ORDERS:
FINAL ORDER AND DECISION
INTRODUCTION
This
matter is before the Court pursuant to the Petitioner’s application for an off
premises beer and wine permit. The South Carolina Department of Revenue (DOR
or Department) issued its Department Determination on May 30, 2008 denying the
application due to a timely, valid public protest, and concerns by the
Department about the application, including a misstatement or concealment of
fact, the moral character and fitness of the Applicant, and undisclosed
principals. The Petitioner requested a contested case hearing before the
Administrative Law Court (ALC) on June 11, 2008. This case was heard by the
Honorable Carolyn C. Matthews, Administrative Law Judge on October 14, 2008.
FINDINGS
OF FACT
1. On or about February 22, 2008, the Department received an application
for an off premises beer and wine permit from Mani One, Inc., d/b/a Corner Stop
Stores #113, located at 2110 Mt. Holly Rd., Rock Hill, South Carolina. Purvin
Patel is the President of the Corporation and has operated the business since
2003.
2. As a result of the filing of the application, the South Carolina Law
Enforcement Division (SLED) conducted a standard investigation of the location
to determine compliance with the statutory requirements for licensure.
3. As part of the application process, the Department reviewed the
licensure history of Mani One. The Department discovered that the Petitioner
has, and has held, several off premises beer and wine permits and one retail
liquor store license. Seven beer and wine permits are currently open, along
with the one retail liquor store license, and seven locations have been closed
since 2006.
4. Of the seven closed locations, four were closed following a violation of
the alcohol beverage licensing laws. Of these four closed locations, two were
facing a suspension of the permit for ninety days, and one location had paid a
$500 fine. The other location had received a letter serving a Notice of Intent
to Revoke the beer and wine permit.
5. The Notice of Intent to Revoke was sent to Mani One, Inc., c/o Purvin
Patel on February 16, 2007. This letter specifically stated,
You have the
following options:
1. You may
surrender your permit and consent to the revocation. The permit must reach the
Department within ninety (90) days of the date of this letter. . . .
2. You may
protest the proposed revocation. This protest must be in writing [and] must
reach the Department within ninety (90) days of the date of this letter. . . .
If you do not
respond to this letter as stated above, you will lose all rights to appeal this
matter and the beer/wine permit will be revoked as indicated.
The language in the
Notice of Intent to Suspend letters was the same, with the substitution of
“suspend” for “revoke.” One letter of suspension was sent on January 23, 2007
and one on February 16, 2007.
6. Following the receipt of the letters suspending or revoking the permit,
the Permittee, Mani One, Inc., in each case surrendered the permit to the
Department, thereby consenting to the revocation or suspension, according to
the terms of the Notice letters.
7. The two permits referenced in the letters dated February 16, 2007, the
permit to be revoked and the permit to be suspended, were both surrendered on
May 17, 2007. The other suspended permit, referenced in the January 23, 2007
letter to suspend, was surrendered on April 20, 2007. All permits were
surrendered within the 90 days provided for in S.C. Code Ann. § 12-60-1310(A)
(Supp. 2007), which gives the permittee the right to appeal or consent to the
penalty. Subsection (C) of that section states that “. . . [i]f the person
fails to respond or participate in the process, the department may view the
appeal as abandoned . . . .”
8. Based upon the fact that Mani One surrendered its permits rather than
serving suspensions or revocations, the Department determined that Mani One,
Inc. is not a “person” of good moral character.
9. Further, Purvin Patel, Mani One’s sole disclosed principal, has failed
to note the suspensions or revocations on his current application. Specifically,
on the Consent and Waiver Form of the application, the Petitioner answered the
question “Have you had revoked or suspended, in this or any other state,
any license to sell beer, wine or alcoholic liqueurs?” with “No.” As noted
above, the Permittee, Mani One, Inc., by not contesting the suspension or
revocation notices, has consented to having its permits suspended or revoked.
Mr. Patel contends that the “you” language in on the waiver form is confusing
because it could mean either a person or a corporation. He said that he
answered “no” because he thought the question was directed at him individually.
10. In addition to answering the question on the Waiver Form incorrectly, Mani
One, Inc. only listed one principal, Purvin Patel, on the application’s
“Consent and Waiver” Form. This portion of the application clearly states,
“Each principal must complete and sign a box below. If a required person does
not sign, this application will be denied.” The application then defines
“principal” to include, among others:
2. All officers of
the business or entity which owns the business;
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6. Managers of a
limited liability company which is managed by managers;
7. Members of a
limited liability company which is not managed by managers;
8. Any fiduciary
who manages, controls title, or is otherwise in control of the business;
9. All employees
who will have day-to-day operational management responsibility for the business
or entity[.]
*
* *
11. All other
principals must be listed also; If not a publicly traded corporation, list all
stockholders.
