SC Administrative Law Court Decisions

I. Introduction

The South Carolina Department of Revenue (DOR) seeks a reconsideration of the final order issued in this case. The final order concluded that no violation of S.C. Code § 12-21-2804(A) was committed by Richard McComas in his capacity as the owner of a Class III video machine or by Richard McComas and Margaret McComas in their capacities as the owners of locations housing such machines. DOR's grounds for seeking a reconsideration are that the decision fails to apply the plain language of Regs. 117-190, ignores the longstanding administrative practice of the DOR, and incorrectly allows ten machines at a "single place or premises."

The Motion for Reconsideration must be denied.

II. Discussion

A. Requirements for Reconsideration

A Motion for Reconsideration must satisfy the requirements for reconsideration as established by ALJD Rule 29(D) and Rule 60(B), SCRCP. The required grounds are as follows:

1. mistake, inadvertence, surprise, or excusable neglect;

• newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b);

3. fraud, misrepresentation, or other misconduct of an adverse party;

4. the judgment is void; or

5. the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application.

The three grounds raised by DOR neither assert nor establish how the decision is the result of mistake, inadvertence, surprise, or excusable neglect on the part of any party. Likewise, no assertion is made that newly discovered evidence requires changing the decision. Further, no one has asserted that the decision is the result of fraud, misrepresentation, or other misconduct of any party. Finally, nothing suggested by DOR demonstrates that the judgment is void or is one that has been satisfied, released, or discharged. In short, none of the grounds of Rule 60 are implicated. Thus, the reconsideration must be denied.

Moreover, the three grounds raised by DOR amount to an attempt to reargue the issues decided in this case. A motion for reconsideration is not a proper vehicle for rearguing a party's position. See 2 AmJur 2d, Administrative Law § 393 ("A rehearing petition may not be used . . . to reargue issues determined by the challenged opinion."). Thus, for this second reason, the motion must be denied.

B. Grounds Considered

However, notwithstanding the lack of a supportable basis requiring a reconsideration, given the sincerity and good faith with which DOR appears to seek a better understanding of the basis for the prior decision, I have carefully considered DOR's stated grounds. After such consideration, I find as a third reason for denial that the arguments presented by DOR are unpersuasive.

A. Plain Language of 117-190

DOR argues the decision fails to follow the plain language of the regulation. I cannot agree. On the contrary, just the opposite of DOR's position is true.

Regulation 117-190 serves the sole purpose of defining whether a particular location or area constitutes a "single place or premises" as that phrase is used in S.C. Code Ann. § 12-21-2804 (Supp. 1998). The decision in this case relied upon the plain language of the regulation. In particular, the decision asked the required question, "Was an employee on the premises of the two areas identified as game room one and game room two?" In answering that question, the decision found as a factual matter that "an employee was not in game room 1 for the entire time that Agent Williamson was playing a machine" but that "an employee was in game room 2."

Thus, consistent with the plain language of Regs. 117-190 the decision held that game room one was not a "single place or premises" while game room two was. Accordingly, the decision properly applied the literal language of the regulation. Therefore, no grounds exist for finding the decision failed to follow the plain language of the regulation.

B. Deference to Longstanding Practice of DOR

DOR argues that it has a longstanding administrative position that a failure to have an employee in every area in which five machines are located is a violation of S.C. Code Ann. § 12-21-2804 (Supp. 1998). Even if the evidence were to confirm that DOR has consistently held such a position, I cannot agree that such a position is entitled to significant weight since the plain language of the disputed statute is contrary to DOR's position.

1. No Agency Deference For Statutes Having A Plain Meaning

Case law has long established that no deference to an agency's position is warranted where the language presents a clear meaning. Glens Falls Insurance Co. v. City of Columbia, 242 S.C. 237, 130 S.E.2d 573 (1963) (no occasion arises for considering an agency's position where the language of the statute is plain and unambiguous and conveys a clear and definite meaning). Indeed, the clear and definite meaning will always be applied despite an agency's contrary but consistently followed position. Davidson v. Eastern Fire & Cas. Ins. Co., 245 S.C. 472, 141 S.E.2d 135 (1965) ("An uninsured motorist endorsement that contravenes the requirements of the statute is, to that extent, invalid, regardless of the Department's approval of it.").

2. Section 12-21-2804 Conveys A Plain Meaning

Here, § 12-21-2804 (Supp. 1998), in plain and unambiguous language, prohibits "more than five [Class III] machines . . . at a single place or premises." Thus, one must find the presence of more than five machines in any area that constitutes a "single place or premises." Accordingly, the first question is what parameters create the various single places or premises for the structure involved in this case and the second question is how many machines are located within that space.

a. Controlling Parameters

Regs. 117-190 relies upon two parameters: exterior walls and multiple areas of machines.

i. Exterior Walls

In straightforward terms, Regs. 117-190 explains that a single place or premises "means a structure surrounded by exterior walls . . ." Accordingly, applying the exterior wall parameter to the instant case results in the conclusion that the mall-type structure is itself a "single place or premises."⁽¹⁾

ii. Multiple Areas of Class III Machines

However, the mere presence of exterior walls does not end the search for single places or premises. Rather, upon entering the mall-type structure involved in this case, one immediately concludes further language of Regs. 117-190 is applicable. One sees multiple areas of machines, i.e., "two or more areas where video game machines are located." Thus, the second parameter of multiple "areas" becomes a factor to be investigated.

