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. Collins Holding Corporation, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
Collins Holding Corporation, Allon Investments, Inc., d/b/a Sunset Boulevard and Diamond Boulevard
 
DOCKET NUMBER:
99-ALJ-17-0515-CC

APPEARANCES:
Jeffrey M. Nelson, Esquire, for the Department

James H. Harrison, Esquire, for Collins

No Appearance for Allon Investments, Inc.
 

ORDERS:

FINAL ORDER AND DECISION

STATEMENT OF CASE

This matter came before the Court on appeal of a Final Agency Determination of the South Carolina Department of Revenue (Department) that the Respondents had violated the single place or premise provisions of the South Carolina Video Games Machine Act. This case was originally set for a hearing on January 20, 2000. However, on January 19, 2000, this office received a copy of a letter from James H. Harrison, attorney for Collins Holding Corporation (Collins), to Allon Investments, Inc. (Allon), advising them to hire independent counsel. This letter was dated September 28, 1999. Accordingly, the hearing was postponed until Allon could be properly notified of the hearing.

On January 24, 2000, this office sent Allon a letter advising them that they had fifteen (15) days to contact the Administrative Law Judge Division (Division) regarding this matter. This letter was forwarded via regular and certified U.S. mail to the following address:

Allon Investments, Inc.

Sunset Boulevard

940 Arrowhead Road

Myrtle Beach, S.C. 29572-5517



The certified letter was returned as unclaimed on February 8, 2000, while the letter sent regular mail was not returned to the Division. The returned certified letter had the following forwarding label affixed to it by the U.S. Postal Service:

Notify Sender of New Address:

Allon Investments, Inc.

4867 Bermuda Way N.

Myrtle Beach, S.C. 29577-5430

Therefore, on February 10, 2000, this office sent a second letter to Allon at the Bermuda Way address, via both regular and certified U.S. mail, granting them ten (10) days to contact the Division. Again, the certified letter was returned as unclaimed on March 2, 2000, while the letter sent regular mail was not returned to the Division.

My office then called the Office of the Secretary of State for South Carolina to obtain the address of Allon's registered agent. The address for the agent was the Arrowhead Road address. Therefore, on March 2, 2000, my office sent the hearing notice to Allon at both addresses via regular mail, setting the hearing for April 20, 2000. A hearing was held at the offices of the Division on that date. Counsel for the Department and Respondent Collins appeared at the designated time and place for the hearing. Neither counsel for Respondent Allon nor Respondent Allon itself, however, appeared at the designated time and place. Respondent Allon at no time contacted the Division to request a continuance or to inform the Division that they would not appear at the hearing on this matter. After waiting ten (10) minutes beyond the scheduled time of the hearing for Allon to make an appearance, this hearing was commenced.

Prior to the presentation of its case, the Department notified the Division of the recent South Carolina Supreme Court decision in the case of S. C. Dept. of Revenue v. Collins Entertainment Corp. (Opinion No. 25110, filed April 17, 2000). In that case, the Supreme Court held S.C. Code Ann. Section 12-21-2804(A) (1998) to be penal and found that the state may only impose monetary fines under that statute against Class III machine owners upon a showing that the owners either violated the statute at the time of the licensure, or that they are (were) directly involved in the maintenance or operation of the business where the violation occurred.

Counsel for the Department informed the Division that on the basis of this ruling, and the lack of any evidence that Respondent Collins was involved in the maintenance or operation of Allon's place of business, that the Department was withdrawing its request for monetary fines against Collins under Section 12-21-2804(A). The Department notified the Division of its intent to proceed with the case against Allon as well as its request for the revocation of the six Class III machine licenses held by Collins.

The Department further notified the Division that, based on its own records and information, that Respondent Allon no longer owned or operated the business locations in question and that the locations were currently owned and operated by an individual or corporation which is not a party to this action.



FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and closely passed upon their credibility, taking into consideration the burden of persuasion by the parties, I make the following Findings of Fact by a preponderance of the evidence:

1. Notice of the time, date, place and subject matter of the hearing was timely given to the Petitioner and the Respondents.

2. Allon Investments, Inc., owned and operated video gaming businesses known as Diamond Boulevard and Sunset Boulevard located at 940 Lake Arrowhead Road in Myrtle Beach, South Carolina.

3. Collins Holding Corporation owned and held the South Carolina Class III Coin Operated Device licenses for three Class III machines operated at Diamond Boulevard on May 14, 1999 (licenses #3001524, 3001525, 3005216) and for three Class III machines operated at Sunset Boulevard on May 14, 1999 (licenses #3929744, 3001814, 3001025). However, Collins was not directly involved in the maintenance or operation of either Sunset Boulevard or Diamond Boulevard.

