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. James O. Henderson, d/b/a Orbit Games, et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
James O. Henderson, d/b/a Orbit Games, and James D. Quinn, d/b/a Casino Jack and d/b/a Casino Jack II
 
DOCKET NUMBER:
99-ALJ-17-0650-CC

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

Respondents & Representative: James O. Henderson, d/b/a Orbit Games, and James D. Quinn, d/b/a Casino Jack and d/b/a Casino Jack II, Thomas A.M. Boggs, 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 three licensees for a total penalty of $15,000, 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. James O. Henderson ("Henderson"), in his capacity as the machine owner, and James D. Quinn ("Quinn"), in his capacity as the location owner, oppose DOR's position. They assert that DOR's determination is without evidentiary 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. 1999). 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 Henderson or Quinn 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. 1999)?



2. If a violation occurred, are Henderson and Quinn 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 Henderson and Quinn denied the privilege of using the ten 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 Henderson and Quinn?

III. Analysis



A. Excessive Machines At A Single Place or Premises



1. Positions of Parties



DOR argues that a violation of § 12-21-2804 occurred in that more than five Class III machines were in operation at a single place or premises. DOR reasons that, at the time of the inspection, neither game room at 4659 Highway 221 South, Roebuck, South Carolina qualified as a "single place or premises," and therefore the total of all machines in the building must be counted to determine if the number exceeded five and thus violated § 12-21-2804(A). DOR asserts that Regulation 117-190, which defines the term "single place or premises," was violated in that one game room holding five machines was in operation with no separation between it and a second game room with five machines at the same location. Henderson and Quinn disagree and argue that there was sufficient separation between the two game rooms at the location 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



James O. Henderson holds several licenses for Class III video game machines with ten of those licenses utilized at 4659 Highway 221 South, Roebuck, South Carolina. The building at the Roebuck address contains two video game rooms as well as a bingo hall and a clothing store. The two game rooms are on either end of a small L-shaped hallway. One of the game rooms, Casino Jack, has a door leading to the building's exterior and another door opening into the hallway. The other game room, Casino Jack II, is located at the other end of the hallway and it has one doorway opening without a door. James D. Quinn holds the retail sales tax licenses for the two video game rooms involved in this dispute. The two game rooms house the following machine licenses:



Casino Jack 3165951, 3165955, 3165954, 3165953, 3165952

Casino Jack II 3018646, 3165829, 3165828, 3165827, 3165826

On July 17, 1999, SLED conducted an inspection of the video game businesses at the Roebuck 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 and retail tax licenses for the location, and talking to Quinn at the location. SLED agents observed that Casino Jack was closed, but that Casino Jack II was open for business.



As a result of the inspection, the SLED Agents issued a citation against Henderson and Quinn 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 Quinn. In addition to revocation and a six month prohibition on the use of Class III machines, DOR also seeks a $5,000 fine against Henderson as the owner and licensee of the machines and a $10,000 fine against Quinn as the location operator ($5,000 for each licensed game room).



B. Disputed Fact Decided



The parties disagree over the existence of a chain at the doorway opening to Casino Jack II at the time of the inspection. DOR maintains that there was no chain at the entrance to Casino Jack II. Respondents disagree with DOR's position; however, they admit that the chain was not draped across the entrance at the time of the inspection.



The photographs taken by SLED agents show that there was a chain hanging at the entrance to Casino Jack II at the time of the inspection, but that it was not draped across the entrance. Therefore, I find that a chain existed at the entrance to Casino Jack II, but it was not closing off the entrance at the time of the inspection.



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. 1999). 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:



A "single place" or "premises" means a structure surrounded by exterior walls or firewalls consistent with the requirements of the applicable building code . . . 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.



DOR asserts that at the time of the inspection, the two game rooms in this case were not adequately separated since only one of the game rooms had a door. Therefore, DOR argues, both game rooms had "openings leading to another area where video game machines [were] located." Accordingly, DOR argues, neither game room qualified as a single place or premises, and the total of all machines in the building must be counted to determine if the number exceeded five and thus violated § 12-21-2804(A).



B. Law Applied to Facts



DOR bears the burden of proving that at the time of the inspection each game room at the Roebuck address had an opening that led to another area where video game machines were located. 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 failed to establish that either game room had an opening that led to another area where video game machines were located.



At the time of SLED's inspection, the two game rooms were located at either end of the L-shaped hallway. Each game room had either a door or a doorway opening leading into the hallway. Contrary to DOR's argument, the presence or absence of a door is not the operative fact in determining whether a game room has "any windows, doors or other openings leading to another area where video game machines are located." Rather, the inquiry is whether there exists any mechanism that adequately separates the areas where video game machines are located. In this case, Casino Jack and Casino Jack II are adequately separated by the L-shaped hallway and the doorway opening which utilizes a chain for closure. The absence of a conventional door to Casino Jack II does not diminish the utility of the hallway as a separation mechanism. Therefore, at the time of the inspection, neither Casino Jack nor Casino Jack II had an opening that led to another area where video game machines were located, and no violation of § 12-21-2804(A) occurred.

B. Other Issues Not Addressed



Since no violation of S.C. Code Ann. § 12-21-2804(A) (Supp. 1999) 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. 1999). 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. 1999) occurred on July 17, 1999 at 4659 Highway 221 South, Roebuck, South Carolina. Accordingly, James O. Henderson and James D. Quinn 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: May 25, 2000

Columbia, South Carolina


Brown Bldg.

 

 

 

 

 

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