid, or directly or indirectly receive, in the form of salary or other compensation any of the profit from the sale or distribution of alcoholic beverages beyond the amount of such salary as may be fixed and voted at a regular meeting by the members of the organization or at a regular meeting by the governing body out of the general revenue of the organization, nor shall such salaries or compensation be in excess of reasonable compensation for the services actually performed.
G. Each nonprofit organization shall file with its application for a license the following information:
(1) A certified copy of its charter, articles of incorporation or constitution;
(2) A copy of its bylaws;
(3) A list of its officers and directors showing names, ages, correct mailing addresses and business employment.
23 S.C. Code Ann. Regs. 7-401.4 (Supp. 2008).
Based on the discrepancy between the recitations in Petitioner’s bylaws and the testimony, I find that Club Nu’voe is not a bona fide nonprofit organization as required by S.C. Code Ann. § 61-6-1820 and 23 S.C. Code Ann. Regs. 7-401.4. In particular I conclude that Club Nu’voe is organized and operated primarily to obtain and hold a license to sell alcoholic beverages, and is not a bona fide nonprofit organization with limited membership to which the sale of alcoholic beverages is incidental to the main purpose of the organization. See 23 S.C. Reg. 7-401.4(A-B). Moreover, I find that the club is not maintained through the payment of monthly, quarterly or annual fees or dues as required by 23 S.C. Reg. 7-401.4(C). Accordingly, the Court concludes that Petitioner’s application for a nonprofit private club liquor-by-the-drink license must be denied.
Suitability of Location
Section 61-4-520 establishes the criteria for the issuance of a beer and wine permit. Included in the criteria is the requirement that the location be a proper and suitable one. See §§ 61-4-520(5)-(6). A liquor license may be denied if the proposed location is not suitable. See, Schudel v S.C. Alcoholic Beverage Control Comm’n., 276 S.C. 138, 276 S.E.2d 308 (1981). Therefore, either a beer and wine permit or a liquor license may be denied if the location of the business is not a proper one.
“Proper location” is not statutorily defined, but broad discretion is vested in the trier of fact to determine the fitness or suitability of a particular location for the requested permit and license. See Fast Stops, Inc. v. Ingram, 276 S.C. 593, 281 S.E.2d 118 (1981). In determining whether a location is suitable, it is proper for this tribunal to consider any evidence that shows adverse circumstances of location. Kearney v. Allen, 287 S.C. 324, 326, 338 S.E.2d 335, 337 (1985); Palmer, 282 S.C. at 249, 317 S.E.2d at 478 (citing Smith v. Pratt, 258 S.C. 504, 189 S.E.2d 301 (1972)). Furthermore, in considering the suitability of a location, it is relevant to consider whether the testimony in opposition to the granting of a license is based on opinions, generalities and conclusions, or whether the case is supported by facts. Id. The determination of suitability of location is not necessarily solely a function of geography. Rather, it involves an infinite variety of considerations related to the nature and operation of the business and its impact on the community within which it is to be located. Kearney, 287 S.C. at 326-27, 338 S.E.2d at 337; Schudel, 276 S.C. at 138, 276 S.E.2d at 308. Further,
a liquor license or permit may be properly refused on the ground that the location of the establishment would adversely affect the public interest, that the nature of the neighborhood and of the premises is such that the establishment would be detrimental to the welfare . . . of the inhabitants, or that the manner of conducting the establishment would not be conducive to the general welfare of the community.
48 C.J.S. Intoxicating Liquors § 168 at 366 (2004).
Consideration can be given to whether the location is heavily traveled or creates a traffic danger. Id. Furthermore, whether the location has in the recent past been permitted and whether the location is now more or less suitable than it was in the past is a relevant factor. Taylor v. Lewis, 261 S.C. 168, 198 S.E.2d 801 (1973) (“The record is devoid of any showing that the location is any less suitable for the sale of beer now than during the prior five (5) year period [when it was operated by a different owner].”). Finally, a valid consideration is whether the surrounding area is substantially commercial. Id.; Byers v. S.C. Alcoholic Beverage Control Comm’n, 281 S.C. 566, 316 S.E.2d 705 (Ct.App. 1984).
