ORDERS:
FINAL ORDER AND DECISION
STATEMENT
OF THE CASE
The
above-captioned matter is before this Court pursuant to S.C. Code Ann. §
61-2-260 (Supp. 2004), S.C. Code Ann. § 1-23-600(B) (Supp. 2004), and S.C. Code
Ann. §§ 1-23-310 et seq. (2005) for a contested case hearing. In this
matter, Petitioner South Carolina Department of Revenue (Department) seeks to
revoke Respondent Bonnie Austin’s on-premises beer and wine permit and
restaurant minibottle license for her Scores Sports Bar located at 5764
Rosewood Drive in Myrtle Beach, South Carolina. The Department seeks the
revocation because it contends that Respondent’s business is not primarily and
substantially engaged in the preparation and serving of meals and thus does not
meet the requirements for a restaurant minibottle license. After timely notice
to the parties, a hearing of this case was held on October 5, 2005, at the
South Carolina Administrative Law Court in Columbia, South Carolina. Based
upon the evidence presented at the hearing, and upon the results of a follow-up
inspection ordered by this Court, I find that Respondent is not currently in
compliance with her restaurant minibottle license and, therefore, that her
minibottle license must be suspended for a period of 120 days and that she
should be fined $500.
FINDINGS
OF FACT
Having
carefully considered all testimony, exhibits, and arguments presented at the
hearing of this matter, and taking into account the credibility and accuracy of
the evidence, I make the following Findings of Fact by a preponderance of the
evidence:
1. Respondent
Bonnie Austin holds an on-premises beer and wine permit and a restaurant
minibottle license issued by the Department for her sport bar, Scores Sports
Bar (Scores), located at 5764 Rosewood Drive in Myrtle Beach, South Carolina.
2. In
response to a complaint received by the South Carolina Law Enforcement Division
(SLED) regarding the lack of food service at Scores, SLED Special Agent Steve
Wright conducted an inspection of the business at approximately 1:00 p.m. on
Thursday, September 30, 2004. At the time of the inspection, the kitchen area
at Scores consisted of a partitioned area at the end of the bar that contained
a microwave oven, a small refrigerator, a sink, and a counter and shelf space,
with additional refrigerator and freezer space and two crock pots located to
the rear of the establishment. The posted menu at
Scores at the time offered hamburgers, cheeseburgers, hotdogs, and other
similar sandwiches for sale, and the food supplies on hand included the items
necessary to prepare and serve those sandwiches, such as hot dog and hamburger
buns, sliced cheeses, frozen meats, pickles, condiments, paper plates, and
napkins. However, at the time of the inspection, the seating at Scores was
limited to thirty-one seats at nine tables. Further, Ms. Austin was unable to
produce receipts for food sales during Agent Wright’s initial inspection, and
Agent Wright was not able to observe the bar’s normal food-service operations
because his inspection occurred prior to the bar’s normal business hours. At
the close of the inspection, Agent Wright informed Ms. Austin that her bar was
not in compliance with her restaurant minibottle license, because her kitchen
facilities were inadequate, the bar did not have seating for forty persons, and
it did not appear that her food service was a regular and substantial source of
business for her establishment. He further informed her that he would return
for a follow-up inspection in a few weeks, at which time he would expect to
review financial documentation of the food service at Scores and would expect
her to have corrected the seating deficiency.
3. On
Monday, October 18, 2004, at approximately 9:00 p.m., Agent Wright conducted a
follow-up inspection of Scores. During the follow-up inspection, Agent Wright
observed that the kitchen facilities at Scores remained unchanged from his
prior inspection and that Scores still only had seating for thirty-one persons.
Agent Wright also collected a year’s worth of business receipts for Scores from
Ms. Austin during the inspection. In sampling a month’s worth of receipts, Agent
Wright found that, of the 769 transactions conducted by Scores in August 2003,
only 28 transactions, or .03% of the total transactions, were for food services.
