SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter comes before the Administrative Law Judge Division pursuant to S.C. Code Ann. § 61-2-90 (Supp. 2001) and S.C. Code Ann. §§ 1-23-310 et seq. (1986 and Supp. 2001) for a contested hearing. The Petitioner, Island Cabaret, Inc., d/b/a Club Paradise, seeks an on-premises beer and wine permit and a sale and consumption (minibottle) license for a location at 130 Arrow Road, Suite 104, Hilton Head, South Carolina. Respondent South Carolina Department of Revenue filed a Motion to be Excused setting forth that but for the protest of the Protestant, this permit would have been issued. However, this motion was not granted. On July 10, 2002, David Connor filed a protest with the Division. The agency transmittal initially forwarded the case to this Division on June 3, 2002. At that time Mr. Grasso was the only Protestant.

A hearing was held before me on July 23, 2002, at the offices of the Administrative Law Judge Division (Division) in Columbia, South Carolina. Mr. Connor appeared at the hearing seeking to be heard. Petitioner objected because he had never received notice of the protest. Mr. Connor conceded he had not sent the Petitioner notice of the protest. Therefore, Mr. Connor was not permitted to testify as a Protestant since his protest was not filed before the case was transmitted as required by Department of Revenue policy and there was no service on the Petitioner.

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of proof upon 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, the Protestants, and the Department.

2. The Petitioner seeks an on-premise beer and wine permit and a sale and consumption (minibottle) license for a location at 130 Arrow Road, Suite 104, Hilton Head, South Carolina. The establishment is Island Cabaret d/b/a Club Paradise and it is owned by Richard Sims.

3. The qualifications set forth in S.C. Code Ann. §§ 61-4-520 and 61-6-1820 (Supp. 2001) concerning the residency and age of the Petitioner are properly established. Furthermore, the Petitioner has not had a permit or license revoked within the last two years and notice of the application was lawfully posted both at the location and in a newspaper of general circulation.

4. The proposed location is a nightclub featuring adult entertainment. There has been no issue raised as to the suitability of the location before this Division. ⁽¹⁾

5. The issuance of the permit is being contested by Michael Grasso. Mr. Grasso has had previous business dealings with Mr. Sims and questions his moral character. When Mr. Sims sought to start this business, Mr. Grasso invested a total of approximately $65,000 in the business. There was never any paperwork signed by the parties. Mr. Sims then removed Grasso from the business. As a result, Grasso brought charges against Mr. Sims for breach of trust. Mr. Sims was subsequently indicted in Beaufort County (Indictment #02-0947). On July 17, 2002, the Solicitor nolle prossed the indictment, finding that the matter is a civil rather than a criminal case and finding that the alleged victim did not cooperate in the investigation or prosecution.

6. The Department was aware of this charge. The disposition of this charge was listed

as "still pending" on the Department's Criminal History Report, which is a part of the applicant's file. Moreover, the Department did not consider his record to be so significant as to deny the issuance of this permit and license. When the Department transmitted this matter to the Administrative Law Judge Division, the Agency Transmittal contained the following language, in relevant part:

Based on the information submitted in the application, and the investigation of the South Carolina State Law Enforcement Division, it appears that the applicant meets all statutory requirements for an on-premises beer and wine permit and sale and consumption license.

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The South Carolina Department of Revenue does not have any relevant information concerning the applicant other than that which will be submitted with the file that will be forwarded to the Administrative Law Judge Division.

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Because the Department does not have any additional information on the question that is before the Administrative Law Judge Division, the Department has attached its motion to be excused from participating in the hearing.

Therefore, the Department, which is the governmental body charged with regulating and enforcing violations concerning permits and licenses involving the sale of beer, wine or alcohol, did not find the charge of breach of trust to be sufficient reason to deny the issuance of this permit.

7. Mr. Jay Stever, the applicant's landlord, testified that he has been aware of all of the negotiations and transactions between Mr. Sims and Mr. Grasso. He testified that it has been his observation that Mr. Sims has not tried in any way to defraud Mr. Grasso. He also believes Mr. Sims has high moral character.

8. Mr. Sims has paid Mr. Grasso a $5,000 of the money he owes him.

• Mr. Sims previously held a license to sell alcohol from the Department of Revenue

at another location from 1997 until 2001. He had no violations during that period. The Department of Revenue would have granted the beer and wine permit and sale and consumption (minibottle) license but for the protest of Mr. Grasso. I find that Mr. Sims is of good moral character.

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

1. S.C. Code Ann. § 1-23-600 (Supp. 2001) grants jurisdiction to the Administrative Law Judge Division to hear contested cases under the Administrative Procedures Act. Furthermore, S.C. Code Ann. § 61-2-260 (Supp. 2001) grants the Division the responsibilities to determine contested matters governing alcoholic beverages, beer and wine.

2. S.C. Code Ann. §§ 61-4-520 and 61-4-540 (Supp. 2001) set forth the requirements for the issuance of a beer and wine permit. S.C. Code Ann. §61-6-1820 (Supp. 2001) sets for the criteria for a minibottle license.

3. S.C. Code Ann. § 61-4-520(1) requires that a permit authorizing the sale of beer and

wine may only be issued to an applicant who is "...of good moral character." S.C. Code Ann. §61-6-1820 requires that before the Department may issue a minibottle license it must determine the applicant "...is of good moral character."

• The trier of fact must weigh and pass upon the credibility of evidence

presented. S.C. Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). The trial judge is in the best position to weigh the demeanor and veracity and to evaluate their testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).

5. Although a "suitable person" or a "fit person" is not statutorily defined, broad

discretion is vested in the trier of fact in determining the fitness or suitability of a particular applicant. The rejection of an applicant may not be made arbitrarily or capriciously. Terry v. Pratt, 258 S.C. 177, 187 S.E.2d 884 (1972). In South Carolina there is no single criterion by which to determine whether or not one is possessed of good moral character. 1968-69 Ops. Attorney General, No. 2709, p.159. The evidence in this case indicates Mr. Sims is of good moral character. This conclusion is based on the fact that Mr. Sims did not have any violations in four years with a previous license; his landlord, a businessman in Hilton Head, holds him in high regard; his only criminal charge stemmed from a business dispute; and it has been dismissed by the prosecutor. The only evidence of bad character was given by Mr. Grasso, who is clearly in a business dispute with Mr. Sims. Regardless of who prevails in that civil dispute it does not mean that Mr. Sims is not of good moral character.

5. The Petitioner meets the statutory requirements for holding an on-premise beer and wine permit and a sale and consumption (minibottle) license at the proposed location.

Based upon the above Findings of Fact and Conclusions of Law, it is hereby:

ORDERED that the application for an on-premise beer and wine permit and sale and consumption (minibottle) license of Island Cabaret, d/b/a Club Paradise, be granted.

IT IS FURTHER ORDERED that the Department of Revenue issue an on-premise beer and wine permit and sale and consumption (minibottle) license upon the payment of the required fees and costs by the Petitioner.

AND IT IS SO ORDERED.

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CAROLYN C. MATTHEWS

Administrative Law Judge

July 30, 2002

Columbia, South Carolina

1. Mr. Sims, owner of Island Cabaret, has been in litigation with Town of Hilton Head concerning zoning for such a business. However, it appears at this time Mr. Sims is authorized to open such a business.