Monday, December 11, 2017

SC Administrative Law Court Decisions

CAPTION:
SCDOR vs. CBA Games, Inc., et al

AGENCY:
South Carolina Department of Revenue

PARTIES:
Petitioners:
South Carolina Department of Revenue

Respondents:
CBA Games, Inc., CBA Games, Inc., d/b/a CBA Inc., Cary Hardee, d/b/a The Poker Room
 
DOCKET NUMBER:
96-ALJ-17-0491-CC

APPEARANCES:
Carol I. McMahan, Esq., Attorney for Petitioner

Thomas C. Mann, Esq., Attorney for Respondent
 

ORDERS:

ORDER AND DECISION

STATEMENT OF THE CASE

This matter came before me pursuant to a citation issued by the Department of Revenue against Respondent CBA Games, Inc. for violating S.C. Code Ann. § 12-21-2804(A) (Supp. 1996), by allowing the use of more than five Class III licenses acquired pursuant to S.C. Code Ann. § 12-21-2720(A)(3) (Supp. 1996) for machines in a "single place or premises," as defined in 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996). After notice to the parties, a hearing was conducted on February 26, 1997.

Any issues raised or presented in the proceedings or hearing of this case not specifically addressed in this Order are deemed denied. ALJD Rule 29(B).

FINDINGS OF FACT

I make the following findings of fact, taking into consideration the burden on the parties to establish their respective cases by a preponderance of the evidence, and taking into account the credibility of the witnesses:

1. On June 13, 1996, revenue officers Tina Lee and Judy Nichols of the South Carolina Department of Revenue visited a location known as "Cussin Bills", at 110 Woodland Hills Road, Columbia, South Carolina. Officers Lee and Nichols conducted an inspection, gathered information, drew a diagram of the location, and took pictures.

2. The revenue officers entered the location and found a mall-type setting with a common area and four separate game rooms (Rooms A through D). The common area included a bar, pool table, dance floor and dining tables.

3. All four game rooms each contained five video poker machines available for play. At the time of Petitioner's inspection, the door was open, the lights were on, and the machines were on and fully operational in each of these four rooms.

4. Respondent CBA Games, Inc. is the machine owner and licensee of all the Class III machines contained in the four game rooms. CBA, Inc. and Cary Hardee d/b/a The Poker Room are the retailers for the Class III machines located in the four game rooms. Cary Hardee is also the "owner, partner, or corporate officer" of CBA Games Inc., whose trade name is CBA, Inc.

5. The following Class III licenses were affixed to machines located in game rooms A and B:

CBA, Inc.(Room A) Cary Hardee, d/b/a The Poker Room(Room B)

42577 3810140

43578 3810150

43579 3810143

43580 3810142

43574 3810141

6. There were no employees in Room A and Room B at the time of Petitioner's inspection. There were no "closed" signs on either of the doors to Rooms A and B and no information to indicate the rooms were not open and machines were not available for play.

7. Employees were located in Rooms C and D at the time of inspection.

8. The employee assigned to Room A, Boyd Bauknight, appeared ten (10) minutes after the officers arrival and informed the officers that he had momentarily left the room to pick up his paycheck stub in the back of building.

9. There is conflicting testimony as to where the employee assigned to Room B, Debra Lafferty, was located at the time of Petitioner's inspection. Officer Lee testified that Ms. Lafferty was located in Room C, while Respondent claims Ms. Lafferty was partially inside Room B. I find that Debra Lafferty was not located in Room B at the time the officers inspected the premises.

10. On June 13, 1996, Officer Lee issued a citation to Respondent CBA Games, Inc. for operating the location in violation of the single place or premise requirement for having more than five video game machines in a single place or premise pursuant to § 12-21-2804(A). Petitioner seeks a $5,000 fine against Respondent, revocation of 10 Class III machine licenses, and a six-month prohibition on the licensure and operation of Class III machines at the subject location.

CONCLUSIONS OF LAW

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

1. Pursuant to S.C. Code Ann. § 12-4-30(D) (Supp. 1996) and S.C. Code Ann. § 1-23-320 (Supp.1996), the Administrative Law Judge Division has jurisdiction to hear this matter.

2. The weight and credibility assigned to evidence presented at the hearing of a matter is within the province of the trier of fact. See S.C. Cable Television Ass'n v. Southern Bell Tel. & Tel. Co., 308 S.C. 216, 417 S.E.2d 586 (1992). Conflicts in the testimony were resolved in favor of the Department based upon the credibility of the witnesses and the weight assigned to their testimony.

3. Petitioner alleges that on June 13, 1996, Respondent violated S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) and 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996) by operating more than five Class III video game machines at a single place or premises.

4. Section 12-21-2804(A) prohibits a person from applying for, receiving, maintaining, or permitting to be used permits for the operation of more than five Class III machines at a single place or premises.

