South Carolina              
Administrative Law Court
Edgar A. Brown building 1205 Pendleton St., Suite 224 Columbia, SC 29201 Voice: (803) 734-0550

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. Hiam Z. Jridi; Rowan, Inc., d/b/a Maxi Mart

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Hiam Z. Jridi; Rowan, Inc., d/b/a Maxi Mart
 
DOCKET NUMBER:
96-ALJ-17-0433-CC

APPEARANCES:
For the Petitioner: Carol I. McMahan, Esquire

For the Respondent: J. Mark Hayes, II, Esquire
 

ORDERS:

FINAL DECISION

STATEMENT OF THE CASE

This matter comes before me pursuant to S.C. Code Ann. § 1-23-320 (Supp. 1996) on a written violation issued by the South Carolina Department of Revenue ("Petitioner or Department") against Hiam Z. Jridi and Rowan, Inc., d/b/a Maxi Mart ("Respondent") at 2507 Chesnee Highway, Spartanburg County, South Carolina. Petitioner alleges that the Respondent violated S.C. Code Ann. § 12-21-2804 (A)(Supp. 1996) by allowing the use of more than five video poker machines at a "single place" or "premise". The Petitioner seeks a $5,000.00 monetary penalty, an order denying the issuance of any video machine licenses at Respondent's location for six months and the revocation of the following Class III video machine licenses: 049604, 040844, 049605, 040845, 040846 and 049603. The Respondent denies the alleged violation and contests the citation.

A contested case hearing was held on January 17, 1997 at the Spartanburg County Courthouse, Spartanburg, South Carolina.

After a thorough and complete review of the record and post-trial briefs submitted to the court, I conclude that the Respondent violated S.C. Code Ann. § 12-21-2804(A). Therefore, the licenses of the six video machines must be revoked; and no new licenses may be issued at the location for six months. However, for the reasons state herein, the monetary penalty shall not be assessed against the Respondent.











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 evidence:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and subject matter of the hearing was timely given to both parties.

3. Hiam Z. Jridi and her husband, Zoheir "Joe" Jridi, are the owners of Rowan, Inc. through which they operate the family business known as Maxi Mart. Anwar Jebril is listed as the President and Secretary of Rowan, Inc. on its Business Tax Application dated February 18, 1994. This application was filed with the Department's office in Spartanburg, South Carolina. Maxi Mart is located at 2507 Chesnee Highway, Spartanburg, South Carolina. Mr. Jridi is the manager of the store, handles most of the paperwork and is there the majority of the time it is open. They have had the convenience store for approximately 6 to 7 years.

4. Hiam Z. Jridi holds the retail license for the store.

5. On June 1, 1994, pursuant to a "Biennial Coin-Operated Device Application" filed by Hiam Z. Jridi, as Machine owner/licensee, with the Department's office (District # 3) in Spartanburg, South Carolina (located in the Hillcrest Shopping Center), the Department issued to her three (3) Type II video game machine licenses for three machines. Mrs. Jridi paid the sum of $10,500.00 to the Department for the three biennial licenses. The license numbers issued by the Department were: 049603, 049604 and 049605. Their expiration date was May 31, 1996.

6. On May 23, 1995, Hiam Z. Jridi again signed and filed a "Biennial Coin-Operated Device Application" with the Department's office in Spartanburg, South Carolina. She listed herself as the machine owner/operator for three (3) Type III video game machines and paid to the Department the sum of $10,500.00 for three biennial licenses (a license tax of $3,500.00 for each of the machines). The license numbers issued on that date by the Department for the three machines were: 040844, 040845 and 040846. The licenses expire on May 31, 1997.

7. On January 15, 1996, a Revenue Officer employed by the Department went to the location and inspected the Type III video machines. He found that six machines were turned on and were available for play. The six machines bore the following machine license numbers: 049603, 049604, 049605, 040844, 040845 and 040846. Mr. Jridi was at the location at the time and an administrative citation was issued by the Revenue Officer for a violation of S.C. Code Ann. § 12-21-2804(A) for maintaining more than five Class III machines on a single place or premises. The report/citation indicated that the Department would seek a monetary penalty of $5,000.00.

8. On January 15, 1996 Hiam Z. Jridi and her husband Zoheir Jridi shut down one of the video machines and it has not been operated since that date.

9. On September 18, 1995, the Department mailed to the Respondent by first class mail the "Department Determination" letter wherein it sustained and recited the alleged violation on January 15, 1996, the facts leading up to the written citation, a section on Law and Analysis and advised that the Department sought a $5,000.00 monetary penalty or fine, the revocation of the six video machine licenses and that upon their revocation, no Class III video machine licenses would be issued at this location for a period of six months.

10. No other citations have been given by the Department to the Respondent for any other type of violation.

11. Respondent conducted all her transactions and purchased all required state licenses and permits at the Department's Spartanburg office. She is familiar with the employees there. She was never informed by the Department's employees at the Spartanburg office when she purchased the biennial video machine licenses that there was a five machine limit at a single place or premise after June 30, 1995.

12. Respondent owns no other business location and upon purchasing the three licenses from the Department on May 23, 1995, was of the impression and understanding that they would not expire until May 31, 1997. Further, she felt the license would be valid at her one place of business which is Maxi Mart.

13. The six (6) Class III video machine licenses issued by the Department to the Respondent did not have a specific location affixed or written on them.



CONCLUSIONS OF LAW

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

1. This matter is properly before the Administrative Law Judge Division pursuant to the provisions of Chapter 23, Title 1 and S.C. Code Ann. § 12-4-30 (D) (Supp. 1996).

