SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before the Administrative Law Court (ALC or Court) pursuant to S.C. Code Ann. §§ 61-2-20 and 61-2-260 (Supp. 2004). The South Carolina Department of Revenue (Department) seeks revocation of the Respondent's sale and consumption license pursuant to S.C. Code Ann. Section 61-6-1830 (Supp. 2004). The Department also seeks revocation of the Respondent's beer and wine permit, pursuant to S.C. Code Ann. Section 61-2-140(E) (Supp. 2004) and a fine of Five Hundred Dollars ($500.00). A hearing was held before me on March 9, 2006 at the offices of the Administrative Law Court in Columbia, South Carolina. The Respondent, Lynwoods, Inc. of Greenville, d/b/a Gott Rocks (Lynwoods), is licensed to sell liquor in minibottles for on premises consumption under DOR license #32028713-PSC and licensed to sell beer and wine for on premises consumption under DOR permit #32028713-PBW. Lynwoods is located at 200 Eisenhower Drive, Greenville, South Carolina.

The Respondent is accused of permitting the sale and consumption of alcoholic liquors by a non-member on the premises of a private club/nonprofit organization. The Department contends that this is the Respondent's third violation assessed against Petitioner pursuant to S.C. Code Ann. Reg. 7-401.4(J).

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of the evidence:

1. Notice of the time, date, place and subject matter of the hearing was given to the Petitioner and the Respondent.

2. Lynwoods, Inc. of Greenville, d/b/a Gott Rocks (Lynwoods), is licensed to sell liquor in minibottles for on premises consumption under DOR license #32028713-PSC and licensed to sell beer and wine for on premises consumption under DOR permit #32028713-PBW. Lynwoods is a nonprofit organization located at 200 Eisenhower Drive, Greenville, South Carolina.

3. On Saturday, March 20, 2005, Agents Asbill and Godfrey of the State Law Enforcement Division (SLED) conducted an undercover investigation at Lynwoods. Agent Godfrey encountered the establishment's doorman, who did not try to ascertain if Agent Godfrey was a member of the club or the guest of a member. Agent Godfrey was allowed entry after payment of a five dollar ($5.00) cover charge. Agent Godfrey approached the bar and ordered a Gin and Tonic. Agent Godfrey was served the mixed drink without anyone inquiring as to his membership status. He consumed a small portion of the drink to ensure it contained alcohol then he collected a sample vial of the drink as evidence. Petitioner was issued a citation for allowing the consumption of liquor by a non-member on the licensed premises contrary to 23 S.C. Code Ann. Regs. 7-401.4(J) (Supp. 2004).

4. Charles L. Floyd, the principal in Lynwoods, Inc. of Greenville, was not on the premises when the citation for this violation was issued. Mr. Floyd has owned and operated this business for approximately ten (10) years. He fired the doorman immediately upon learning of the citation. This doorman was new, and did not do his job as instructed. Mr. Floyd now personally serves as doorman most nights the club is open, and is present at the club every night the club is open for business. Mr. Floyd’s business has never been cited for a violation while he was physically present.

Mr. Floyd’s sole purpose for operating a private club was to benefit from increased hours of operation that result from being allowed to remain open for business later into the night. However, all restaurants and bars are now allowed to remain open for the same hours previously only enjoyed by private clubs. Mr. Floyd now wishes to convert his club to a public establishment. By making this conversion, there will not be an issue of serving people who are not members or guests of members. Mr. Floyd is converting his establishment to increase business and to prevent future violations.

5. Under the circumstances of this case, I find that the evidence establishes a violation of 23 S.C. Code Ann. Regs. 7-401.4(J) (Supp. 2004) (consumption of liquor by a non-member) on March 20, 2005.

