ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
This
matter is before the Administrative Law Court (“ALC”) for a final order and
decision following a contested case hearing pursuant to S.C. Code Ann. §§
1-23-310 et seq. (2005), S.C. Code Ann. § 1-23-600(B) (Supp. 2006), and
S.C. Code Ann. § 61-2-260 (Supp. 2006). The petitioner, Club Exception, Inc.,
d/b/a Club Exception (“Petitioner” or “Club Exception”), applied for an
on-premises beer and wine permit pursuant to §§ 61-4-500 et seq. and for
a liquor by the drink license pursuant to §§ 61-6-1600 et seq. for the
location at 721 North Ocean Boulevard, Myrtle Beach, South Carolina 29577. Kyle
and Karon Mitchell (“Protestants”)
filed a written protest to the Petitioner’s application. Respondent South
Carolina Department of Revenue (“Department”) denied the application pursuant
to § 61-4-525 and § 61-6-1825 due to the receipt of the Protestants’ valid
public protest. The Department further denied the application pursuant to §
61-6-1820 because the proposed location did not meet restaurant requirements
and pursuant to § 61-2-160 because one of the principals has outstanding state
tax liabilities.
After
notice to the parties and the Protestant, the court held a hearing on October
24, 2007. All parties 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 granted subject to the conditions set forth below.
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 all of the relevant statutory criteria. Notice of the time,
date, place, and subject matter of the hearing was given to all parties and the
Protestant.
The
Petitioner seeks a permit for the retail sale of beer and wine for on-premises
consumption and a license to sell liquor by the drink for the location at 721
North Ocean Boulevard, Myrtle Beach, South Carolina 29577. The proposed
location is inside the municipal limits of Myrtle Beach. Notice of the
application was lawfully posted at the location and was published in a
newspaper of general circulation.
Itzhak
Edri (“Edri”) and David Harrar (“Harrar”) are the principals of the corporation
seeking the requested permit and license. Both are over the age of twenty-one
and have never had a permit or license to sell beer, wine, or liquor revoked.
Neither Edri nor Harrarr has a criminal record. However, Harrar allegedly currently
owes delinquent state income taxes, penalties, and interest.
The
Petitioner seeks an on-premises beer and wine permit and a license to sell
liquor by the drink for Club Exception, a restaurant and nightclub. The
proposed location has not been previously permitted or licensed to sell beer,
wine, or liquor by the drink. The proposed location is on North Ocean
Boulevard, a heavily traveled thoroughfare in Myrtle Beach. The area in the vicinity
of the proposed location is substantially commercial, consisting entirely of
businesses such as multiple motels, a bar and grill, retail stores, and a hair
salon. The proposed location is directly across the street from the former site
of the Pavilion, an amusement park that has recently closed. There are no
churches, schools, or playgrounds within three hundred feet of the proposed
location. Parking at the proposed location is adequate.
Edri
testified regarding the nature of Club Exception. The club has a maximum
capacity of 700 people. During the pendency of the Petitioner’s application,
Edri has operated the proposed location as a “teen club.” Initially, the
proposed location experienced problems with patrons blocking the sidewalk on
North Ocean Boulevard or due to the volume of patrons exiting the club at
closing time. To remedy these issues, Edri consulted with law enforcement and
improved crowd flow by designating different exit and entrance points, with
patrons exiting the club onto Flagg Street rather than North Ocean Boulevard at
closing time. Further, during the nightly closing time local law enforcement
is outside the proposed location.
If
the Petitioner’s application is granted, Edri envisions that Club Exception
will be open from mid February until the end of October or November with hours
of operation from 6:00 p.m. until 2:00 a.m. each evening. The club will serve
dinner between 6:00 p.m. and 9:00 p.m. Around 9:00 p.m. a deejay will start
playing music and patrons can begin dancing. The club will admit patrons ages
eighteen and up and will utilize a wristband identification system for patrons
ages twenty-one and up. The proposed location will have twenty-four four-top
tables and a thirty-foot bar with twenty stools, creating a total seating
capacity of 116 people. The proposed location will not have any live music,
karaoke, or objectionable contests.
While
operating as a teen club, Club Exception employed twelve security personnel.
Edri generally stationed one security employee at each of the three exits, one
in the bathrooms, two at the front of the club, and four on the floor. Edri
testified that this arrangement will continue if the application is granted.
Karon
Mitchell (“Mitchell”) testified in opposition to the application. Mitchell
believes the application should be denied for various reasons. Mitchell owns
several motels located in close proximity to the proposed location. Many of
her concerns derive from her experiences with a previous night club that was
located across the street from the proposed location and caused her to lose
business. Mitchell
believes the same problems will arise if Club Exception’s application is
granted. She stated that the number of people that will be exiting the club
each night after drinking will result in havoc and fighting in the streets. For
example, one evening last June, while the Petitioner was operating as a teen
club, a fight erupted in the streets in front of the proposed location that
involved between one hundred and two hundred people. The fight traveled down
North Ocean Boulevard in front of one of Mitchell’s motels and resulted in one
of her guests being struck and the rest retreating into their rooms. Mitchell objects
to the detrimental effect such incidents may have on the operation of her
businesses.
LAW
Based
upon the foregoing Findings of Fact, the court concludes the following as a
matter of law.
1. Jurisdiction and
Review
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).
2. Suitability
of Location
a. Generally
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 proposed location be a
proper and suitable one. See §§ 61-
4-520(5)-(6). Additionally, § 61-6-1820 sets forth the basic criteria for the issuance
of a liquor license. However, 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.
b. Factors
in Determining Proper Location
“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. See Fast Stops, Inc. v. Ingram, 276
S.C. 593, 281 S.E.2d 118 (1981). In determining whether a proposed 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)). 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 proposed 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).
