SC Administrative Law Court Decisions

This matter comes before me pursuant to S.C. Code Ann. § 61-1-55 (Supp. 1995) and

S.C. Code Ann. §§ 1-23-310, et seq. (1986 & Supp. 1995) upon a renewal application for an off-premises beer and wine permit, Permit Number BG644115, for a location at 488 W. Boyce Street, Manning, South Carolina, by Harmon B. Sprott, III, Sprott Oil Company, Inc. d/b/a In and Out Express (hereinafter referred to as "Petitioner" or "Sprott"), filed with the South Carolina Department of Revenue and Taxation (hereinafter referred to as "DOR"). Petitioner seeks removal of a restriction on his permit which prohibits outside beer advertisement on the licensed premises. DOR joins in Petitioner's request to remove the restriction; however, Rev. Dennis Jeffcoat opposes the removal of the restriction. A contested case hearing was held June 19, and July 10, 1996. Upon consideration of the evidence and applicable law, the permit renewal is granted with the advertisement restriction removed.

Petitioner owns and operates a gasoline station and convenience store in Manning, South Carolina. He applied for an off-premises beer and wine permit for the location in 1995. Reverend Dennis Jeffcoat opposed issuance of the permit, resulting in a contested case (Harmon B. Sprott, III d/b/a In & Out Express v. S.C. Department of Revenue and Taxation, Docket No. 95-ALJ-17-0075-CC) hearing before Administrative Law Judge Ralph K. Anderson, III, on March 30, 1995. As a result of that hearing and pursuant to his Order dated April 20, 1995., Judge Anderson issued the permit subject to Petitioner agreeing to be bound by certain restrictions. Petitioner voluntarily entered into a signed, written stipulation with DOR to adhere to the following restrictions:

1. [T]he Applicant and his employees shall prohibit loitering and the consumption of beer or wine by his patrons/customers in the parking lot and exterior area of the proposed location. This shall specifically include the car wash located on his premises. The Applicant shall post both in the In and Out Express and the car wash area that the consumption of beer and wine on the premises i[s] strictly prohibited. The Applicant shall further make every effort to have his employees check the car wash area to ensure that no one is drinking in that area. This prohibition shall be strictly enforced.

2. The applicant shall have no exterior advertisements or advertisements which are visible from the outside of his store advertising beer, wine or any alcoholic beverage.

On January 12, 1996, Petitioner filed with DOR a renewal application for his beer and wine permit, accompanied by a request to remove the above restrictions. Intervenor Rev. Dennis Jeffcoat, the Protestant in the first case, opposes the removal of the restrictions. A contested case hearing was held before the Administrative Law Judge Division on June 19, and July 10, 1996, with the parties presenting evidence on whether any material change had occurred with respect to the location since the permit was originally issued pursuant to Judge Anderson's Order.

At the hearing, the Court raised several issues regarding collateral estoppel and res judicata and the applicability of S.C. Code Ann. § 61-1-90 (Supp. 1995), a statute relating to regulation of beer signs. During the proceedings, Petitioner moved under Rule 60, SCRCP, to alter Judge Anderson's Order on the ground that it was mistake to impose the advertising restriction. Administrative notice was taken of Judge Anderson's April 20, 1995 Order (incorporated herein by reference in its entirety).

The proposed location was initially licensed to sell beer and wine for off-premises consumption by Order of Administrative Law Judge Ralph K. Anderson, III, dated April 20, 1995, following a hearing in Harmon B. Sprott, III d/b/a In & Out Express v. S.C. Department of Revenue and Taxation, Docket No. 95-ALJ-17-0075-CC. Judge Anderson's Order conditioned issuance of the permit upon Sprott signing a written agreement with DOR to adhere to two restrictions to be incorporated into the permit requirements. Rather than appeal Judge Anderson's April 20, 1995 Order, Petitioner subsequently voluntarily entered into a stipulation with DOR to adhere to the two restrictions, and the initial permit was issued. On renewal of the permit; however, Petitioner retracts his earlier consent to be bound by the restrictions. By letter to DOR dated January 15, 1996, Petitioner requested the removal of the restrictions. Of the two restrictions, Sprott now seeks removal of only the following restriction:

The applicant shall have no exterior advertisements or

advertisements which are visible from the outside of his

store advertising beer, wine or any alcoholic beverage.

