SC Administrative Law Court Decisions

STATEMENT OF THE CASE

This matter is before this tribunal for a contested case hearing pursuant to S.C. Code Ann. §§ 1-23-310 et seq. (Supp. 1997) and S.C. Code Ann. § 12-4-30(D) (Supp. 1997) on alleged administrative violations. The South Carolina Department of Revenue alleges that on May 20, 1997, Respondent violated S.C. Code Ann. § 12-21-2804(A) by applying for, receiving, maintaining, or permitting to be used permits for the operation of more than five machines authorized under S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1997) at a single place or premises. Specifically, the Department alleges violations of the "one separate employee," "separate utility meter," and "retail license" requirements of 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997). For the alleged violations of § 12-21-2804(A), the Department seeks a $5,000 fine against Respondent.

The hearing of this matter was held on January 29, 1999. The issues before this tribunal are (1) whether Respondent violated S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997), and (2) if so, what is the proper penalty for the violations. Based upon the following Findings of Fact and Conclusions of Law, this tribunal concludes that Respondent violated S.C. Code Ann. § 12-21-2804(A) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997) by utilizing video game machine licenses in contravention of these laws. Consequently, the Department shall impose a fine of $250 against Respondent for violation of S.C. Code Ann. § 12-21-2804(A).

FINDINGS OF FACT

Having carefully considered all testimony and arguments presented at the hearing of this matter, and taking into account the credibility and accuracy of the evidence, I make the following Findings of Fact by a preponderance of the evidence:

1. On May 20, 1997, SLED agents Aaron Jackson and Jerry Owen conducted an inspection of the video gaming business located at 818 Highway 28 Bypass, Anderson, South Carolina. After completion of the inspection that day, the agents issued an administrative citation against Respondent for violations of the "single place or premises" requirement of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1997).
2. At the time of the inspection, the facts relating to the "single place or premises" requirement of § 12-21-2804(A) and Regs. 117-190 were as follows:
3. The location at 818 Highway 28 Bypass, Anderson, South Carolina was a mall-type structure consisting of a bar and two separate rooms, herein designated as Game Room 1 and Game Room 2. Each room contained video gaming machines.
4. The main entrance into the structure opened into a common area.
5. The rooms were open and contained operational Class III video game machines which were available for play.
6. No employee was inside either of the game rooms.
7. Respondent had not obtained retail licenses for these rooms.
8. The rooms did not have separate electrical meters.
9. On May 20, 1997, the following Class III licenses were affixed to the machines in Game Room 1 and Game Room 2, as designated on Petitioner's Exhibit # 1.

1. The Department seeks a $5,000 fine against Respondent.
2. Respondent concedes the violations but requests leniency because of extenuating circumstances. Respondent is a truck driver and was not involved in the daily management of the business. Additionally, Respondent has incurred expenses from the medical treatment of his wife for cancer.
3. The Department believes that violations occurred which warrant the imposition of a penalty against Respondent; however, the Department concedes that extenuating circumstances exist and does not object to this tribunal taking such into consideration in imposing an appropriate penalty.