Based upon this follow-up inspection, Agent Wright issued a violation to Ms.
Austin for failing to maintain the required seating for forty persons and
issued a warning to her for failing to maintain a bona fide restaurant
primarily and substantially engaged in the preparation and serving of meals.
4. In
December 2004, Glenn Pemberton, an auditor with the Department, visited Scores
and audited its receipts. Mr. Pemberton examined Scores’ receipts for four
months—November 2003, February 2004, May 2004, and August 2004—and found that,
for each of the four months, Scores’ food sales constituted less than one-half
of one percent of its total sales for the month.
5. Based
upon Agent Wright’s inspections and Mr. Pemberton’s audit, the Department
issued a Final Agency Determination on March 24, 2005, in which it concluded
that Ms. Austin had failed to maintain a restaurant bona fide engaged primarily
and substantially in the preparation and serving of meals as required by her
restaurant minibottle license, because Scores failed to maintain an adequate
kitchen, failed to provide seating for forty persons, and generally failed to
operate an establishment that derived a regular and substantial source of
business from food sales. Accordingly, the Department further concluded that
Ms. Austin’s restaurant minibottle license for Scores, as well as her
on-premises beer and wine permit for the same premises, should be revoked.
6. At
the time of the hearing in this matter, Ms. Austin was engaged in a major
expansion of Scores. Under the twenty-thousand-dollar project, Scores would be
expanded into an adjoining unit of the shopping center in which it is located
to nearly double the size of the establishment. In addition to providing more
seating and more bar space in Scores, this expansion would also include the
addition of a new, larger kitchen and a walk-in cooler at the rear of the
business. Ms. Austin testified that, upon completion of this expansion, she
expected to greatly increase both the variety and quantity of the food sales at
Scores.
7. Given
the scope of this expansion and the extent to which the expansion would likely
affect the food service operations at Scores, at the close of the hearing in
this matter, this Court informed the parties that it would hold its ruling in
abeyance to provide Ms. Austin with a reasonable opportunity to complete her
expansion to Scores and to allow the Department to re-evaluate Ms. Austin’s compliance
with her minibottle license based upon Scores’ new food service operations. In
particular, this Court instructed the Department to re-inspect Scores on
November 30, 2005, or as soon thereafter as possible, to determine whether Ms.
Austin was operating in compliance with her license and to inform this Court of
the results of that inspection within ten days of the inspection. By a letter
dated December 12, 2005, the Department submitted to the Court a copy of a
report provided to the Department by Mr. Pemberton regarding Scores’ operations
in early December 2005. According to the report, Mr. Pemberton had visited
Scores on December 8, 2005, and found that the expansion of Scores was nearly
complete. With the expansion, Scores could seat over twenty more persons at
tables than the original establishment and had an entirely new kitchen
featuring a large freezer, a refrigerator, two large deep-fryers, a broiler, an
oven, and a range with two gas burners and a grill. Scores also had a new
menu, featuring appetizers, salads, soups, sandwiches, and daily dinner
specials. However, at the time of Mr. Pemberton’s inspection, the new kitchen
had not yet been put into operation, pending final connections of the equipment
and final inspections of the facility. Not surprisingly, then, Mr. Pemberton
found that, as of early December 2005, Scores’ food sales had not increased
from prior years. Because food sales had not yet become a regular and
substantial source of business for Scores at the time of Mr. Pemberton’s
re-inspection, the Department maintained its position that Ms. Austin’s
minibottle license and beer and wine permit should be revoked.
CONCLUSIONS
OF LAW
Based
upon the foregoing Findings of Fact, I conclude the following as a matter of
law:
Jurisdiction
and General Principles
1. The
Department is charged with the responsibility of administering the laws and
regulations governing the manufacture, distribution, and sale of alcoholic
beverages in South Carolina. See S.C. Code Ann. §§ 61-2-20, 61-2-80
(Supp. 2004). The Department’s responsibilities include the prosecution of
administrative violations against alcoholic beverage licensees. See, e.g.,
S.C. Code Ann. § 61-6-1830 (Supp. 2004) (authorizing the Department to suspend,
revoke, or refuse to renew a minibottle license where the licensee has violated
any provision of the Alcoholic Beverage Control Act or any regulation
promulgated thereto).