2. The Video Game Machines Act, which regulates video game machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. This Act is codified at S.C. Code Ann. § 12-21-2770 et seq. (Supp. 1996).

3. With regard to the number of video game machines authorized at a "single place or premises," S.C. Code Ann. § 12-21-2804(A)(Supp. 1996) provides as follows:



(A) No person shall apply for, receive, maintain, or permit to be used, and the commission shall not allow to be maintained, permits or licenses for the operation of more than eight machines authorized under § 12-21-2720(A)(3) at a single place or premises for the period beginning July 1, 1993, and ending July 1, 1994. After July 1, 1994, the commission may not issue nor authorize to be maintained any licenses or permits for more than five machines authorized under § 12-21-2720(A)(3) at a single place or premises.

4. Machines licensed pursuant to S.C. Code Ann. § 12-21-2720(A)(3)(Supp. 1996) include video game machines which have a free play feature operated by a slot in which a coin or thing of value is deposited.

5. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) states that the penalty for failing to comply with the maximum allowable number of machines in a "single place" or "premises" requires: (1) the revocation of the licenses of the machines located in the establishment, and (2) prohibits the issuance of a license for a machine in the establishment for a period of six months from the date of revocation.

6. S.C. Code Ann. § 12-21-2804(F)(Supp. 1996) provides that a person violating subsection (A) of this statute is subject to a fine of up to five thousand ($5,000.00) dollars.

7. Respondent argues that she acted in good faith when she purchased the three biennial licenses on May 23, 1995 with the assumption that they would be operable and good for the three machines at the location for which they were purchased. However, no evidence was provided to the court showing any "holding out" by employees of the Department that the licenses would be good at the Maxi Mart location if the number of machines there exceeded five after June 30, 1995. Also, there was nothing written or stamped on each license which required it to be utilized on a machine at any specific location. Although the license is not transferable from one machine to another after it has been affixed to a machine, the machine may be moved to another location. Respondent appears to posit that she and her husband relied solely on the terminology in the applications and thus were innocent of any violation. However, Respondent is presumed to have known the law when she purchased the licenses for the machines. See Smothers v. U.S. Fidelity and Guaranty Co., ___S.C.___, 470 S.E.2d 858 (Ct. App. 1996) (everyone is presumed to have knowledge of the law and must exercise reasonable care to protect his interests). Respondent further argues that the statute is ambiguous and that it can be construed to allow biennial licenses purchased prior to July 1, 1994 to remain valid at the location after June 30, 1995. It is clear that the legislature intended to limit the number of machines at a single place or premises to five after June 30, 1995. If there were a provision prohibiting the removal of licensed machines from one location to another, then Respondent's argument might have some validity. Since the remainder of any period of licensure could be utilized at another location, Respondent's argument fails.



8. Notwithstanding the duty of an owner/operator of a video game machine to educate themselves on all rules and statutes applicable to their operation, I find that there was not any intentional action on the part of the Respondent to evade or violate the statute limiting the number of operational video game machines at a location after June 30, 1995. On the date of the inspection, Respondent and her husband voluntarily shut down one machine and it has been inoperable since that time. Further, they cooperated with the Revenue Officer. Respondent has lost revenue from the use of that machine and will lose revenue from the usage of the other five machines as a result of the violation. The Department properly issued the citation to the Respondent and the violation requires that the six licenses be revoked by the Department not later than ten (10) days from the date of this Final Decision. Further, S.C. Code Ann. § 12-21-2804(A) prohibits the issuance of a license for a video machine for a period of six months from the date the Department revokes the licenses in conformity with this Order.

9. It is a generally recognized principle of administrative law that the fact finder has the authority to impose an administrative penalty after the parties have had an opportunity to have a hearing and be heard on the issues. See Ohio Real Estate Comm'n v. Aqua Sun Investments, 655 N.E.2d 266 (Ohio A. 2 Dist. 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W.2d 835 (Mo. App. S.D. 1995); Matter of Henry Youth Hockey Ass'n., 511 N.W.2d 452 (Minn. App. 1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of Louisville v. Milligan, 798 S.W.2d 454 (Ky. 1990); Com., Dept. of Transp. v. Slipp, 550 A.2d 838 (Pa. 1988); Dept. of Transp. v. Miller, 528 A.2d 1030 (Pa. 1987); State Police v. Cantina Gloria's, 639 A. 2d 14 (Pa. 1994).

10. Mitigating circumstances exist in this case, given that the Video Game Machines Act was relatively new and there was confusion in the industry concerning the application of the statute and the Department's guidelines. Further, Respondent and her husband have acted in good faith with the Department since notice of the violation and have incurred revenue loss and will incur additional losses due to the revocation of the licenses and the prohibition of the issuance of new licenses for a period from six months from the date of this revocation. Accordingly, I conclude that the imposition of a monetary penalty, along with the revocation of the licenses and prohibition of the issuance of others at this location, is unduly harsh. No monetary penalty shall be assessed against Respondent.























ORDER

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

ORDERED that the Department shall revoke the six video game machine licenses, bearing numbers 049603, 049604, 049605, 040844, 040845, and 040846, issued to the Respondent, Hiam Z. Jridi, and it is further

ORDERED that the Department is prohibited from issuing any video game machine licenses at this location (2507 Chesnee Highway, Spartanburg, South Carolina) for a period of six months from the date of the revocation of the six licenses by the Department pursuant to the terms of this Decision, and it is further

ORDERED that no monetary fine shall be imposed upon the Respondent.

AND IT IS SO ORDERED.



___________________________________

Marvin F. Kittrell

Chief Judge

Columbia, South Carolina

April 7, 1997


Brown Bldg.

 

 

 

 

 

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