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SC Administrative Law Court Decisions

SCDOR vs. M.L. Harley d/b/a Broadway Restaurant and Lounge and Collins Holding

South Carolina Department of Revenue

South Carolina Department of Revenue

M.L. Harley d/b/a Broadway Restaurant and Lounge and Collins Holding




This matter is before the Administrative Law Judge Division (Division) pursuant to the Petitioner's Motion for Reconsideration of the Division's Final Order and Decision dated October 23, 2000. Administrative Law Judge Division Rule 29(D) sets forth that "[a]ny party may move for reconsideration of a final decision of an administrative law judge in a contested case, subject to the grounds for relief set forth in Rule 60(B)(1 through 5), SCRCP . . . . "

The Petitioner (Department) contends that "the Court ignored the express language" of S.C. Code Ann. § 12-21-2804(F) (Supp. 1999). The Department argues that when a payout occurs in violation of S.C. Code Ann. Section 12-21-2804(C) (1999), Section 12-21-2804(F) requires the revocation of all the licenses of the Class III machines in the establishment. The Department bases its contention upon the theory that the reference to "any person" in Section 12-21-2804(F) "necessarily includes the machine owner."

Here, an employee of Broadway Restaurant and Lounge (Broadway Restaurant) and not an employee of Collins Holding Corporation (Collins) made a video poker payout to a person under twenty-one years of age. In Stipulation of Fact No. 9, the Department agreed that "Respondent Collins was not involved in any form or fashion with any payment to the UCI in this matter other than owning the Class III licenses located at the Broadway Restaurant." Therefore, I determined that since Collins was not "directly involved" in the violation in this case, only the establishment license of Broadway Restaurant was revocable for the violation of Section 12-21-2804(C).

Section 12-21-2804(F) begins by setting forth that "[a] person violating subsections (A), (B), (D), or (E)" is subject to a fine. The latter part of Section 12-21-2804(F) sets forth that "[t]he department shall revoke the licenses of any person issued pursuant to the provisions of Article 19 of this chapter for a violation of subsection (C) of this section." (emphasis added). In South Carolina Department of Revenue vs. Collins Entertainment Corp., 340 S.C. 77, 530 S.E. 2d 635 (2000), the South Carolina Supreme Court established that the penal provisions of the Video Games Machines Act are strictly construed against the Department and liberally in favor of the accused violator. Furthermore, the Department "must bring [its] case clearly within the language and meaning of the statute awarding the penalty." Id. at 636. Reading the provision as a whole, Section 12-21-2804(F) can clearly be interpreted as requiring that the establishment license of Broadway Restaurant, the person who violated the Act, be revoked. To the contrary, Section 12-21-2804(F) does not specifically set forth that the machine licenses shall be revoked. In Section 12-21-2804(A), the General Assembly specifically required the revocation of "the licenses of machines located in an establishment which fails to meet the requirements of this section." Therefore, if the General Assembly had intended that the machine licenses be revoked no matter what person violated Section 12-21-2804(C), the General Assembly presumably would have utilized revocation language similar to Section 12-21-2804(A). Consequently, since there is no evidence that Collins violated Section 12-21-2804(C), revocation of its machines licenses is improper.

The Department also argues that the revocation provisions of Section 12-21-2804(A) are applicable to each subsection of Section 12-21-2804, including Section 12-21-2804(C). Section 12-21-2804(A) requires the revocation of "the licenses of machines located in an establishment which fails to meet the requirements of this section." (emphasis added). The Department contends that since the General Assembly used the term "section" rather than "subsection," the "necessary and only implication" is that a violation of any provision of Section 12-21-2804 requires revocation of the machine licenses in the establishment in which the violation occurred.

If the plain and unambiguous language in a statute conveys a clear and definite meaning, the statute should not be altered or redefined . Paschal v. State Election Comm'n, 317 S.C. 434, 454 S.E. 2d 890 (1995). In other words, unless the language used in a statute "requires interpretation or may be reasonably considered ambiguous," a court should not attempt to construe a statute. 73 Am. Jur. 2d Statutes § 194 (1974). An ambiguity arises when the language of a statute is capable of being understood by reasonably well-informed persons in either of two or more senses. Southeastern Fire Ins. Co. v. South Carolina Tax Comm'n, 253 S.C. 407, 171 S.E. 2d 355 (1969). Furthermore, in the interpretation of statutory terms, the doctrine of construction, noscitur a sociis controls. "That is, the meaning of particular terms in a statute may be ascertained by reference to words associated with them in the statute." 73 Am. Jur. 2d Statutes § 213 (1974). See Southern Mut. Church Ins. Co. v. South Carolina Windstorm and Hail Underwriting Ass'n., 306 S.C. 339, 412 S.E.2d 377 (1991).

In this case, the phrases "section" and "subsection" are both utilized in Section 12-21-2804. Specifically, Section 12-21-2804(F) and (G)(2) use the phrase "subsection" to limit the application of Section 12-21-2804. In fact, Section 12-21-2804(F) sets forth that "[a] person violating subsections (A), (B), (D), or (E) of this section is subject to a fine of up to five thousand dollars to be imposed by the department." (emphasis added). The use of two different terms establishes the legislative intent that the terms have distinct meanings. Therefore, the plain meaning of "section" in 12-21-2804(A) appears to apply to all of 12-21-2804. On the other hand, the plain meaning of "subsection" appears to apply to the individual enumerated parts of Section 12-21-2804. Consequently, I agree with the Department that the language "this section" within Section 12-21-2804(A) appears to reference all of Section 12-21-2804, including subsection (C).

However, the Department's own procedure set forth in Revenue Procedure 99-1 does not apply the mandatory revocation of the machine owner's licenses to all of the different types of violations of Section 12-21-2804. Specifically, for a first offense violation of subsections (B), (C), and (E) of Section 12-21-2804, the Department only requires that the location operators be liable for the penalties imposed for those violations. See Revenue Procedure 99-1. Accordingly, the Department's own written policy does not even call for revocation of the machine owner's licenses for a first violation of Section 12-21-2804(C), contrary to the position taken by the Department in this case against Collins.

In Weaver v. South Carolina Coastal Council, 309 S.C. 368, 423 S.E. 2d 340 (S.C. 1992), the South Carolina Supreme Court held that the equal protection and due process provisions of the state and federal constitutions require that individuals who are "similarly situated" are entitled to be treated in the same manner as the Department has treated others. However, no specific evidence was offered that established that individuals who were "similarly situated" were treated in a dissimilar manner. Nevertheless, since the Department has established a written policy that contradicts the position that revocation of the machine owner's licenses is mandatory for a first violation of Section 12-21-2804(C), I find that the revocation of the machine licenses under the facts of this case would be improper.

Finally, the Department contends that there is no evidence in the record to support the last sentence in Finding of Fact No. 2. That sentence stated that "the Department has withheld the value of these two Class III COD licenses from the license refunds issued to Respondent Collins, pending the outcome of this proceeding." The Department is correct that the finding was not supported by the record. Rather, that finding was based upon an unrefuted argument of opposing counsel. Therefore,

IT IS ORDERED that the last sentence of Finding of Fact No. 2 shall be stricken from the Final Order and Decision in this matter issued on October 23, 2000.

IT IS FURTHER ORDERED that the Petitioner's remaining grounds set forth in its Motion for Reconsideration are denied.



Ralph King Anderson, III

Administrative Law Judge

November 28, 2000

Columbia, South Carolina

Brown Bldg.






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