4. On May 14, 1999, South Carolina Law Enforcement (SLED) Special Agents Pam Williamson, Richard Gregory, and Robbie Jones conducted an inspection of the video gaming establishments located at 940 Lake Arrowhead Road in Myrtle Beach, South Carolina. The location was a mall-type arrangement containing two video poker rooms which were separated from the main bar and dance floor area of the building by walls and doorways. The doors to both of these video poker rooms were open. These two rooms had signs over the doorways designating them as "Sunset Boulevard" and "Diamond Boulevard."

There were four machines in Sunset Boulevard, three of which were operational, and a three station blackjack machine in Diamond Boulevard. Three of the machines in Sunset Boulevard were "on" and available for play. All three stations on the blackjack machine in Diamond Boulevard were "on" and available for play. Therefore, a total of six machines were operating in these two rooms.

Agents Williamson and Gregory observed several patrons playing the machines in the Diamond Boulevard location. However, during the Agents' inspection of the building, there were no employees physically present in either of the two licensed "places" or "premises" which were open for business. Furthermore, after the Agents identified themselves, the owner and CEO of Allon Investments, Inc., Yvette Allon, admitted that there were no employees located in either Sunset Boulevard or Diamond Boulevard.

5. On the date of the inspection, Agent Williamson issued a Preliminary Findings Report to Yvette Allon for failure to comply with the single place or premises requirements of S.C. Code Ann. § 12-21-2804(A) (1998) and 27 S.C. Code Ann. Regs. 117-190 (1998). More specifically, Ms. Allon was cited for violating the "one separate employee" requirement of Regulation 117-190.

6. The Department seeks the imposition of a Five Thousand ($5,000.00) Dollar fine against Respondent Allon. The Department further seeks revocation of the six Class III machine licenses at the location.



CONCLUSIONS OF LAW

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

1. The Administrative Law Judge Division has jurisdiction to hear this matter pursuant to S.C. Code Ann. Section 12-4-30(D) (Supp. 1998) and S.C. Code Ann. Section 1-23-320 (Supp. 1998).

2. The Department contends that the Respondents violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1998). That section 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 five machines authorized under Section 12-21-2720(A)(3) at a single place or premise.

(emphasis added). The term "person" is not defined in the Act but is generally defined as encompassing an individual or business entity, as well as a licensee or machine owner. See Black's Law Dictionary 1142 (6th ed. 1990).

3. Pursuant to S.C. Code Ann. Section 12-21-2798 (Supp. 1998), the Department may promulgate rules and regulations pertaining to Class III video game machines and persons licensed for their operation. Regulation 117-190 was promulgated to clarify the meaning of the phrase contained in S.C. Code Ann. Section 12-21-2804(A) "single place or premise". This regulation provides, in relevant part, that:

In determining whether each entity is in fact a single place or premises, the Department of Revenue will consider the following factors:

* * *

(2) Does each entity or business have at least one separate employee on the premises during business hours?

* * *

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 Games Machines Act.

27 S.C. Code Ann. Regs. 117-190 (1998).

4. S.C. Code Ann. § 12-21-2804(A) provides that "[t]he department shall revoke the licenses of machines located in an establishment which fails to meet the requirements of this section."

5. Respondent Collins is the licensee of the Class III video machines which were located and operating in the two locations at issue in this matter. Respondent Allon is the owner of those two locations: Sunset Boulevard and Diamond Boulevard.

6. Because no evidence was offered as to whether there were any employees assigned

to the rooms or, if employees were assigned to the rooms, why the employees were absent from the room, I conclude that Respondent Allon permitted Class III licenses to be used at a "single place or premises" in violation of S.C. Code Ann. Section 12-21-2804(A) (1998) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1998). Furthermore, Respondent Allon is clearly liable for the penalties sought to be imposed by the Department as it is the owner and operator of the businesses in which the machines were being operated. Since Respondent Allon failed to appear at the hearing in this matter, no mitigating circumstances were presented.

7. As to Respondent Collins, no evidence was presented that Collins had any direct control or knowledge of the day-to-day operations of the business in which its machines were being operated. Therefore, I find that Collins is not liable for any monetary damages as a result of this violation.

ORDER

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

ORDERED that Respondent Collins' licenses listed in paragraph three of the Findings of Fact are revoked, and Respondent Allon Investments, Inc., shall pay a fine to the Department of Revenue in the amount of Five Thousand and no/hundredths ($5,000.00) Dollars within thirty (30) days from the date of this Order.

AND IT IS SO ORDERED.



_______________________________

Ralph King Anderson, III

Administrative Law Judge



November 16, 2000

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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