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. Collins Entertainment Corp., et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Collins Entertainment Corp., Double Dagger, Inc., d/b/a Donut Hole 3,4,5,& 6, Julian Adams d/b/a Mardi Gras Too-A, d/b/a Mardi Gras Too-B, d/b/a Mardi Gras Too-C, d/b/a Mardi Gras Too-D, d/b/a Mardi Gras Too-E, and d/b/a Mardi Gras Too-F
 
DOCKET NUMBER:
96-ALJ-17-0492-CC

APPEARANCES:
Carol I. McMahan, Attorney for Petitioner

Peter H. Dworjanyn, Attorney for the Respondent/Collins Entertainment Corp.
 

ORDERS:

FINAL DECISION

STATEMENT OF THE CASE


This matter comes before me pursuant to S.C. Code Ann. § 12-4-30 (D)(Supp. 1995) and S.C. Code Ann. § 1-23-320, et seq. (Supp. 1995) pursuant to a request for a contested case hearing by Collins Entertainment, Inc., owner/licensee ("Collins"). The South Carolina Department of Revenue ("Petitioner" or "Department") issued a citation against the Respondent Collins for alleged administrative violations of S.C. Code Ann. § 12-21-2804(A)(Supp. 1995) of the Video Game Machines Act ("Act") and S.C. Code Regs. 117-190 (Supp. 1995) ("Regulation") at the business operated by Double Dagger, Inc. ("Double Dagger") located at 4309 Mineola Avenue, Little River, Horry County, South Carolina ("location"). Specifically, the Department alleges that the Respondent Collins has violated the Act by placing its machines in a location which did not have a separate employee within each of four single places or premises ("game rooms") at the location during business hours on June 13, 1996. Respondent Collins denies any violation of the Act or the Regulations.

The Department seeks revocation of the fifteen (15) Class III video poker licenses at the location, a $5,000.00 fine and an Order prohibiting the licensing, usage and placement of any Class III video poker licenses at the location for the four game rooms formerly known as Donut Hole 1, 3, 4, and 5 for a period of six months from the date of this Order.



After timely notice to the parties, a contested case hearing was held at the Administrative Law Judge Division ("Division") offices, Columbia, South Carolina at 10:00 a.m. on March 6, 1997.

Based upon a thorough review of the record, post-hearing legal briefs, the relevant and probative evidence and applicable law as set forth hereafter, I conclude that the Respondent Double Dagger violated S.C. Code Ann. §12-21-2804(A) and S.C. Code Regs. 117-190 on June 13, 1996 and that the licenses of the machines located in the establishments in question must therefore be revoked. However, the Department did not present sufficient evidence to warrant the imposition of a fine against the Respondent Collins pursuant to S.C. Code Ann. § 12-21-2804(F) (Supp. 1995).

ISSUES

1. Was there a violation of the "single place" or "premises" provisions of S.C. Code Regs. 117-190 (Supp. 1996) and S. C. Code Ann. Section 12-21-2804(A) (Supp. 1996) for the failure of Respondent Double Dagger to have an employee within each of the four game rooms on June 13, 1996?

2. If there is a violation, what is the appropriate penalty which may be imposed against the Respondent Collins?



FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing, taking into account the credibility of the witnesses, the accuracy of the evidence and having reviewed all the exhibits carefully, I make the following findings by a preponderance of the evidence:

1. This Division has personal and subject matter jurisdiction.

2. Notice of the date, time, place and nature of the hearing was timely given to the parties. A notice of the hearing was mailed to Archie Parmentier, owner of the Respondent Double Dagger, but was returned to the Division with the notation "Box Closed--Unable to Forward". The Respondent Collins also attempted to contact Mr. Parmentier to ask him to testify at the hearing. However, Mr. Parmentier failed to attend the hearing.

3. On June 13, 1996, Respondent Double Dagger owned and operated six (6) separate video game businesses within a building located at 4309 Mineola Avenue, Little River, South Carolina. The businesses were known as Donut Hole 1, Donut Hole 2, Donut Hole 3, Donut Hole 4, Donut Hole 5, and Donut Hole 6.