Under the doctrine of collateral estoppel, when an issue of fact or law is actually litigated and determined by a valid and final decision of an administrative tribunal, and that determination is essential to the decision, the determination is conclusive in a subsequent matter between the parties, whether on the same or different claim. Carman v. S.C. ABC Commission, ___ S.C. ___, 451 S.E.2d 383 (1994); St. Philip's Episcopal Church v. S.C. ABC Commission, 285 S.C. 335, 329 S.E.2d 454 (Ct. App. 1985). When a location has previously been found to be unsuitable, an applicant must affirmatively show that some material change with respect to the location has occurred since the previous denial. S.C. Code Ann. Regs. 7-3, 7-19.1, 7-30, and 7-96 (1976 and Supp. 1995). The same standard applies to licenses and permits which have been previously granted with restrictions, when an applicant seeks a new permit free of those restrictions. See Teresa Rose, d/b/a Brandi's Restaurant v. S.C. Dept. of Revenue and Taxation, Docket No. 95-ALJ-17-0768-CC, Order dated February 23, 1996.

Typically, a "material change with respect to the location" sufficient to remove or alter an existing permit restriction refers to a change in the character of the community surrounding the location (e.g., the presence or proximity of residences, schools, churches, or playgrounds in the area) or a change in the business practices at the location. According to the testimony presented at the hearing in the present case, however, the location and its surrounding vicinity are essentially unchanged since the original permit was issued last year. Petitioner did offer evidence of the negative impact of the restriction upon the store's revenues, but the only significant change in circumstances alleged relates to Petitioner's acquiescence to be bound by a restriction which could not have been imposed without his consent.

Normally, the mere request by a permittee to have a restriction removed would not justify a finding of a change of condition sufficient to warrant removal of the restriction. There is a distinction, however, between restrictions which the State may unilaterally impose upon a permittee and restrictions accepted by a permittee which are otherwise unenforceable without the permittee's consent. The advertising prohibition contained in the initial permit is in direct conflict with S.C. Code Ann. § 61-1-90 (Supp. 1995), which provides:

Neither the South Carolina Department of Revenue

and Taxation nor the South Carolina Law Enforcement

Division shall have the authority to regulate the size, type,

or number of beer signs displayed on the premises of any

retail or wholesale beer dealer.

Except for Sprott's written stipulation to adhere to it, the restriction prohibiting advertisement of beer, wine, and alcoholic beverages is unenforceable.

It is unnecessary to decide whether Judge Anderson possessed the authority to condition issuance of the initial permit upon Petitioner signing an agreement with DOR to adhere to the

advertising restriction. By Petitioner's voluntary stipulation and subsequent compliance with the restriction, that issue is moot. The real question is whether collateral estoppel or res judicata preclude this tribunal, upon renewal of the permit, from lifting the restriction now that the permittee has withdrawn his consent to be voluntarily bound.

The rule on issue preclusion set forth in the Restatement (Second) of Judgments, §§ 27, 28, and 29 (1986) has been adopted by the South Carolina Court of Appeals. St. Philip's Episcopal Church v. S.C. ABC Commission, 285 S.C. 335, 329 S.E.2d 454 (Ct. App. 1985); Beall v. Doe, 281 S.C. 363, 315 S.E.2d 186 (Ct. App. 1984). Although as a general rule, an issue actually litigated and determined by a valid and final order, with the determination essential to the final decision, is precluded from being relitigated in subsequent litigation, there are several exceptions to the rule. Restatement (Second) of Judgments, § 28(2)(b) (1986) provides that relitigation of an issue in a subsequent action is not precluded if, "The issue is one of law and ... a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws." See also Fennell v. S.C. Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958), which held, "An administrative ruling is not so sacrosanct as to be beyond the correction of error; it need not perpetuate error."