5. 27 S.C. Code Regs. 117-190 was promulgated to clarify the meaning of the phrase "single place or premises" as set forth in Section 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 fire walls 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 fire walls 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 fire walls 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 Regs. 117-190 (1995) (emphasis added).

6. It is well established that in interpreting a statute, the court's primary function is to ascertain the intention of the legislature. State v. Blackmon, 304 S.C. 270, 403 S.E.2d 660 (1991); First Sav. Bank, Inc. v. Gold Coast Ass'n., 301 S.C. 158, 390 S.E.2d 486 (Ct. App. 1990); State v. Harris, 268 S.C. 117, 232 S.E.2d 231 (1977). 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. S.C. 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. Bryant v. City of Charleston, 295 S.C. 408, 368 S.E.2d 899 (1988); Home Health Serv. v. S.C. Tax Comm'n, 312 S.C. 324, 440 S.E.2d 375 (1994). 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).

7. With respect to the "employee" requirement, Regulation 117-190 requires that each entity or business have at least one separate employee on the premises during business hours for a business to comply with the "single place or premises" requirements of Section 12-21-2804(A). If a game room containing operational Class III video game machines is accessible to customers and no employee is present in that room, the room is being operated in violation of Section 12-21-2804(A). An employee working in a common area or anywhere else outside the game rooms is not considered to be "on the premises" of the game room. See South Carolina Dep't of Revenue & Taxation v. Mickey Stacks, 95-ALJ-17-0742-CC (March 8, 1996), aff'd Court of Common Pleas, Richland County, Civil Action No. 96-CP-40-0889 (March 21, 1997).

8. Respondent raised the defense of insufficient notice, claiming DOR failed to adequately notify affected businesses of the Department's "narrow" interpretation and application of S.C. Code Ann. Regs. 117-190 (Supp. 1996). Respondent contends he was unaware of the requirement that each video game room possess separate employees at all times. Respondent believed his establishment was in compliance with the law by having a sufficient number of employees in the entire building to cover each of the game rooms. In essence, Respondent argues "single place or premises" would reasonably refer to the entire building rather than to each separate game room, and that DOR failed to notify video poker operators differently. Respondent's lack of notice defense is unpersuasive given the clear language of the regulation and the correlating duty of business owners to familiarize themselves with the applicable laws governing their business.

9. Respondents' claim that DOR failed to adequately notify them of the Department's interpretation and application of 27 S.C. Code Ann. Regs. 117-190 (Supp. 1996) is without merit. The language of Regulation 117-190 clearly defines a premises in terms of that area where five Class III licenses are located. Regulation 117-190 clearly defines the criteria necessary to meet the "single place or premises" requirement, including the separate employee criteria. Those who engage in a particular business bear the responsibility of familiarizing themselves with the applicable statutes and regulations governing the industry. Cf. South Carolina Wildlife & Marine Resources Dep't v. Kunkle, 287 S.C. 177 at 179, 336 S.E.2d 468 at 469 (1985) ("[I]t is a well-settled maxim that ignorance of the law is no excuse.").

10. In addition, Revenue Ruling 95-13 issued on August 1, 1995, contains questions and answers about the Department's interpretation of Reg. 117-190. This Revenue Ruling is available to the public and is designed to inform the public about the Departments' policies and positions relating to those policies. One of the questions asked whether employees were required to be in the single place or premise or if the employees could be in a common area. The answer stated there must be an employee in each single place or premise during business hours. This interpretation is consistent with the wording of Reg. 117-190.

12. S.C. Code Ann. § 12-21-2804(A) (Supp. 1996) expressly authorizes the "commission" [Department] to enforce the provisions of this section and also authorizes the Department to revoke licenses utilized in a fashion that fails to comply with the provisions of this section.

13. Pursuant to S.C. Code Ann. § 12-21-2804(A) (Supp.1996), the penalty for exceeding the maximum number of video gaming machines permitted in a single place or premises is revocation of the licenses of the Class III machines located in the establishment. Additionally, no machine license may be issued for, nor a machine be operated at, an establishment in which a license has been revoked for a period of six months from the date of the revocation.

14. S.C. Code Ann. § 12-21-2804(F) (Supp. 1996) provides that a person who violates S.C. Code Ann. § 12-21-2804(A) is subject to a fine of up to $5,000.

15. Respondent CBA Games, Inc. and Cary Hardee permitted the use of more than five Class III machines at a single place or premise. ORDER

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

ORDERED, that the ten (10) Class III licensed video game machine licenses located in Rooms A and B as stated in this Order are revoked. Respondent CBA Games, Inc. and Cary Hardee are fined $5,000.00. Further, DOR may not issue licenses for, and Respondents shall not operate Class III machines in those rooms at, 110 Woodland Hills Road, Columbia, South Carolina, for a period of six months from the date of this order.

AND IT IS SO ORDERED.

___________________________

ALISON RENEE LEE

Administrative Law Judge



November 14, 1997

Columbia, South Carolina