S.C. Code Ann. § 61-4-580(5) (Supp. 2008) prohibits a permittee from knowingly allowing “any act, the commission of which tends to create a public nuisance or which constitutes a crime under the laws of this state” to occur on the licensed premises. The term “licensed premises” includes not only the interior of the licensed business but also the areas immediately adjacent to the entrance and exit, as well as the parking areas. See 23 S.C. Code Ann. Regs. 7-700 (“Licensed premises shall include those areas normally used by the permittee or licensee to conduct his business and shall include but are not limited to the following: selling areas, storage areas, food preparation areas and parking areas.”). “[O]ne who holds a license to sell alcoholic beverages is responsible for supervising the conduct of his clientele, both within the licensed premises and in the immediate vicinity, in order to ensure that his operations do not create a nuisance for the surrounding community.” Dayaram Krupa, LLC v. S.C. Dep’t of Revenue, 06-ALJ-17-0929-CC, 2007 WL 1219343 (S.C. Admin. Law Ct., March 19, 2007) (citing § 61-4-580(5) and A.J.C. Enters., Inc. v. Pastore, 473 A.2d 269, 275 (R.I. 1984)). The court in A.J.C. Enterprises held that a liquor licensee “assumes an obligation to supervise the conduct of its clientele so as to preclude the creation of conditions within the surrounding neighborhood which would amount to a nuisance to those who reside in the area.” A.J.C. Enters., Inc., 473 A.2d at 275. In the event that a licensed location becomes a public nuisance to the surrounding community, the Department may revoke or refuse renewal of the license for the location. See S.C. Code Ann. § 61-4-580(5).
Without sufficient evidence of an adverse impact on the community, a permit must not be denied if the statutory criteria are satisfied. The fact that the issuance of a permit is protested is not a sufficient reason, by itself, to deny the application. See 48 C.J.S. Intoxicating Liquors § 166 (2004). Moreover, the denial of a permit to an applicant on the ground of unsuitability of location is without evidentiary support when relevant testimony of those opposing the requested permit consists entirely of opinions, generalities, and conclusions not supported by the facts. Taylor, 261 S.C. at 171, 198 S.E.2d at 802.
After carefully weighing the evidence and applying the law as discussed above, the Court finds the location to be unsuitable for the type of club operated by the Petitioner. The proximity to nearby residences coupled with the Petitioner’s failure to articulate an effective plan for security or to prevent underage drinking leads me to conclude that it is unlikely that Petitioner could operate the club in its current location, even with the stipulated conditions, in a manner that would not constitute a nuisance to the community. Therefore, the Court finds that the location is unsuitable for the type of club operated by Petitioner, and concludes that Petitioner’s application for an on-premises beer and wine permit, and nonprofit private club liquor-by-the-drink license should be denied.
Suitability of Petitioner
In order to issue the beer and wine permit this Court must find that “the applicant is a fit person to sell beer and wine.” S.C. Code Ann. § 61-4-540. When an application for an alcohol license is made by a person other than an individual, such as a non-profit corporation, all principals of the organization are required to sign the application and give information concerning history of revocation or suspension of previous licenses and criminal record. S.C. Code Ann. § 61-2-100(c). This requirement was made clear to Petitioner in this case by the application which provides, in pertinent part,
1-12 is a list of principals. Each principal must complete and sign a box below. If a required person does not sign, this application will be denied:
Principals: …9. All employees who will have day-to-day operational management responsibility for the business or entity,…12. If a nonprofit organization, list all officers and directors of the organization. Respondent’s Exhibit 1, p. 3.
A misstatement or concealment of fact on an application for a license or permit is sufficient grounds to deny the application. S.C. Code Ann. §61-2-100(J), 61-4-540. In this case, Makeba Goodman did not sign the application, although the Petitioner admitted at the hearing that Makeba is responsible for the day-to-day operation of the club. Such a misstatement on the application, along with the findings of fact above that the Petitioner does not have adequate plans for security or to prevent the consumption of alcohol by underage persons, leads this Court to conclude that Petitioner is not a fit person to sell beer and wine.
Accordingly, the Court concludes that Petitioner’s application for an on-premises beer and wine permit must be denied.
ORDER
Based upon the Findings of Fact and Conclusions of Law stated above, the Court finds that the Petitioner did not meet all of the statutory requirements for the issuance of an on-premises beer and wine permit or a nonprofit private club liquor-by-the-drink license. It is therefore
ORDERED that the Department shall DENY Petitioner’s application for an on-premises beer and wine permit, and nonprofit private club liquor-by-the-drink license for the premises located at 10290 Lynches River Road, Lynchburg, South Carolina in accordance with S.C. Code Ann. § 61-2-80, § 61-4-540, and § 61-4-520.
IT IS SO ORDERED.
______________________________________
Deborah Brooks Durden
Administrative Law Judge
October 21, 2009
Columbia, South Carolina |