CONCLUSIONS OF LAW AND ANALYSIS

1. Jurisdiction
2. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1997) and S.C. Code Ann. § 1-23-320 (Supp. 1997), the Administrative Law Judge Division has jurisdiction to hear this matter.
3. Burden of Proof
4. In civil cases, generally, the burden of proof rests upon the party who asserts the affirmative of an issue. 2 Am. Jur. 2d Administrative Law § 360 (1994); Alex Sanders, et al., South Carolina Trial Handbook § 9:3 Party With Burden, Civil Cases (1994). The Department is the party asserting the affirmative in this case; therefore, the Department must prove by a preponderance of the evidence that Respondent violated § 12-21-2804(A) and Regs. 117-190. The preponderance of the evidence "is evidence which is of the greater weight or more convincing than the evidence which is offered in opposition to it . . . . " Black's Law Dictionary 1182 (6th ed. 1990). "The preponderance of the evidence means such evidence as, when considered and compared with that opposed to it, has more convincing force and produces in the mind the belief that what is sought to be proved is more likely true than not true." Sanders, supra, § 9:5 Quantum of Evidence in Civil Cases (1994), (citing Frazier v. Frazier, 228 S.C. 149, 89 S.E.2d 225 (1955)).
5. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See South Carolina Cable Television Ass'n v. Southern Bell Tel. and Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Furthermore, a trial judge, who observes a witness, is in the better position to judge the witness's demeanor and veracity and evaluate his testimony. See McAlister v. Patterson, 278 S.C. 481, 299 S.E.2d 322 (1982); Peay v. Peay, 260 S.C. 108, 194 S.E.2d 392 (1973); Mann v. Walker, 285 S.C. 194, 328 S.E.2d 659 (Ct. App. 1985); Marshall v. Marshall, 282 S.C. 534, 320 S.E.2d 44 (Ct. App. 1984).
6. Single Place or Premises Violation
7. The Video Game Machines Act, which regulates video game machine activity in South Carolina, was enacted in 1993 and became effective on July 1, 1993. This Act is codified at S.C. Code Ann. §§ 12-21-2770, et seq. (Supp. 1997). The purpose of the Act is to regulate the video game machines industry and to prevent large-scale casino-type gambling operations in the State of South Carolina. See Reyelt v. South Carolina Tax Comm'n, Nos. 6:93-1491-3 and 6:93-1493-3 (D.S.C. Nov. 15, 1993); See also Op. Att'y Gen. 94-21 at 51 (1994).
8. South Carolina Code Ann. § 12-21-2804(A) (Supp. 1997) 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 Section 12-21-2720(A)(3) at a single place or premises. . . .

(Emphasis added).

1. On June 23, 1995, regulations were promulgated which further clarify the provisions of the Video Game Machines Act, and, as such, these regulations have the force and effect of law. See Young v. South Carolina Dep't of Highways and Pub. Trans., 287 S.C. 108, 336 S.E.2d 879 (1985); Faile v. South Carolina Employment Sec. Comm'n, 267 S.C. 536, 230 S.E.2d 219 (1976). Specifically, Regulation 117-190 was promulgated to clarify the meaning of the phrase "single place or premises" as set forth in § 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 firewalls 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 firewalls 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 firewalls 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 Ann. Regs. 117-190 (Supp. 1997) (emphasis added). The Supreme Court of South Carolina held this regulation to be valid and a natural amplification of § 12-21-2804. McNickel's, Inc. v. South Carolina Department of Revenue, 331 S.C. 629, 503 S.E.2d 723 (1998).

1. It is well established that in interpreting a statute, the court's primary function is to ascertain the legislative intent. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); State v. Harris, 268 S.C. 117, 232 S.E.2d 231 (1977); First South Sav. Bank, Inc. v. Gold Coast Assocs., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990). 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. South Carolina 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. Home Health Serv., Inc. v. South Carolina Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994); Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988). Where terms of a statute are clear and unambiguous, they must be applied according to their literal meaning. Medlock v. 1985 Ford F-150 Pick Up, 308 S.C. 68, 417 S.E.2d 85 (1992); Green v. Zimmerman, 269 S.C. 535, 238 S.E.2d 323 (1977). "[A] statute should be so construed that no word, clause, sentence, provision or part shall be rendered surplusage, or superfluous. . . ." 82 C.J.S. Statutes § 346 (1953); see also Savannah Bank & Trust Co. of Savannah v. Shuman, 250 S.C. 344, 157 S.E.2d 864 (1967). This tribunal has no legislative powers, and the justice or wisdom of statutes rests exclusively with the General Assembly. See Smith v. Wallace, 295 S.C. 448, 369 S.E.2d 657 (Ct. App. 1988).
2. It should be emphasized that S.C. Code Ann. § 12-21-2804(A) (Supp. 1997) clearly precludes any person, not just the licensees, from applying for, receiving, maintaining, or permitting to be used permits for the operation 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 any individual or business entity, including the licensee or machine owner. See Black's Law Dictionary 1142 (6th ed. 1995). Further, § 12-21-2804(A) mandates that the Department revoke the licenses of machines located in an establishment that fails to meet the requirements of this section. Hence, § 12-21-2804(A) mandates revocation of the licenses so used, even if the licensee was not directly involved in applying for, receiving, maintaining, or permitting its licenses to be used in contravention of the statute. Such an interpretation is consistent with the plain language of the statute.
3. There is sufficient evidence to establish that Respondent permitted licenses to be used in contravention of § 12-21-2804(A), which prohibits the operation of more than five Class III video game machines within a single place or premises.