Unlike the automatic single place or premises classification achieved by the exterior walls parameter, the second parameter of multiple "areas" produces a single place or premises classification only after an investigation by DOR "to determine if each area in reality constitutes a single place or premise." To constitute a single place or premises, the investigation must find that each of the areas has a separate electric utility meter, at least one separate employee on the premises during business hours, a separate local business license where required, and a separate state sales tax license.

In this case, no employee was in the area identified as game room one. Thus, the area comprising game room one was not and cannot by itself be classified as a single place or premises. Accordingly, since the area is incapable of being a single place or premises by itself, what space is the area a part of? The area is a part of the total space comprising the single place or premises produced by the exterior walls parameter.

b. How Many Machines Are Within Each Single Place or Premises

Having found all of the single places or premises in the structure here under review, the remaining question is how many Class III machines are housed within each. When making the count, if any area qualifies as a "single place or premises," the machines in that area can be counted only once and cannot be again counted when determining the machines in another single place or premises. To do so would defy the plain meaning of the word "single" as used in the statute. See Merriam-Webster: WWWebster Dictionary 1999; www.m-w.com/dictionary.htm (18 April 2000) ("single" is "unaccompanied by others: lone, sole.").

Accordingly, twenty machines were located in four separate single places or premises with each having only five machines. Three single places or premises consisted of three game rooms with five machines each. The fourth game room lacked an employee and thus could not be a single place or premises. However, the space occupied by the fourth game room became a part of the single place or premises created by the exterior walls. The single place or premises created by the exterior walls had only five machines. Thus, no single place or premises exceeded the five machine limit, and no violation of § 12-21-2804 could be made. Accordingly, DOR's position that a failure to have an employee in every area in which five machines are located results in a violation of S.C. Code Ann. § 12-21-2804 (Supp. 1998) is a position contrary to the plain language of the statute and cannot be given significant weight.

This analysis applies equally to the convenience store hypothetical supplied by DOR in its Motion for Reconsideration.

First, the exterior walls parameter is applied. The structure housing the convenience store is itself a "single place or premises." Further, the exterior walls parameter does not impose a duty to have an employee on the premises in order to reach that status. Accordingly, the convenience store itself is a single place or premises and is allowed to house five machines.

Second, the multiple areas parameter is applied. Once the convenience store adds an "additional room" and places five machines in that room, the additional room presents a structure having an interior configuration with Class III machines in multiple areas. The additional room that created the multiple area configuration must achieve the status of a "single place or premises" since without that status ten machines will be within the "single place or premises" created by the exterior walls parameter. The additional room achieves the status of being a single place or premises by having a separate electric utility meter, at least one separate employee on the premises during business hours, a separate local business license where required, and a separate state sales tax license.

In summary, if the additional room qualifies, five machines are present in each of two single places or premises and no violation results. In finding two single places or premises, only the additional room falls under DOR's mandatory scrutiny requiring an affirmative finding of a separate electric utility meter, at least one separate employee on the premises during business hours, a separate local business license where required, and a separate state sales tax license. If the additional room fails to achieve the status of a single place or premises, the five machines of the additional room become a part of the single place or premises produced by the exterior walls parameter. Such being true, ten machines are present in the single place or premises and a violation of § 12-21-2804 occurs.

C. Ten Machines at a Single Place or Premises

DOR argues the instant decision allows ten machines at a single place or premises and does so without imposing a violation. I cannot agree.

As discussed above, all game rooms except game room number one were properly configured and constituted individual single places or premises with each housing five machines. Such being true, all of the remaining space outside the properly configured three game rooms became a part of the single place or premises created by the exterior walls parameter and that entire space was to be examined to determine if more than five machines were present. If more than five were found, a violation resulted. If five or fewer were found, no violation resulted.

Here, the total remaining space of the structure outside the properly configured three game rooms held only five machines. Thus, contrary to DOR's view, no location contained more than five machines and no violation was established.

To adopt DOR's position and to find a violation would require rewriting the statute to create an automatic violation when a space containing five machines fails to have an employee within that space. No such language is in the statute or in the regulation.

Rather, Regs. 117-190 plainly holds that an interior "area" containing five machines but containing no employee is merely a space that is not a single place or premises. Section 12-21-2804 is not automatically violated when a party attempts but fails to make an interior area a single place or premises. Had the General Assembly wanted the sole factor of a lack of an employee on the premises to constitute a violation of § 12-21-2804, the General Assembly could have written just such a statute. It did not do so, and I decline DOR's invitation that I write such a statute. See Creech v. S. C. Public Service Authority, 200 S.C. 127, 20 S.E.2d 645 (1942) ("'It is perhaps unnecessary to say that courts have no legislative powers, and in the interpretation and construction of statutes their sole function is to determine, and within the constitutional limits of the legislative power to give effect to, the intention of the Legislature. They cannot read into a statute something that is not within the manifest intention of the Legislature as gathered from the statute itself.") Accordingly, DOR has failed to establish that the decision of March 20, 2000 allows ten machines to be present at a single place or premises.

III. Order

The Motion for Reconsideration is denied.

AND IT IS SO ORDERED.

____________________________

RAY N. STEVENS

Administrative Law Judge

Dated: April 19, 2000

Columbia, South Carolina

1. One should note that the regulation does not require an employee on the premises when the single place or premises status is achieved by the exterior walls parameter. Rather, the only requirement to achieve such status is that the structure must be surrounded by exterior walls.