4. The building was divided into six (6) single rooms containing licensed video machines as well as an office and an empty room. The business, Double Dagger, Inc., was owned by Archie Parmentier. See Petitioner's Exhibit # 3.



5. Each single game room, contained inside the building, met the statutory and regulatory physical requirements of Regs. 117-190 to qualify as a "single place" or "premises".

6. Each of the six (6) game rooms had Class III video game machines located inside. The owner/licensee of the video game machines was Collins Entertainment Corp. Collins had contracted with Mr. Parmentier, individually, and with Double Dagger, Inc., d/b/a The Donut Hole, to provide coin operated machines to the businesses at the location.

7. Each of the game rooms was surrounded by interior walls within the building which constitute exterior walls for purposes of each individual business.

8. The video game rooms contained video game machines with the following assigned biennial license numbers (see Petitioner's Exhibits #3 and #6):

a. Donut Hole 1 (depicted as Room #6 on Petitioner's Exhibit #3)--3805530, 0345530, 3805523, 3805531, 3805501

b. Donut Hole 2 (depicted as Room #2 on Petitioner's Exhibit #3)--034696, 3805528

c. Donut Hole 3 (depicted as Room #5 on Petitioner's Exhibit #3)--027629, 027630, 028636, 027778, 028634

d. Donut Hole 4 (depicted as Room #4 on Petitioner's Exhibit #3)--3805524, 042970, 042969

e. Donut Hole 5 (depicted as Room #3 on Petitioner's Exhibit #3)--3805529, 042576, 3805527

f. Donut Hole 6 (depicted as Room #1 on Petitioner's Exhibit #3)--03805525, 3805526, 034697, 034568

9. Each of the six game rooms or businesses had a separate State sales tax license and a separate electrical meter.

10. Julian Adams is presently operating the same six game rooms as separate video game machine businesses. They are known as Mardi Gras Too-A, Mardi Gras Too-B, Mardi Gras Too-C, Mardi Gras Too-D, Mardi Gras Too-E and Mardi Gras Too-F. He has contracted with Collins to place video game machines at the location.

11. On June 13, 1996, at approximately 2: 30 p.m., Revenue Officer Ritchie Way went to the location at 4309 Mineola Avenue, Little River, Horry County, South Carolina. He walked into the rooms, inspecting each one separately. He observed the following:

a. five (5) video game machines in Donut Hole #1 (large area as one enters into the building) with an employee on duty inside the room.

b. four (4) video game machines in Donut Hole #6 with no employees within the room. The interior lights and the machines were on.

c. two (2) video game machines in Donut Hole #2 with an employee within the room. The door was open and the lights and machines were on.

d. three (3) video game machines in Donut Hole #5 with no employees within the room. The door was open and the lights and machines were on.

e. three (3) video game machines in Donut Hole #4 with no employees within the room. The door was open to that room, and the lights and the machines were turned on.

f. five (5) video game machines in Donut Hole #3 with no employees within the room. Again, the door was open and the lights and the machines were turned on.

g. The biennial license numbers on the video game machines within the separate game rooms were as listed on Petitioner's Exhibit # 6.

There were no other employees within the premises/location at the time of the inspection.

12. Revenue Officer Way wrote up a Regulatory Violation and Proposed Assessment Report ("citation report") on June 13, 1996 against Collins for violation of the "single place" or "premises" provisions of S.C. Code Ann. Section 12-21-2804(A) and Regs. 117-190. However, no citation report was written against Double Dagger. See attachment to the Department's "Determination Letter" dated November 8, 1996, which is a part of the Department's prehearing report.

13. The biennial licenses on the fifteen (15) video game machines located in Donut Hole # 3, 4, 5, and 6, which were inspected by Revenue Officer Way at the location on June 13, 1996, were purchased by Respondent Collins and the numbers were assigned to Collins by the Department.

14. I find that the testimony of Revenue Officer Way is unrefuted and that all six (6) game rooms were open for business on June 13, 1996 when Revenue Officer Way conducted his inspection at the location. I further find that there were no employees at the location assigned to the game rooms known as Donut Hole 3, Donut Hole 4, Donut Hole 5, and Donut Hole 6 at the time of the inspection.