CONCLUSIONS OF LAW

Based upon the above Findings of Fact, I conclude the following as a matter of law:

1. The Department is vested with the authority to administer the provisions of Title 61 governing alcoholic beverages, beer and wine. S.C. Code Ann. § 61-2-20 (Supp. 2004). S.C. Code Ann. § 1-23-600 (1986 & Supp. 2004) grants jurisdiction to the Court to hear contested cases under the Administrative Procedures Act. Specifically, S.C. Code Ann. § 61-2-260 (Supp. 2004) grants the Court the authority to hear contested case hearings in matters governing alcoholic beverages, beer and wine.

2. Permits and licenses issued by this State for the sale of liquor, beer and wine are privileges to be used and enjoyed only so long as the holder complies with the restrictions and conditions governing them. See Feldman v. S.C. Tax Commission, 203 S.C. 49, 26 S.E. 2d 22 (1943).

3. Lynwoods holds a sale and consumption license as a "nonprofit organization." S.C. Code Ann § 61-6-20(6) (Supp. 2004) provides that a "nonprofit organization" is "an organization not open to the general public, but with a limited membership and established for social, benevolent, patriotic, recreational, or fraternal purposes." Nonprofit organizations which are licensed by the Department under this article may sell alcoholic liquors in minibottles. Furthermore, only "bona fide members" or "bona fide guests of members of [nonprofit] organizations may consume alcoholic beverages sold in sealed containers of two ounces or less upon the licensed premises." 23 S.C. Code Ann. Regs. 7-401.4(J) (Supp. 2004). Here, the Respondent permitted Agent Godfrey, who was neither a "bona fide member" nor a "bona fide guest of a member," to consume an alcoholic beverage upon its premises in violation of Regulation 7-401.4(J).

The Department argues that Respondent’s sale and consumption license should be revoked upon conviction of a third offense within three years. The Department also argues that Respondent's beer and wine permit should also be revoked in accordance with S.C. Code Ann. 61-2-140(E) (Supp. 2004). Finally, the Department seeks a $500.00 fine against the Respondent for this third violation. S.C. Code Ann. § 61-6-2600 (Supp. 2004) provides that "a person licensed to sell alcoholic liquors pursuant to the provisions of this article who...violates any...provision of this article must: (3) for a third offense within three years of the first offense be fined not less than five hundred dollars and have his license revoked permanently...."

On the other hand, S.C. Code Ann. § 61-6-4270 (Supp. 2004) sets forth, “For violations of Articles 3, 5, 7, and 13 of this chapter, or of Chapter 21 or 33 of Title 12, and for a violation of any regulation pertaining to alcoholic liquors, the department may, in its discretion, impose a monetary penalty upon the holder of a liquor license in lieu of suspension or revocation.”

The primary rule of statutory construction is to ascertain and give effect to the legislature's intent. Green v. Thornton, 265 S.C. 436, 219 S.E.2d 827 (1975). In ascertaining the legislature's intent, statutes that are part of the same act must be read together. Burns v. State Farm Mut. Auto. Ins. Co., 297 S.C. 520, 377 S.E.2d 569 (1989).

Furthermore, "[e]ach part of a statute should be given effect and each word given its plain meaning if this can be accomplished by any reasonable construction." Sea Island Scenic Parkway Coalition v. Beaufort County Bd. of Adjustments and Appeals, 316 S.C. 231, 236, 449 S.E. 2d 254, 257 (Ct. App. 1994). Moreover, this tribunal must reconcile conflicts if possible and is obligated to avoid a construction that would read a provision out of a statute. Steinke v. South Carolina Dept. of Labor, Licensing and Regulation, 336 S.C. 373, 520 S.E.2d 142 (1999); see also S.C. Code Ann. § 61-6-4000 (Supp. 2004) (providing that Article 13 of Title 61, which includes § 61-6-4270, is complementary to and not in conflict with existing laws governing the sale of "beer, wines, and other vinous, fermented, or malt liquors").

