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. Richard McComas, d/b/a RM Amusement, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Richard McComas, d/b/a RM Amusement; and Margaret McComas, d/b/a Golden Image Game Room
 
DOCKET NUMBER:
98-ALJ-17-0192-CC

APPEARANCES:
Petitioner & Representative: South Carolina Department of Revenue, Carol I. McMahan, Esq.

Respondents & Representative: Richard McComas, d/b/a RM Amusement and Margaret McComas, d/b/a Golden Image Game Room, H. Buck Cutts, Esq.

Parties Present: All Parties Present
 

ORDERS:

FINAL ORDER AND DECISION

I. Statement of the Case



The South Carolina Department of Revenue (DOR) seeks the imposition of a $5,000 monetary penalty on two individuals giving a total penalty of $10,000, the revocation of ten Class III machine licenses, and the prohibition of any Class III licenses at the offending location for a period of six months. Richard McComas in his capacity as the machine owner and Richard McComas and Margaret McComas in their capacities as location owners oppose DOR's position. They assert that DOR's determination is without evidentiary or statutory support and that if any violation occurred, DOR's penalties are excessive and should be reduced. This disagreement places jurisdiction in the Administrative Law Judge Division. S.C. Code Ann. §§ 12-60-1310, 12-60-1320, 1-23-600 (Supp. 1998). Based upon the evidence and the argument presented by the parties, no violation of S.C. Code § 12-21-2804(A) occurred and thus no penalty, revocation, or prohibition is imposed.







II. Issues



1. Did Richard McComas or Margaret McComas violate the limitation of having more than five Class III machines at a single place or premises as imposed by S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998)?



2. If a violation occurred, are Richard McComas and Margaret McComas denied the use of any Class III machines at the location for a period of six months from the time the revocation becomes final or are Richard McComas and Margaret McComas denied the privilege of using the five machines for a period of six months from the time the revocation becomes final?



3. If a violation occurred, what monetary penalty, if any, is proper for Richard McComas and Margaret McComas?

III. Analysis



A. Excessive Machines At A Single Place or Premises



1. Positions of Parties



DOR asserts two game rooms at 2761 Highway 17 S, Garden City, South Carolina were in operation with no employee in either of the rooms. Accordingly, DOR argues a violation of § 12-21-2804 occurred in that more than five Class III machines were in operation at a single place or premises. Richard McComas and Margaret McComas disagree and argue the proper number of employees were present so as to refute any alleged violation.



2. Findings of Fact



Based on the preponderance of the evidence, the following findings of fact are entered:



A. Background Facts



Richard McComas holds several licenses for Class III video game machines with twenty of those licenses utilized at 2761 Highway 17 S, Garden City, South Carolina. The building at the Garden City address contains a video game business in a mall-type structure housing four video game rooms. Richard McComas and Margaret McComas hold retail sales tax licenses for the two video game rooms involved in this dispute. The two game rooms have the following names and house the following machine licenses:



RM Amusement 3806110, 3806117, 3806065, 3806106, 3806114

Golden Image Game Room 3806108, 3806101, 3806103, 3806104, 3806105

On July 17, 1997, SLED conducted an inspection of the video game businesses at the Garden City address. The inspection included walking into each area, listing the license numbers for machines located in the game rooms, taking photographs of the location, examining the business licenses, retail tax licenses, and utility meters for the location, and talking to an employee at the location.



As a result of the inspection, the SLED Agents issued a citation against Richard McComas and Margaret McComas for violating S.C. Code Ann. § 12-21-2804(A) due to operating more than five machines in a single place or premises. Copies of the Violation Report were left with the employee on duty. In addition to revocation and a six month prohibition on the use of Class III machines, DOR also seeks a $5,000 fine against Richard McComas as the owner and licensee of the machines and a $5,000 fine against Margaret McComas as the location operator.



B. Disputed Fact Issue Decided



The definitive disputed fact is whether Richard McComas and Margaret McComas had at the time of the inspection at least one separate employee on the premises of each of the open game rooms during business hours.



Four game rooms were located at the Garden City location at the time of the inspection by SLED. However, the two SLED Agents conducting the inspection have raised questions on only two of the rooms. One game room was closed and a second room had an employee on the premises. However, Agent Williamson entered Golden Image Game Room (game room 1) and Agent Holden entered RM Amusement (game room 2) with both rooms raising employee concerns.



In game room 1, Agent Williamson played at least one machine for fifteen minutes. A dispute exists as to whether an employee was present in the room and if so whether that employee properly left the room.



Agent Williams asserts no employee was in the room when she entered, but that an employee entered later, stayed a few minutes, and then left the room. However, the employee in dispute, Dorothy Elliott, testified that she went with the Agent to the game room and that she remained in the room as an employee with the Agent. The employee admits, however, that during the fifteen minute period that the Agent was in game room 1, the employee left Agent Williams alone. Dorothy Elliott left the game room since she was requested by Richard McComas to come to game room 2.



Richard McComas made the request while he was in game room 2. Richard McComas was in game room 2 when that room was entered by Agent Holden and Richard McComas remained in the room while Agent Holden played one of the machines in the room. After the employee from game room 1 came into game room 2, both Richard McComas and Dorothy Elliott remained in game room 2. Shortly thereafter, Richard McComas left game room 2 and entered game room 1 acting as the employee on the premises of game room 1.



After both Agent Williamson and Agent Holden finished playing the machines, they left the building. Soon thereafter, they re-entered the building and issued a violation for operating more than five Class III machines on a single place or premises.



Thus, under the facts of this case, I find an employee was not in game room 1 for the entire time that Agent Williamson was playing a machine in that room. I find that game room 1 remained open after the employee left and that the room was available for play by members of the public. Further, I find that an employee was in game room 2 for the entire time that Agent Holden was playing a machine.