11. Mani One, Inc. is currently licensed at seven active locations in Greenville, Rock Hill, Laurens, and Woodruff. Mr. Patel resides in Spartanburg, South Carolina. It is clear that Mr. Patel, as the only disclosed principal, cannot manage
all these locations solely. Nor, could he possibly be the sole employee of
seven convenience stores. In spite of this fact, however, he has failed to
list any other principals on the application. As stated on the application,
the failure to list a required principal is grounds for denial. Purvin Patel
contends that the reason that he is the only principal listed is because he is
not in the business of operating convenience stores. Rather, he buys underperforming stores and renovates and rehabilitates them. He
testified that his managers handle operation of the stores and that they ran
the stores for three months while he was out of the country on vacation. However,
none of those managers were listed as principles or employees on the form pursuant
to section 9 of the Consent and Waiver Form.
12. The Department received a valid public protest to the licensing of the
location from Shannon C. Higgins for Mount Holly United Methodist Church on March 21, 2008.
13. The Department denied the issuance of the requested permit pursuant to a
denial letter dated April 16, 2008.
14. The Applicant timely protested the denial of the permit in a letter
received by the Department on April 28, 2008.
15. The Department issued its Department Determination on May 30, 2008.
16. The Petitioner filed its request for a contested case hearing on June
11, 2008.
17. A hearing was held before me on October 14, 2008. The Protestant did not
appear. Accordingly, her protest was deemed waived and the Court took
testimony regarding the other issues relating to the denial of the permit. Based
on the evidence presented at the hearing, I find that Mr. Patel did not
correctly answer the waiver form. However, I find that his omission was not
willful and therefore not reason alone to deny the application.
18. Because Mr. Patel failed to disclose the Principals in his application, I
uphold the Department’s Determination to deny the permit.
CONCLUSIONS
OF LAW
Based upon the foregoing Findings of Fact, I conclude the
following as a matter of law:
1. Jurisdiction over this case is vested with the Administrative Law Court
pursuant to S.C. Code Ann. § 61-2-260 (Supp. 2007) and S.C. Code Ann. §§
1-23-310 et seq. (1986 & Supp. 2007).
2. “[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).
3. 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); see also Doe v. Doe, 324 S.C. 492, 502, 478
S.E.2d 854, 859 (Ct. App. 1996) (holding that a trial judge, when acting as
finder of fact, “has the authority to determine the weight and credibility of
the evidence before him”). Furthermore, a trial judge who observes a witness is
in the best position to judge the witness' 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).
4. S.C. Code Ann. § 61-4-520 (Supp. 2007) states in pertinent part: “A retail
permit authorizing the sale of beer or wine must not be issued unless:
(1) The applicant, a partner, or
co-shareholder of the applicant, and each agent, employee, and servant of the
applicant to be employed on the licensed premises are of good moral character.”
Further, S.C.
Code Ann. § 61-6-1820 (Supp. 2007) states in pertinent part:
The department may
issue a license under subarticle 1 of this article upon finding:
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(2) The applicant,
if an individual, is of good moral character or, if a corporation or
association, has a reputation for peace and good order in its community, and
its principals are of good moral character.
Section 61-2-100(H)(2)(h)
describes a principal as “an employee who has day-to-day operational management
responsibilities for the business or entity.”
5. In addition, S.C. Code Ann. § 61-2-540 (Supp 2007) directs the
Department to issue the permit upon filing of a verified application and a
determination that the applicant is “fit” and that location is a “proper one,”
once the applicant has filed the requisite fees.
6. The Department argues that Mani One is not “fit” as contemplated by this
statute because it lacks moral character. Specifically, the Department argues
that Mani One’s surrender of the permits rather than serving the suspensions or
revocation shows lack of moral character; Mani One’s failure to disclose these
suspensions or revocation on its application shows a lack of moral character;
and that Mani One’s failure to disclose its principals on the application is
reason alone to deny the application.
7. The Department argues that the application should be denied on the basis
that the applicant failed to disclose principals.
8. S.C. Code Ann. § 61-2-100(H)(2) (Supp. 2007) provides the following
definition of “principal:”
(H) As used in
this title and unless otherwise required by the context:
* * *
(2) "Principal"
of a business or entity means a person who is described in any one or more of
the following terms:
(a) an officer
of the business or entity which owns the business;
(b) a partner
other than a limited partner who cannot exercise any management control;
(c) a manager
of the limited liability company which is managed by managers;
(d) a member
of the limited liability company which is not managed by managers;
(e) a
fiduciary, including personal representatives, trustees, guardians, committees,
and receivers, who manage, hold, or control title to or who is otherwise in
direct or indirect control of the business;
(f) a person
who owns twenty‑five percent or more of the combined voting power of the
business or entity;
(g) a person
who owns twenty‑five percent or more of the value of the business entity;
or
(h) an
employee who has day-to-day operational management responsibilities for the
business or entity.
