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. Triad Amusements, Inc., Rick Shillinglaw, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Triad Amusements, Inc., Rick Shillinglaw, d/b/a RGS Vending, and David Powers, d/b/a J&J Video, d/b/a David's Den
 
DOCKET NUMBER:
96-ALJ-17-0532-CC

APPEARANCES:
Carol I. McMahan, Attorney for Petitioner

Rodney L. Foushee, Attorney for Respondents Triad Amusements, Inc. and Rick Shillinglaw, d/b/a RGS Vending

David Powers, not represented and not present at the hearing
 

ORDERS:

ORDER AND DECISION

STATEMENT OF THE CASE

This matter came before me pursuant to a citation issued by the Department of Revenue against the Respondents David Powers, RGS Vending and Triad Amusements for violating S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), by allowing the use of more than five Class III licenses acquired pursuant to S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) for machines in a "single place or premises," as defined in 27 S.C. Code Regs. 117-190 (Supp. 1996). David Powers was sent the Final Department Determination by certified mail which was returned unclaimed. Notice of the hearing scheduled for June 17, 1997 was sent to the parties.

Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(B).

FINDINGS OF FACT

I make the following findings of fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence, and taking into account the credibility of the witnesses:

1. On June 13, 1996, two revenue officers of the South Carolina Department of Revenue visited a location at 1008-D Highway 17, North Myrtle Beach, South Carolina. They conducted an inspection, gathered information, drew a diagram of the location, and took pictures.

2. The revenue officers entered the location and found a mall type setting with a common area. A cashier station was located to the right. Although there were several rooms at the location, only two contained Class III video game machines.

3. The first room, located on the right, had five machines. The door was open, the lights were on, the machines were on and fully operational. The retail license indicated that the location was operated as J&J's Video Games by owners Jerryl Kesler and David Powers. Four machines were owned by Triad Amusement and one was owned by RGS Vending.

4. The second room was toward the rear of the location. The lights in the room were on and the door was open. The retail license indicated that the room was operated as David's Den by David Powers and Jerryl Kesler, owners. There was a multi-station Class III video game machine in the room which was on and fully operational. Two of the licenses on the machine were owned by Triad Amusement and three were owned by RGS Vending.

5. All of the licenses on the Class III machines expired May 31, 1997.

6. There were no employees in either room. There were no customers in either room. There were no "closed" signs on any of the doors and no information to indicate the rooms were not open and machines available for play.

7. One employee was present at the time the officers conducted their inspection. This person was located at the cashier's desk. The employee was the manager of the location and was not employed by Triad Amusement or RGS Vending. The machine owners did not have custody or control over any of the employees on the premises.

8. The officers then issued a citation to David Powers and Triad Amusements for operating the location in violation of the single place or premise requirement for having more than five video game machines in a single place or premise pursuant to § 12-21-2804(A).

9. Rick Shillinglaw, as owner of Triad Amusement and RGS Vending, had discussed with the manager of the location on several occasions the requirements of the statute relating to the number of employees for each retail premises. The manager was familiar with the requirements that an employee must be on the premises of each business in which video games machines are located.

10. The lease agreement between the machine owners and the retail licensees required the payment of fifty percent of the revenues from the machines as the lease payment. Forms were used to record meter readings from the machines and the payments were deposited on behalf of Triad Amusement or RGS Vending. No one visited the location to collect money. The machines were serviced by their owners as necessary. CONCLUSIONS OF LAW

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

1. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1995) and S.C. Code Ann. § 1-23-320 (Supp.1995), the Administrative Law Judge Division has jurisdiction to hear this matter.

2. Respondents Triad Amusement and Rick Shillinglaw, d/b/a RGS Vending are licensees of video game machines licensed under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1995).

3. David Powers is the retail licensee for the two video game rooms within the location at 1008-D Highway 17 in North Myrtle Beach.

4. Petitioner alleges that on June 13, 1996, Respondents violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1995) and 27 S.C. Code Regs. 117-190 (Supp. 1995) by permitting licenses to be used 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).

5. 27 S.C. Code Regs. 117-190 was promulgated to clarify the meaning of the phrase "single place or premises" as set forth in Section 12-21-2804(A). This regulation, effective June 23, 1995, provides in relevant part:

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 a separate state sales tax license?

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.

27 S.C. Code Regs. 117-190 (1995) (emphasis added).

6. The primary issue before this tribunal is whether the Respondents "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. Pub. Serv. Auth., 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 Serv. 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).

8. With respect to the "employee" requirement, Regulation 117-190 requires that each entity or business have at least one separate employee on the premises during business hours for a business to comply with the "single place or premises" requirements of Section 12-21-2804(A). If a game room containing operational Class III video game machines is accessible to customers and no employee is present in that room, the room is being operated in violation of Section 12-21-2804(A). An employee working in a common area or anywhere else outside the game rooms is not considered to be "on the premises" of the game room. See South Carolina Dep't of Revenue and Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996), aff'd Court of Common Pleas, Richland County, Civil Action No. 96-CP-40-0889 (March 21, 1997).

9. S.C. Code Ann. § 12-21-2804(A) (Supp. 1995) expressly authorizes the "commission" [Department] to enforce the provisions of this section and also authorizes the Department to revoke licenses utilized in a fashion that fails to comply with the provisions of this section.

10. Pursuant to S.C. Code Ann. § 12-21-2804(A) (Supp.1995), the penalty for exceeding the maximum number of video gaming machines permitted in a single place or premises is revocation of the licenses of the Class III machines located in the establishment.

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) (Supp. 1995) is subject to a fine of up to $5,000.

12. Under Section 12-21-2804(A), a license on a video poker machine must be revoked by virtue of its misuse under the Act, regardless if the actual violator is the retail licensee, machine owner, or lessee. A monetary fine under Section 12-21-2804(F), however, may only be imposed on the actual person directly involved in the violation of Section 12-21-2804(A).

13. David Powers and Jerryl Kesler, the retail licensees and operators of each game room, maintained or permitted to be used licenses for the operation of more than five Class III machines at a single place or premise.

14. Powers had constructive notice of the violation when the citation was given to the manager of the location. In addition, notice of the hearing was provided to Powers. He failed to appear at the hearing and is therefore in default.

15. Pursuant to ALJD Rule 23, "the administrative law judge may dismiss a contested case or dispose of a contested case adverse to the defaulting party. A default occurs when a party fails to plead or otherwise prosecute or defend, fails to appear at a hearing without the proper consent of the judge . . . ." Powers failed to appear at the hearing to defend against the violation. 16. The Department failed to establish that Triad Amusement and Rick Shillinglaw violated the provisions of Section 12-21-2804(A). There is no evidence that these Respondents applied for, received, maintained or permitted to be used licenses for the operation of more than five Class III machines at a single place or premise. Triad Amusement and Rick Shillinglaw, may not be assessed a fine under the provisions of S.C. Code Ann. § 12-21-2804(F).

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is hereby ORDERED, that the ten Class III licensed video-game machine licenses are revoked. Respondent David Powers is fined $5,000.00. Further, DOR may not issue licenses for and Respondents shall not operate Class III machines at 1008-D Highway 17, North Myrtle Beach, South Carolina, for a period of six months from the date of this order.

AND IT IS SO ORDERED.

___________________________

ALISON RENEE LEE

Administrative Law Judge



September 4, 1997

Columbia, South Carolina.


Brown Bldg.

 

 

 

 

 

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