Other
factors may be considered when determining whether a location is proper. For
example, consideration can be given to the impact the issuance of the permit or
license will have on law enforcement. Fowler v. Lewis, 260 S.C. 54, 194
S.E.2d 191 (1973); Roche v. S.C. Alcoholic Beverage Control Comm’n, 263
S.C. 451, 211 S.E.2d 243 (1975). Evidence that the granting of a permit will
place a strain upon police to adequately protect the community must be
weighed. Moore v. S.C. Alcoholic Beverage Control Comm’n, 308 S.C. 160,
162, 417 S.E.2d 555, 557 (1992). Denial is appropriate where the public areas
surrounding the proposed location have been the source of constant law
enforcement problems or significant problems with public intoxication. Roche,
263 S.C. at 451, 211 S.E.2d at 243. Another pertinent factor is whether police
have been summoned to the scene on prior occasions when licensed to another
party. Schudel, 276 S.C. at 141-42, 276 S.E.2d at 309-10. It is
relevant whether the location is near other locations that have either been a
constant source of law enforcement problems or are locations where young people
congregate and loiter. Palmer, 282 S.C. at 250, 317 S.E.2d at 478.
Similarly,
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). 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).
Section
61-4-580(5) 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 Club Exception, 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, d/b/a Midland’s
Mini-Mart 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 269, 275 (R.I. 1984). 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 or license
application must not be denied if the statutory criteria are satisfied. The
fact that the issuance of a permit or license 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 or license to
an applicant on the ground of unsuitability of location is without evidentiary
support when relevant testimony of those opposing the requested license or 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.
3. Other
Requirements
Permits
and licenses may not be issued if one of the principals owes delinquent taxes,
penalties, or interest. Section 61-2-160 states that a permit or license “must not be issued, renewed, or transferred unless the
department determines that the applicant does not owe the State delinquent
taxes, penalties, or interest.”
Before an applicant may obtain a license to
sell liquor by the drink, the Department must find that “the applicant conducts
a business bona fide engaged primarily and substantially in the preparation and
serving of meals or furnishing of lodging.” § 61-6-1820. “‘Bona fide
engaged primarily and substantially in the preparation and serving of meals’
means a business which has been issued a Grade A retail establishment food
permit prior to issuance of a license [to sell liquor by the drink], and in
addition provides facilities for seating not less than forty persons
simultaneously at tables for the service of meals.” § 61-6-20(2).
4. Conclusions
After
carefully weighing the evidence and applying the law as discussed above, the
court finds that, with certain restrictions and conditions, Club Exception’s
application meets the statutory requirements and should be granted.
The
evidence shows that Club Exception, even without an alcohol license, has had
problems with crowd management. It further shows, however, that Club
Exception’s management has worked with law enforcement in an effort to control
problems associated with crowds at the club. The court notes that the capacity
of the club, at 700, is very high, lending itself to large crowds and the
problems associated therewith. Additionally, the club is located in a resort
setting with many tourist patrons and with several hotels and motels in the
surrounding area, including but not limited to those operated by Mitchell.
Accordingly,
the court finds that certain conditions should be imposed on Club Exception’s
license. First, as a condition of the permit, the Department shall require
Club Exception to abide by any applicable noise ordinances. Second, it shall
require Club Exception to maintain adequate security personnel and adequate security
lighting at all public points of ingress or egress to the club and in the rear
parking area. Third, as offered by the Petitioner at the contested case
hearing, the Petitioner shall not employ anyone who was previously employed by
the Freaky Tiki. Finally, the Department shall require Club Exception to
continue to cooperate with law enforcement and that it take whatever other
reasonable measures necessary to ensure orderly dissipation of the crowd from
the club and the nearby area. In addition to these conditions, issuance of the
license shall be subject to Club Exception’s satisfaction of a final restaurant
inspection and Harrar’s satisfactory resolution of his South Carolina income
tax liability.
Failure
to abide by any of these conditions shall be a violation of the permit and may
subject the licensee to revocation. Additionally, should Club Exception’s
management knowingly allow any activity, including but not limited to criminal
acts or behavior that disrupts the peace of the neighborhood, which constitutes
a public nuisance, then under South Carolina law, its license can be revoked or
renewal may be denied. Cf. Blink, Inc., d/b/a The Freaky Tiki v.
S.C. Dep’t of Revenue, 05-ALJ-17-0255-CC, 2005 WL 3061999 (S.C. Admin. Law
Ct., Oct. 24, 2005) (denying renewal and finding that the manner in which the
club was operated constituted a public nuisance).
ORDER
Based upon the Findings of Fact and Conclusions of Law stated
above, the court finds that, with the above-noted restrictions, the Petitioner
meets all of the statutory requirements for the issuance of an on-premises beer
and wine permit and liquor by the drink license. It is therefore
ORDERED that the Department shall GRANT Petitioner’s application for an on-premises
beer and wine permit and liquor by the drink license for the premises located
at 721 North Ocean Boulevard, Myrtle Beach, South Carolina 29577 in accordance
with § 61-2-80, § 61-4-540, and § 61-6-1820, subject to the Petitioner’s satisfying
all applicable final inspection requirements and Harrar’s resolution of his
outstanding tax liabilities, with the conditions as described above.
IT IS SO
ORDERED.
_______________________________
PAIGE
J. GOSSETT
Administrative
Law Judge
December 5, 2007
Columbia, South Carolina
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