Now that Sprott seeks to retract his consent to be bound by the voluntary restriction, he should not be penalized by his previous acquiescence to be restricted. It is inequitable to prohibit Sprott from advertising the sale of beer and wine on his premises against his wishes when all other licensees and applicants can not be lawfully restricted as well.

Petitioner's Motion to Amend or Alter Judge Anderson's Order dated April 20, 1995, in the case of Harmon B. Sprott, III d/b/a In & Out Express v. S.C. Department of Revenue and Taxation, Docket No. 95-ALJ-17-0075-CC, pursuant to Rule 60(b)(4), SCRCP, is denied. SCRCP Rule 60(b)(4) allows for relief from a final judgment or order if the judgment is void. A void judgment is one rendered where the court lacks jurisdiction, either personal or subject matter. Irregularities which do not involve jurisdiction do not render a judgement void. Thomas & Howard Co. Inc. V. T.W. Graham and Co., ___ S.C. ___, 457 S.E.2d 340 (1995); 49 C.J.S. Judgments § 401 (1947). Judge Anderson unquestionably had jurisdiction to hear and decide the first application case. Accordingly, his Order will not be disturbed by this tribunal.

By a preponderance of the evidence, I find:

(1) Petitioner seeks an off-premises beer and wine permit for a location at 488 W. Boyce Street, Manning, South Carolina, having filed a renewal application with DOR on January 12, 1996, accompanied by a request to remove restrictions on the existing permit.

(2) Petitioner operates and has operated the proposed location as a convenience store with gasoline and car wash service since February, 1995, and has sold beer and wine at the location since April, 1995.

(3) Petitioner currently holds an off-premises beer and wine permit for 488 W. Boyce Street, Manning, South Carolina, having been granted the permit, subject to certain restrictions, after a contested case hearing before Administrative Law Judge Ralph K. Anderson, III, on March 30, 1995, and pursuant to his Order dated April 20, 1995.

(4) Notice of the time, date, place, and subject matter of the hearing was given to the petitioner, protestants, and DOR, with a contested case hearing held before the Administrative Law Judge Division on June 19, and July 10, 1996.

(5) Administrative notice is taken of Judge Anderson's April 20, 1995 Order (incorporated herein by reference in its entirety).

(6) Petitioner voluntarily consented to be bound by the following restriction when the permit was first issued, but now seeks renewal of his permit with the removed:

The applicant shall have no exterior advertisements or

advertisements which are visible from the outside of his

store advertising beer, wine or any alcoholic beverage.

(7) Intervenor Rev. Dennis Jeffcoat, the Protestant in the first case, opposes the removal of the restriction.

(8) There have been no permit violations or other law enforcement problems at the proposed location since it was first permitted.

(9) The proposed location is located in a commercial area.

(10) The proposed location and its surrounding vicinity are essentially unchanged since issuance of the current permit in 1995.

(11) The applicant is over twenty-one years of age, is a resident of the State of South Carolina, and has maintained his principal residence in South Carolina for more than thirty days.

(12) The applicant has never had a permit or license revoked.

(13) Petitioner is of good moral character and is suitable to hold a beer and wine permit.

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

(1) The South Carolina Administrative Law Judge Division is empowered to hear this case pursuant to S.C. Code Ann. § 61-1-55 (Supp. 1995) and Chapter 23 of Title I of the 1976 Code, as amended.

(2) S.C. Code Ann. § 61-9-320 (Supp. 1995) provides the criteria to be met before issuance of a beer and wine permit.

(3) As the trier of fact, an administrative law judge is authorized to determine the fitness or suitability of the proposed business location of an applicant for a permit to sell beer and wine using broad but not unbridled discretion. Ronald F. Byers v. S.C. ABC Commission, 281 S.C. 566, 316 S.E.2d 705 (Ct. App. 1984).

(4) Judge Anderson, in his Order of April 20, 1995, found and concluded the proposed location to be suitable and proper, but conditioned issuance of the permit upon petitioner signing a voluntary stipulation to agree to be bound by certain restrictions. Petitioner did not appeal that decision.

