ORDERS:
FINAL ORDER AND DECISION
I. Statement Of The Case
On October 15, 1997, the Department of Revenue (DOR) issued a Final Determination citing
Cynthia R. McDonald and James R. McDonald, Jr., (McDonalds) with violations of the "single
place or premises" requirements of S.C. Code § 12-21-2804(A) (Supp. 1997). The violations
resulted from DOR's determination that twenty-five Class III licenses were operated at a single
place or premises. As a result, DOR sought to revoke the twenty-five licenses, to prohibit the
operation or licensing of Class III machines at the location for six months, and to impose a penalty
of $5,000 against each of the McDonalds. The McDonalds then sought a contested-case hearing
which resulted in the scheduling of a hearing on the merits. However, the merits of the hearing
were never reached. Rather, on February 25, 1998, the parties agreed in a Consent Order to the
following:
The parties have agreed to continue this case until July 15 or until Gateway and Triple
AAA are decided by the Supreme Court, whichever arrives first. If the July 15, 1998,
date arrives and the Supreme Court has not reached a decision, the respondents agree
that three of the five rooms involved in the case were in violation and respondents will
not contest violations assessed against those three rooms. Respondents will request
a hearing on the other two rooms, and such hearing should be granted and heard within
ten (10) days of July 15, 1998.
On March 6, 1998, the McDonalds moved for reconsideration of the Consent Order and sought to
"reopen" the case in light of the holding of Department of Revenue v. Andrews, 97-ALJ-17-0643-CC (February 25, 1998) that the six month revocation imposed by S.C. Code Ann. § 12-21-2804(A)
(Supp. 1997) applies only to the machines in an establishment but not to the establishment itself.
However, on March 17, 1998, the Motion for Reconsideration was denied.
July 15, 1998 arrived without the Supreme Court having decided Gateway and Triple AAA.
Accordingly, the terms of the Consent Order required "a hearing on the other two rooms." In
compliance with the Consent Order, a hearing was set for September 23, 1998. However, again,
the merits of the hearing were never reached.
At the opening of the case, DOR conceded "the other two rooms" and then moved for a dismissal
since the McDonalds' concession of the initial three rooms left no controversy to be decided. In
short, five rooms in dispute; the McDonalds conceded three; DOR conceded two: no controversy.
The McDonalds disagree with DOR's view. The McDonalds assert the three rooms addressed in
the Consent Order were not conceded and are still very much in controversy. In their view, the
Consent Order conceded only that the three rooms were in violation but did not concede what fine
should flow from the violation nor concede whether the six-month prohibition applied to the
machines or to the location. Accordingly, a single issue is presented.
II. Issue
Does the February 25, 1998 Consent Order concede all of the legal controversy resulting from the
admitted violations that occurred in the three rooms addressed in the Consent Order?
III. Analysis
When the terms of a settlement agreement lead to disputes in interpretation, the court's duty is to
determine the parties' intention. Mattox v. Cassady, 289 S.C. 57, 344 S.E.2d 620 (Ct.App.1986).
The parties' intention is best found from the language used in the agreement itself, and, if the
language is unambiguous, the language alone determines the effect of the disputed document.
Valley Public Service Authority v. Beech Island Rural Community Water Dist., 319 S.C. 488, 462
S.E.2d 296 (Ct. App. 1995). When examining the disputed document's language, the court must
consider the document as a whole so as not to read any provision in isolation. Parker v. Byrd, 309
S.C. 189, 420 S.E.2d 850 (1992). Additionally, "where one construction makes the provisions
unusual or extraordinary and another construction which is equally consistent with the language
employed, would make it reasonable, fair, and just, the latter construction must prevail." Valley
Public Service Authority v. Beech Island Rural Community Water Dist., 319 S.C. 488, 462 S.E.2d
296 (Ct. App. 1995) citing Parker v. Byrd at 309 S.C. at 192, 420 S.E.2d at 853.
Here, the language of the Consent Order is unambiguous. The unambiguous terms state that "the
respondents agree that three of the five rooms involved in the case were in violation and
respondents will not contest violations assessed against those three rooms. Respondents will
request a hearing on the other two rooms . . . ." (Emphasis added). The plain language states that
the hearing in this matter will be "on the other two rooms." The use of language stating that a
hearing will be held but mentioning a hearing only in reference to "the other two rooms" is language
that plainly expresses an intent not to have a hearing on the previously conceded three rooms.
Moreover, such a view is more reasonable than the rather unusual interpretation urged by the
McDonalds. The view from the McDonalds is that they merely conceded the "liability" portion of
the case and expected to have a later hearing on the "damages" aspects. Such a procedural posture
is not the norm for administrative hearing. To accomplish such a bifurcated hearing on the three
rooms would require specific language to that effect. No such language is in the Consent Order.
Accordingly, all aspects of the controversy as to three of the rooms are conceded by the Consent
Order since the language is plain and unambiguous.
Further, even if the Consent Order were ambiguous, extrinsic evidence demonstrates the three
rooms were conceded as to all controversies. Extrinsic evidence can be examined so long as the
evidence does not vary or contradict the terms of the agreement. See e.g., Levy v. Outdoor Resorts,
304 S.C. 427, 405 S.E.2d 387 (1991). Indeed, for ambiguous language, the court may review
extrinsic evidence to ascertain the true meaning and intent of the parties. Klutts Resort Realty, Inc.
v. Down'Round Devp. Corp., 268 S.C. 80, 232 S.E.2d 20 (1977).
Here, statements by counsel for the McDonalds at the February 18, 1998 hearing confirm the
interpretation that the parties intended that no controversy would remain as to three rooms.
Through counsel, the McDonalds explained the settlement by stating, "We would not contest three
of the five rooms, and the hearing would only be on two of the five rooms." (Emphasis added).
Transcript at p. 17. Thus, the McDonalds not only acknowledge that the hearing will address only
two rooms but more importantly, specifically agree they will not contest three rooms. The use of
the words "would not contest three of the five rooms" establishes the McDonalds' full concession
of all of the controversy on three of the rooms.
IV. Order
IT IS HEREBY ORDERED THAT the McDonalds designate which three rooms will be subject
to revocation of licenses (designated rooms) and notify DOR within ten days of the date of this
order which rooms are so designated.
IT IS FURTHER ORDERED THAT no Class III video game machines may be operated in three
designated rooms for six months after the effective date of revocation.
IT IS FURTHER ORDERED THAT all Class III video game licenses located within the three
designated rooms be surrendered to DOR.
IT IS FURTHER ORDERED THAT each of the McDonalds remit a monetary penalty of $5,000
for a total of $10,000 to DOR.
AND IT IS SO ORDERED.
RAY N. STEVENS
Administrative Law Judge
December 8, 1998
Columbia, South Carolina |