3. Conclusions of Law



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



A. Statutory and Regulatory Requirements for Single Place or Premises



For machines authorized under § 12-21-2720(A)(3), i.e. Class III machines, no person may maintain licenses for more than five Class III machines at a single place or premises. S.C. Code Ann. § 12-21-2804 (Supp. 1998). While the statute does not explain what constitutes a single place or premises, a definition is supplied by Regulation 117-190.



Regulation 117-190 concentrates its analysis of a single place or premises by examining the physical characteristics of the structure enclosing the Class III machines and gives particular attention to exterior walls surrounding two or more video game areas. If at least two interior structures exist (i.e., each having a proper four wall configuration) and if Class III video games are located within each interior structure, each interior structure is characterized as a video game area. Under such circumstances the inquiry becomes whether each video game area is a single place or premises allowing five machines within each area.



A decision on whether each video game area is a single place or premises is reached by a facts and circumstances methodology imposed by Regs. 117-190. Under the regulation, DOR "must review all the facts and circumstances to determine if each area in reality constitutes a single place or premise for video game machines." While a facts and circumstances review is normally very general, the regulation requires the existence of at least four facts. Indeed, a failure to meet any one of these criteria results in the video game area not being a separate place or premise. The four criteria are: (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?



In this case, of the four game rooms, only two are in dispute. DOR asserts that neither is a separate place or premises.



B. Law Applied to Facts



DOR bears the burden of proving that no employee was on the premises of either of the two game rooms under review. See 2 Am. Jur. 2d Administrative Law § 360 (1994) (burden of proof generally rests with the party who asserts the affirmative of an issue). Under the facts of this case, DOR has established that game room 1 lacked an employee "on the premises" but has not established that game room 2 lacked an employee.



An employee is not "on the premises" when the employee is working outside the game room and the Class III video game machines are operational and accessible to customers; i.e., the employee must be physically present in the room. S.C. Dep't of Revenue and Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996). In this matter, during the fifteen minute period that Agent Williamson was in game room 1, the employee left the room. Thus, an employee was not on the premises of game room 1 while the machines in that room were available and open to play by the public. Therefore, game room 1 does not constitute a separate place or premises. However, game room 2 had at least one employee and sometimes two employees during the time that Agent Holden played the machines in that room. Thus, game room 2 constitutes a separate place or premises.



The lack of an employee on the premises of game room 1 means the game room is not a single place or premises. However, finding that an area is not a single place or premises does not automatically determine that a violation of the five machine limit of S.C. Code Ann. Sec. 12-21-2804(A) has occurred. Indeed, the General Assembly did not impose a violation of S.C. Code Ann. §12-21-2804(A) for attempting but failing to create a specific area as a single place or premises. Rather, the statute imposes a violation only when more than five machines are "at a single place or premises." S.C. Code Ann. Sec. 12-21-2804(A) (Supp. 1998). Accordingly, the question is, "Once a specific area has been found not to be a single place or premises, what is the area that comprises the 'single place or premises' used to count the number of machines in that area?"



DOR argues that once an area has been found not to be a single place or premises, all of the machines in the entire structure must be utilized in the counting of machines. Applying such a view to the instant case gives twenty machines (five in each of the game rooms) on a "single place or premises" and creates a violation. I cannot agree with DOR's analysis.



In deciding the meaning of "single," DOR's view ignores the plain language of the statute under review. Green v. Thornton, 265 S.C. 436, 219 S.E.2d 827 (1975). The legislature's intent should be ascertained primarily from the plain language of the statute. 82 C.J.S. Statutes § 322 (b), at 571 (1953). Further, unless a statute requires a different interpretation, the words used must be given their ordinary meaning. Hughes v. Edwards, 265 S.C. 529, 220 S.E.2d 231 (1975). Here, the plain language of §12-21-2804(A) is specific and imposes a duty to count the machines "at a single place or premises."



In the instant case, three of the game rooms at the location qualify as separated areas with each being a "single place or premises." The common meaning of "single" is "unaccompanied by others: lone, sole." Merriam-Webster: WWWebster Dictionary 1999; www.m-w.com/dictionary.htm (24 March 2000). Thus, based on the plain meaning of the word "single," the controlling logical syllogism is as follows:



A single place or premises is unaccompanied by any other area.

The three other game rooms are single places or premises.

The three other games rooms are unaccompanied by any other area.



Accordingly, none of the three game rooms that are separate "single place or premises" can be combined with some other area for the purpose of counting machines in that "other area." Rather, having once counted the machines in the three separate place or premises to establish the five machine limit for each of those areas, a second counting of those same machines is improper as being contrary to the statute's plain use of the term "single" in reference to a "single place or premises."



Therefore, not being able to count the machines in the other three game rooms, the remaining square footage of the structure (comprised primarily of game room 1 and the common area) is to be examined for the existence of more than five machines. In this case, the remaining area does not yield more than five machines but rather gives exactly five machines. Accordingly, no violation of Sec. 12-21-2804(A) occurred on July 17, 1997 at 2761 Highway 17 S, Garden City, South Carolina.



B. Other Issues Not Addressed



Since no violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred, no need exists to address the dependent issues of penalties, revocation, or prohibition of licenses resulting from a violation of S.C. Code Ann. Sec. 12-21-2804(A) (Supp. 1998). Thus, no other issues are examined.



IV. Order



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



No violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1998) occurred on July 17, 1997 at 2761 Highway 17 S, Garden City, South Carolina. Accordingly, Richard McComas and Margaret McComas are not liable for any penalty, revocation, or prohibition, and the citation issued against them is dismissed.







AND IT IS SO ORDERED.





____________________________

RAY N. STEVENS

Administrative Law Judge



Dated: March 28, 2000

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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