CONCLUSIONS OF LAW

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

1. Pursuant to S.C. Code Ann. § 12-4-30 (D) (Supp. 1996) and Chapter 23 of the Title 1 of the 1976 Code, as amended, the South Carolina Administrative Law Judge Division has jurisdiction in this matter.

2. Petitioner alleges that on June 13, 1996, respondent Collins violated S.C. Code Ann. §12-21-2804(A) (Supp. 1995) and 27 S.C. Code Regs. 117-190 (Supp. 1995) by permitting the use of its licenses for the operation of more than five (5) Class III video game machines at a single place or premises. Section 12-21-2804(A) provides:

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 Section 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 S.C. Code Ann. § 12-21-2720(A)(3) at a single place or premises. . . . (emphasis added).

3. Machines licensed pursuant to the provisions of S.C. Code Ann. § 12-21-2720(A)(3) include video games with free play feature operated by a slot in which a coin or thing of value is deposited. S.C. Code Ann. § 12-21-2720 (Supp. 1995).

4. Pursuant to S.C. Code Ann. § 12-21-2798 (Supp. 1995), the Department is authorized to promulgate regulations to assist in the administration and enforcement of the Video Game Machines Act.

5. S.C. Code Regs. 117-190 (Supp. 1995) defines "single place" or "premises" for purposes of interpreting the Video Game Machines Act, including § 12-21-2804(A). It provides as follows:

A "single place" or "premises" means a structure surrounded by exterior walls or fire walls consistent with the requirements of the applicable building code (or where no building code is applicable, a one hour rated firewall), provided such exterior walls and fire walls may not have any windows, doors or other openings leading to another area where video game machines are located.

If a structure surrounded by exterior walls has two or more areas where video game machines are located, each surrounded by exterior walls or fire walls as defined and required above, the Department must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines. In determining whether each entity is in fact a single place or premises, the Department of Revenue will consider the following factors: (1) Does each entity or business have a separate electric utility meter? (2) Does each entity or business have at least one separate employee on the premises during business hours? (3) Does each entity or business have a separate local business license where required? (4) Does each entity or business have separate sales tax licenses? A positive answer to these four questions is required for each area to be considered a "single place or premise" for purposes of the Video Game Machines Act.

6. The primary issue before this tribunal is whether any person "permitted" the use of permits or licenses for the operation of more than five Class III video game machines at a single place or premises, in violation of S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Regs. 117-190.



7. It is well established that in interpreting a statute, the court's primary function is to ascertain the intention of the legislature. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); First Savings Bank, Inc. v. Gold Coast Assoc., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990); State v. Harris, 268 S.C. 117, 232 S.E.2d 231 (1977). In ascertaining the intent of the legislature, a court should not focus on any single section or provision but should consider the language of the statute as a whole. Creech v. S.C. Public Service Authority, 200 S.C. 127, 20 S.E.2d 645 (1942). Furthermore, in construing statutes, the language used should be given its plain and ordinary meaning without resort to subtle or forced construction to limit or expand the statute's operation. Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988); Home Health Service v. S.C. Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994). Where terms of a statute are clear and unambiguous, they must be applied according to their literal meaning. Medlock v. Ford F-150 Pick Up, et al., 308 S.C. 68, 417 S.E. 2d 85 (1992); Green v. Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977).

It should be emphasized that S.C. Code Ann. § 12-21-2804 (A) clearly precludes any person, not just the licensees, from permitting the use of more than five Class III video game machines in a single place or premises. The term "person" is not defined in the Act, but its common and ordinary meaning clearly encompasses an individual or a business entity, as well as a licensee or machine owner. See Black's Law Dictionary 1142 (6th ed. 1995). Further, Section 12-21-2804(A) mandates that the Department revoke the licenses of the machines located in an establishment which fails to meet the requirements of this section. Hence, even if the licensee, in this case Collins, was not directly involved in permitting its licenses to be used in violation of the statute, the use of its licenses by Double Dagger, Inc. in contravention of the statute mandates the revocation of the licenses so used. Such an interpretation is consistent with the plain language of the statute. However, Collins argues that its lack of knowledge of the improper use of its licenses precludes revocation of the licenses. This argument is not supported by the law. The existence or nonexistence of knowledge on behalf of the licensee under the facts of this case would not compel a result other than the revocation of the licenses. See Mickey Stacks, d/b/a Red Dot Amusement Co. v. S.C. Dep't of Revenue and Taxation, Court of Common Pleas, County of Richland, 96-CP-40-0239 (April 20, 1995).