(5) When a proposed location has previously been found to be unsuitable, an applicant must affirmatively show that some material change with respect to the location has occurred since the previous denial. 23 S.C. Code Ann. Regs. 7-3, 7-19.1, 7-30, and 7-96 (1976 & Supp. 1995). The same standard applies to license and permits which have been previously granted with restrictions when an applicant seeks a new license free of those restrictions.

(6) Petitioner offered no evidence to establish that any material change has occurred in relation to the proposed location since the issuance of the current permit with restrictions pursuant to Judge Anderson's Order of April 20, 1995, except that he no longer consents to be bound by the advertising restriction.

(7) Under the doctrine of collateral estoppel, when an issue of fact or law is actually litigated and determined by a valid and final decision of an administrative tribunal, and that determination is essential to the decision, the determination is conclusive in a subsequent matter between the parties, whether on the same or different claim. Carman v. S.C. ABC Commission, ___ S.C. ___, 451 S.E.2d 383 (1994); St. Philip's Episcopal Church v. S.C. ABC Commission, 285 S.C. 335, 329 S.E.2d 454 (Ct. App. 1985).

(8) The South Carolina rule on collateral estoppel issue preclusion is set forth in the Restatement (Second) of Judgments, §§ 27, 28, and 29 (1986). St. Philip's Episcopal Church v. S.C. ABC Commission, 285 S.C. 335, 329 S.E.2d 454 (Ct. App. 1985); Beall v. Doe, 281 S.C. 363, 315 S.E.2d 186 (S.C. App. 1984).

(9) Relitigation of an issue in a subsequent action is not precluded if, "the issue is one of law and ... a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws." Restatement (Second) of Judgments, § 28(2)(b) (1986).

(10) S.C. Code Ann. § 61-1-90 (Supp. 1995), provides:

Neither the South Carolina Department of Revenue

and Taxation nor the South Carolina Law Enforcement

Division shall have the authority to regulate the size, type,

or number of beer signs displayed on the premises of any

retail or wholesale beer dealer.

(11) The Administrative Law Judge Division is vested with the authority to hear and decide contested cases involving various state agencies under the Administrative Procedures Act. Except for the general powers provided for in Articles 3 and 5 of Title 1, S.C. Code Ann., and the equitable powers specifically granted in S.C. Code Ann. § 1-23-630 (Supp. 1995), the judges of the Division possess no greater regulatory authority in its adjudicatory function than the affected State agency from which the case was transmitted.

(12) To avoid inequitable administration of the laws, Petitioner must not be precluded from seeking removal of a permit restriction which, without Petitioner's agreement to be bound by, is unenforceable. It is inequitable to prohibit Sprott from advertising the sale of beer and wine on his premises against his wishes when all other permittees and applicants can not be lawfully restricted as well.

(13) "An administrative ruling is not so sacrosanct as to be beyond the correction of error; it need not perpetuate error." Fennell v. S.C. Tax Commission, 233 S.C. 43, 103 S.E.2d 424 (1958).

IT IS THEREFORE ORDERED that Petitioner's beer and wine permit be renewed with the following restriction removed:

The applicant shall have no exterior advertisements or

advertisements which are visible from the outside of his

store advertising beer, wine or any alcoholic beverage.

IT IS FURTHER ORDERED that the renewed permit shall continue to contain the remaining restriction set forth in Judge Anderson's Order dated April 20, 1995, in the case of Harmon B. Sprott, III d/b/a In & Out Express v. S.C. Department of Revenue and Taxation, Docket No. 95-ALJ-17-0075-CC, which provides:

[T]he Applicant and his employees shall prohibit loitering and the consumption of beer or wine by his patrons/customers in the parking lot and exterior area of the proposed location. This shall specifically include the car wash located on his premises. The Applicant shall post both in the In and Out Express and the car wash area that the consumption of beer and wine on the premises i[s] strictly prohibited. The Applicant shall further make every effort to have his employees check the car wash area to ensure that no one is drinking in that area. This prohibition shall be strictly enforced.

AND IT IS SO ORDERED.

_______________________________________

STEPHEN P. BATES

ADMINISTRATIVE LAW JUDGE

July ___, 1996

Columbia, South Carolina