2. This
Court has jurisdiction over this contested case matter pursuant to S.C. Code
Ann. § 61-2-260 (Supp. 2004), S.C. Code Ann. § 1-23-600(B) (Supp. 2004), and
S.C. Code Ann. §§ 1-23-310 et seq. (2005).
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’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).
Requirements
for Restaurant Minibottle Licenses
4. A
restaurant minibottle license allows a business to sell alcoholic liquors by
the drink from minibottles so long as “the business is bona fide engaged
substantially and primarily in the preparation and serving of meals.” S.C.
Code Ann. § 61-6-1610 (Supp. 2004); see also S.C. Const. art. VIII-A, §
1. What it means to be “bona fide engaged substantially and primarily in the
preparation and serving of meals” is elaborated upon by other statutory and
regulatory provisions. Under these provisions, a business licensed to sell
liquor drinks as a restaurant must have been issued a Class A restaurant
license from the South Carolina Department of Health and Environmental Control
and must “provide[] facilities for seating not less than forty persons
simultaneously at tables for the service of meals.” S.C. Code Ann. §
61-6-20(2) (Supp. 2004). Further, a licensed restaurant must “[b]e equipped
with a kitchen that is utilized for the cooking, preparation, and serving of
meals”; make a list of its food offerings readily available to its patrons
either through menus or a posted listing; and prepare hot meals for service to
its customers at least once each day. 23 S.C. Code Ann. Regs.
7-401.3(A)(1)-(3) (Supp. 2004). As used in this regulation, a restaurant’s
“kitchen”
means a separate and
distinct area of the business establishment that is used solely for the
preparation, serving and disposal of solid foods that make up meals. Such area
must be adequately equipped for the cooking and serving of solid foods, and the
storage of same, and must include at least twenty-one cubic feet of
refrigerated space for food and a stove.
23 S.C. Code
Ann. Regs. 7-401.3(B)(2) (Supp. 2004). The regulation further provides that a
restaurant is “primarily” engaged in the preparation and serving of meals if
“the serving of meals by [the] business establishment constitutes a regular
and substantial source of business to the licensed establishment”; meals
are served upon demand of patrons during the normal “mealtimes” that occur when
the licensed business is open to the public; and an adequate supply of food is
present on the licensed premises to meet such demand. 23 S.C. Code Ann. Regs.
7-401.3(B)(3) (Supp. 2004) (emphasis added).
5. The
South Carolina Supreme Court has held that, despite the specific definition of
“bona fide engaged primarily and substantially in the preparation and serving
of meals” found in Section 61-6-20(2), a restaurant with a minibottle license
must not only meet the technical requirements of having a Class A restaurant
license and seating for forty persons, but must also actually be “primarily”
engaged in the preparation and serving of meals. See Brunswick
Capitol Lanes v. S.C. Alcoholic Beverage Control Comm’n, 273 S.C. 782,
783-84, 260 S.E.2d 452, 453 (1979).
Respondent’s
Compliance with Her Restaurant Minibottle License
6. In
the instant matter, the Department contends that Ms. Austin’s Scores sports bar
is not in compliance with her restaurant minibottle license because the
establishment does not have seating for forty persons, does not have an
adequate kitchen, and does not serve meals as a regular and substantial source
of its business.