1. Whether an establishment is being operated as a "single place or premises" is determined by evaluating the facts against the standard set forth in Regulation 117-190. Regulation 117-190 requires that each entity or business have at least one separate employee on the premises of that respective entity or business during business hours to comply with the "single place or premises" requirements of § 12-21-2804(A). Additionally, Respondent was required to install a separate utility meter for each game room and obtain individual retail licenses as well.
2. Respondent failed to meet the requirements set forth in Regulation 117-190. Failure to comply with any portion of Regulation 117-190 constitutes a violation of the single place or premises requirements of S.C. Code Ann. § 12-21-2804(A) (Supp. 1997). Consequently, Respondent is subject to a penalty.
3. Penalty
4. Section 12-21-2804(A) expressly authorizes the Department to enforce the provisions of this section and to revoke licenses utilized in a fashion that fails to comply with the provisions of this section.
5. S.C. Code Ann. § 12-21-2804(F) (Supp. 1997) provides that a person who violates S.C. Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000 (emphasis added). The Department seeks a $5,000 fine against Respondent.
6. It is a generally recognized principle of administrative law that the fact-finder has the authority to impose an administrative penalty, as established by the legislature, after the parties have had an opportunity for a hearing on the issues. See, e.g., Walker v. South Carolina ABC Comm'n, 305 S.C. 209, 407 S.E.2d 633 (1991).⁽¹⁾
7. Based on the facts of this case, the evidence supports a fine of $250 against Respondent for violation of § 12-21-2804(A).
8. Pursuant to ALJD Rule 29(C), issues raised in the proceedings but not addressed in this Order are deemed denied.

ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, IT IS HEREBY ORDERED that the Department shall impose a fine of $250 against Respondent.

AND IT IS SO ORDERED.

______________________________

JOHN D. GEATHERS

Administrative Law Judge

February 5, 1999

Columbia, South Carolina

1. See Ohio Real Estate Comm'n v. Aqua Sun Investments, 655 N.E.2d 266 (Ohio App. 2 Dist. 1995); Shadow Lake of Noel, Inc. v. Supervisor of Liquor Control, 893 S.W.2d 835 (Mo.App. S.D. 1995); Matter of Henry Youth Hockey Ass'n, 511 N.W.2d 452 (Minn.App. 1994); Vermont Agency of Natural Resources v. Duranleau, 617 A.2d 143 (Vt. 1992); City of Louisville v. Milligan, 798 S.W.2d 454 (Ky. 1990); Com., Department. of Transp. v. Slipp, 550 A.2d 838 (Pa.Cmwlth. 1988); Department. of Transp. v. Miller, 528 A.2d 1030 (Pa.Cmwlth. 1987); State Police v. Cantina Gloria's, 639 A.2d 14 (Pa. 1994).

Prior to governmental restructuring (i.e., 1993 Act No. 181, eff. July 1, 1994), a commission sitting in its adjudicatory capacity imposed penalties for violations of statutory provisions its agency administered. Acting as fact-finder, it was the commission'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). It is uncontroverted that the former Tax Commission exercised that authority in bingo cases. The ALJ, as the current fact-finder, must also impose a penalty based on the facts presented at the contested case hearing. As parties are entitled to present evidence on all issues arising out of the contested agency action, it follows logically that the tribunal responsible for conducting the proceedings must have the authority to decide those issues.