8. The business owner, Double Dagger, Inc., clearly permitted licenses to be used for the operation of more than five Class III video game machines in a single place or premises. As stated above, whether an establishment is being operated as a "single place or premises" is determined by evaluating the facts against the factors set forth in Regs. 117-190. With respect to the "employee" requirement, Regs. 117-190 requires that each business entity have a separate employee at the location and available to perform job functions with respect to that business entity during business hours in order to comply with the "single place or premises" requirements of Section 12-21-2804(A). See S.C. Dep't of Revenue v. Great Games, Inc., 96-ALJ-17-0204-CC (March 18, 1997). In this case, the uncontroverted evidence indicates that game rooms 1, 3, 4, and 5 had no employees at the location who were assigned to those game rooms. Furthermore, the evidence indicates that those game rooms were open for business at the time of the inspection. Therefore, I conclude that the businesses formerly known as Donut Hole 3, Donut Hole 4, Donut Hole 5, and Donut Hole 6 have violated Section 12-21-2804(A) by permitting licenses to be used for the operation of more than five Class III video game machines in a single place or premises. Consequently, the respondent Collins' licenses are subject to revocation because Double Dagger, Inc., the operator of those businesses, utilized the machines on which Collins' licenses were displayed, in a manner which contravened Section 12-21-2804(A).



9. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) provides that the penalty for exceeding the maximum number of video gaming machines permitted in a single place or premises is the mandatory revocation of the licenses of machines located in the establishment. Additionally, no license may be issued

for a machine in an establishment in which a license has been revoked for a period of six months from the date of revocation.

10. Acting as fact-finder, it is the administrative law judge's prerogative "to impose the appropriate penalty based on the facts presented." Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633, 634 (1991). If an the administrative law judge finds and concludes that a violation has occurred, then he has the authority to establish the monetary fine within the allowable range provided for by S.C. Code Ann. § 12-21-2804(A) (Supp. 1995). S.C. Code Ann. § 12-4-30(D) (Supp. 1995).

11. S.C. Code Ann. § 12-21-2804(F) (Supp. 1995) provides that a person who violates S.C. Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000. In this case, the Department has not cited the person who directly utilized the video game machines in violation of Section 12-21-2804(A), namely Double Dagger, Inc. See Mickey Stacks, d/b/a Red Dot Amusement Co. v. S.C. Dep't of Revenue and Taxation, supra at 8-9. Under Section 12-21-2804(A), a license on a video game machine must be revoked if it is misused under the Act, regardless of whether the person directly responsible for committing the violation is the licensee, machine owner, or the business owner. However, a monetary fine under Section 12-21-2804(F) may only be imposed on the person directly involved in the violation of Section 12-21-2804(A). In this case, that is Double Dagger, Inc., which was not cited for a violation. Furthermore, no evidence was presented at the hearing which would establish a nexus between Collins and Double Dagger, Inc., sufficient to impute knowledge of Double Dagger's failure to maintain the proper number of employees at the location to Collins. Therefore, the imposition of the $5,000 fine against the respondent Collins must fail for the foregoing reasons.

12. An administrative law judge possesses the same powers at chambers or in open court as do circuit court judges and may issue such remedial writs as are necessary to give effect to its jurisdiction. S.C. Code Ann. § 1-23-630 (Supp. 1996).



ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that the Department shall revoke the video game machine licenses located at 4309 Mineola Avenue, Little River, South Carolina, in the game rooms formerly known as Donut Hole 3, 4, 5, and 6, as shown on Petitioner's Exhibit #6; and IT IS FURTHER ORDERED that no video game machine licenses shall be issued for those game rooms for a period of six months from the date of this Order.













IT IS FURTHER ORDERED that the Department shall suspend the monetary fine; and that the revocation of the licenses cited above does not affect the machines to which those licenses are attached, and those machines may be re-licensed on other premises.

AND IT IS SO ORDERED.











___________________________________

Marvin F. Kittrell

Chief Judge

April 21, 1997

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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