7. At
the time of Agent Wright’s inspections of Scores in September and October 2004,
Ms. Austin was not in compliance with the basic requirements of her restaurant
minibottle license. While the food preparation and storage area at Scores,
although perhaps meager, likely satisfied the regulatory requirements for a
kitchen, Scores admittedly did not provide seating for forty persons simultaneously
at tables for the service of meals and its negligible food sales—less than
one-half of one percent of its total sales—could not be said to constitute a
“regular and substantial source of business” to the establishment. As a result
of its recent expansion in late 2005, Scores currently clearly has the kitchen
facilities and available seating to satisfy the requirements of Ms. Austin’s
restaurant minibottle license. However, as this expansion, including the
addition of a new kitchen, was only recently completed, the serving of meals at
Scores does not yet constitute a regular and substantial source of business for
the establishment. Accordingly, Ms. Austin is not yet fully in compliance with
her restaurant minibottle license.
Appropriate
Penalty
8. The
facts in this case warrant a lesser penalty than that sought to be imposed by
the Department. It is a generally recognized principle of administrative law
that the fact finder has the authority to determine an appropriate
administrative penalty, within the statutory limits established by the
legislature, after the parties have had an opportunity for a hearing on the
issues. See, e.g., Walker v. S.C. Alcoholic Beverage Control Comm’n,
305 S.C. 209, 407 S.E.2d 633 (1991). Further, in assessing a penalty, the
finder of fact “should give effect to the major purpose of a civil
penalty–deterrence.” Midlands Utility, Inc. v. S.C. Dep’t of Health &
Envtl. Control, 313 S.C. 210, 212, 437 S.E.2d 120, 121 (Ct. App. 1993).
9. In
this matter, I find that, because Ms. Austin has significantly expanded her
food-service operations at Scores, such that the establishment’s facilities
plainly meet the requirements for a restaurant minibottle license and the
establishment’s food sales will most probably develop into a robust portion of
the bar’s business, the revocation of Ms. Austin’s restaurant minibottle
license is not appropriate. However, as those food sales have not yet
materialized, Ms. Austin cannot be allowed to sell alcoholic liquors by the
drink at the current time. Therefore, I find that the appropriate penalty in
this case is a 120-day suspension of Ms. Austin’s restaurant minibottle license,
because it appears that, by the expiration of that suspension, food sales at
Scores will have developed into a regular and substantial source of business
for the establishment. If the Department should find that, at the expiration
of the suspension period, Ms. Austin is still not operating Scores in
compliance with her license, the Department may initiate a new enforcement
action against Ms. Austin. In addition to the 120-day suspension of the
minibottle license, I further find that a $500 fine must be imposed upon Ms.
Austin for her failure to maintain the required seating at Scores during
September and October 2004. While Ms. Austin may have had some reason to
believe that her pre-expansion kitchen facilities and food service operations
at Scores satisfied the requirements of her license, the lack of seating at the
establishment was not only a plain violation of the applicable statutory
requirements for a licensed restaurant, but also a violation that she failed to
remedy even after being issued a written warning by Agent Wright. Accordingly,
I find that it is appropriate to impose a $500 fine upon Ms. Austin for the
violation.
ORDER
Based
upon the Findings of Fact and Conclusions of Law stated above,
IT
IS HEREBY ORDERED that the Department shall SUSPEND Respondent
Bonnie Austin’s restaurant minibottle license for the premises located at 5764
Rosewood Drive in Myrtle Beach, South Carolina, for a period of one hundred and
twenty (120) days from the date of this Order. This suspension will only apply
to Respondent’s restaurant minibottle license, and will not affect her
on-premises beer and wine permit or her ability to sell beer and wine at the
licensed establishment.
IT
IS FURTHER ORDERED that the Department shall impose a fine of five hundred
dollars ($500) upon Respondent to be collected in the same manner in which the
Department normally collects the monetary penalties it imposes.
AND
IT IS SO ORDERED.
______________________________
JOHN D.
GEATHERS
Administrative
Law Judge
1205 Pendleton
Street, Suite 224
Columbia, South
Carolina 29201-3731
January 9, 2006
Columbia, South Carolina
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