Presuming that the application of the rules of statutory construction is warranted in this case, the most reasonable construction which gives effect to both Sections 61-6-2600 and 61-6-4270 is that this tribunal has discretion to impose a monetary penalty, whenever the provisions of Articles 3, 5, 7, and 13 of Title 61 set forth that the Department may revoke or suspend a license or permit held under those provisions. On the other hand, when a licensee commits a third offense within three years under Article 5, the license must be mandatorily revoked. Nevertheless, the most reasonable construction is not always applied in enforcement actions by the Department because if a penal statute is ambiguous, it is strictly construed against the State and any doubt must be resolved in favor of the Respondent. Gateway Enterprises, Inc. v. South Carolina Department of Revenue, 341 S.C. 103, 533 S.E.2d 896 (2000). However, in this case, I am not making any finding concerning the construction of these statutes because I find that Section 61-6-2600 is inapplicable to this case.

Section 61-6-2600 sets forth that a person who violates a "provision" of Article 5 must have their license revoked. However, the Respondent did not violate a provision of Article 5. Rather, the Respondent violated 23 S.C. Code Ann. Regs. 7-401.4(J) (Supp. 2004). S.C. Code Ann. § 61-6-1830 (Supp. 2004) sets forth the penalties for violation of the Department's regulations. It provides that, “The department may suspend, revoke, or refuse to renew a license issued pursuant to subarticle 1 of this article upon finding that: (2) the applicant has violated since the issuance of the license any regulation. Id. If there is any ambiguity between Section 61-6-2600 and 61-6-1830, the interpretation of the meaning of those provisions must be strictly construed against the State and any doubt must be resolved in favor of the Respondent. Moreover, "[a] specific statutory provision prevails over a more general one." Wooten ex rel. Wooten v. S.C. Dep't of Transp., 333 S.C. 464, 468, 511 S.E.2d 355, 357 (1999). Section 61-6-1830 expressly addresses the penalties for violations of the regulations by Article 5 licensees. Moreover, Section 61-6-4270 also specifically provides that a monetary penalty may be imposed in lieu of revocation for a violation of the Department's regulations. Accordingly, both 61-6-4270 and 61-6-1830 contain permissive language to allow the Department to utilize discretion in its decision-making process to determine the appropriate penalty. Therefore, I find that the Department and consequently the Court possesses the discretion to impose a monetary penalty in lieu of revocation for a violation of Regulation 7-401.4(J) by an Article 5 licensee.

Sanction

4. The Administrative Law Court, as the trier of fact in contested cases under the Administrative Procedures Act, has the authority to establish the facts supporting the imposition of a penalty for a violation. Inherent in and fundamental to the quasi-judicial powers of an Administrative Law Judge is the authority to decide the appropriate sanction when such is disputed. Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E. 2d 633 (1991). To that end, the Administrative Law Judge must consider relevant evidence presented in mitigation. Mitigation is defined as a lessening to any extent, great or small. It may be anything between the limits of complete remission on the one hand and a denial of any relief on the other. In a legal sense, it necessarily implies the exercise of the judgment of the court as to what is proper under the facts of the particular case. 58 C.J.S. Mitigation p. 834-835 (1948). A legitimate as well as a significant consideration is whether the alleged mitigating factor demonstrates reasonable cause to reduce the penalty. Kroger Co. v. Department of Revenue, 673 N.E. 2d 710 (Ill. 1996).

I find that consideration of the mitigating evidence is justified in determining the appropriate sanction for the Respondent's violation of Regulation 7-401.4(J). I further find that in light of the fact that Respondent has made efforts to insure that further violations do not occur, that a One Thousand Dollar ($1,000.00) fine is the appropriate penalty for this violation of Regulation 7-401.4(J). However, I strongly caution the Petitioner that further violations may result in permanent revocation.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law:

IT IS HEREBY ORDERED that the Respondent, Lynwoods, Inc. of Greenville, d/b/a Gott Rocks, shall pay a fine to the Department in the amount of One Thousand Dollars ($1,000.00) for this violation involving the Respondent's license number 32028713-PSC and permit number 32028713-PBW for the sale and consumption of alcoholic liquors at a private club.

AND IT IS SO ORDERED.

___________________________

John D. McLeod

Administrative Law Judge

March 16, 2006

Columbia, South Carolina