9. Mani
One, Inc. has failed to list any other person, other than Purvin Patel, who
owns stock in Mani One, Inc., or who manages the business, or who would have
day-to-day management responsibilities for this location. All principals are
required to be disclosed on the alcohol application so that the Department may
ensure that the applicant and all principals meet certain statutory criteria,
to include being persons of “good moral character.” See § 61-2-100(D).
10. Furthermore,
the Department must determine that each principal is in compliance with his or
her tax obligations under S.C. Code Ann. § 61-2-160 (Supp. 2007). Without full
disclosure of all principals, the Department cannot grant the permit as
requested. Since Purvin Patel, as the sole disclosed shareholder of Mani One,
Inc., operates six additional locations, he cannot possibly be the only person
solely responsible for this location. Mr. Patel testified that he took a three
month long vacation while his managers tended to the day to day operation of
the businesses. However, he failed to list any of these managers on his
application. Accordingly, I find that Mr. Patel did not comply with the
statute because he did not list the managers who obviously played a vital role
in the day to day operation of the business as principals.
11. The
Department also denied the application on the basis that Mani One surrendered
its permits rather than serving the suspensions or revocation. The Department
argues that this act is contrary to the statutory and regulatory framework of
the alcohol beverage laws, and shows that Mani One does not have the sufficient
character or fitness to operate a licensed facility.
12. In
this case, Mani One, Inc. has corporately held several permits for the sale of
beer and wine, along with one retail liquor license. In four separate
instances, a location was closed following a SLED-cited violation of
“Permitting Games of Chance” upon permitted premises. One of these locations,
Marv’s Corner Stop #39, was cited twice. In each of these five incidences, all
occurring in the last three years, the Department sent a letter to Mani One,
notifying Mani One of the proposed penalty, which ranged from a $500 fine to
revocation.
13. Here,
the response to regulatory violations by Mani One is to surrender the permit at
issue, and then apply for a new permit at another location. The Department
argues that this response is not appropriate and indicates a disregard for the
statutes and regulations which govern this industry.
14. While
the Department argues that his failure to serve the suspensions shows a lack of
moral character, I find that Mr. Patel had a right to surrender his permits
rather than serving the suspensions.
15. The
Department also believes that the application should be denied because Purvin
Patel, the only listed principal of Mani One, Inc., indicated “No” when asked
on his current application if he had ever had a license suspended or revoked.
The Department contends that by surrendering these permits at the end of the 90
day period allowed for protest of a Department sanction, that Mani One has
consented to these penalties and made a misstatement or concealment of fact on
its subsequent application for the Corner Stop #113 which is at issue in this
case.
Mr. Patel contends that he only answered “No” when asked if he had ever had a
license suspended or revoked because he thought “you” meant him personally,
rather than the corporation. I find that the waiver form is confusing and that
Mr. Patel did not willfully conceal his prior violations.
16. Under
the terms of S.C. Code Ann. § 61-2-100(J) (Supp. 2007) “A misstatement or
concealment of fact on an application for a license or permit pursuant to this
title is sufficient grounds for the department to deny the application and to
revoke a license or permit issued based on an application containing a
misstatement or concealment of fact.” The Department argues that the
Applicant’s failure to be truthful and forthcoming concerning its licensure
history is a “misstatement or concealment of fact” on its sworn application. Moreover,
they argue that this misstatement or concealment of fact is sufficient ground
for denial of the requested permit.
17. S.C. Code
Ann. § 61-4-540 (Supp. 2007) provides that “[a] misstatement or concealment of
fact in an application is a sufficient ground for the revocation of the
permit.” Inherent in this power to revoke a beer and wine permit because of
false information provided in the permit application is the power to deny a
permit application on that same ground. The Department argues that because Mr. Patel
was not mentioned on the initial permit renewal application, this “concealment
of fact” in the application is a ground for the denial of the requested permit. Because no evidence was
introduced that Mr. Patel purposely concealed his involvement with the
application, the fact that his name was not on the renewal is not reason alone
to deny the application.
18. As the
trier of fact, the issuance or denial of a permit rests within the sound
discretion of this tribunal. Inherent in the power to issue a permit or license
is also the power to refuse it. Terry v. Pratt, 258 S.C. 177, 187 S.E.2d 191
(1972). Refusal of the permit in the instant case is compelled
because of Mr. Patel's failure to provide information disclosing other
principals.
CONCLUSION
For
the reasons stated, the off premises beer and wine permit application of Mani
One, Inc. is denied.
______________________________
The
Honorable Carolyn C. Mathews
Administrative
Law Judge
Columbia, South Carolina
November 19, 2008
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