Bugsy's, Inc. v. City of Myrtle Beach, 25111.

• Decision Date: 24 April 2000
• Docket Number: No. 25111.,25111.
• Citation: 530 S.E.2d 890,340 S.C. 87
• Court: South Carolina Supreme Court
• Parties: BUGSY'S, INC., Highway Coffee, Inc., Pool Services Unlimited of MB, Inc., 6401 Convenience, Inc., and Candy Treats, Inc., Appellants, v. The CITY OF MYRTLE BEACH, Respondent.

340 S.C. 87

530 S.E.2d 890

BUGSY'S, INC., Highway Coffee, Inc., Pool Services Unlimited of MB, Inc., 6401 Convenience, Inc., and Candy Treats, Inc., Appellants, v. The CITY OF MYRTLE BEACH, Respondent.

No. 25111.

Supreme Court of South Carolina.

Heard November 2, 1999.

Decided April 24, 2000.

Howell V. Bellamy, Jr., and Douglas M. Zayicek, of Bellamy, Rutenberg, Copeland, Epps, Gravely & Bowers, P.A., of Myrtle Beach, for appellants.

James B. Van Osdell and Cynthia Graham Howe of Van Osdell, Lester, Howe & Jordan, P.A., of Myrtle Beach, for respondent.

BURNETT, Justice:

This action challenges the validity of Respondent the City of Myrtle Beach's (the City's) Zoning Ordinance 96-56 which, in part, affects some businesses which operate video poker machines. The master-in-equity determined Ordinance 96-56 was valid. Alternatively, the master-in-equity held appellants were operating in violation of the prior zoning ordinance. We affirm.

FACTS

Appellant Bugsy's, Inc., is a sports bar and restaurant located within the City. Appellants King's Highway Coffee, Inc., 6401 Convenience, Inc., and Candy Treats, Inc., are retail businesses located in separate rooms inside Bugsy's, Inc. These four appellants each lease and operate five video poker machines from Appellant Pool Services Unlimited of M.B.¹

Pursuant to the City's zoning ordinance, video poker machines may be maintained as a principal use in seven districts. Video poker machines are only permitted as accessory uses in district AC-2.² Bugsy's is located in district AC-2.³ Bugsy's general manager testified the businesses gross $400,000 a month from video poker machines and $20,000 a month from other sales. Hence, 95% of Bugsy's gross proceeds is generated by the operation of video poker machines.

Both prior to and after adoption of Ordinance 96-56, the City's comprehensive zoning ordinance defines "accessory use," in part, as follows:

Section 204.1 Accessory building or use. An accessory building or use is:

(a) Subordinate to and serves a principal building or principal uses;

(b) Subordinate in area, extent, or purpose to the principal use served;

(c) Designed for the comfort, convenience, or necessity of occupants of the principal use served.

At all times, the City's comprehensive zoning ordinance has permitted accessory uses provided, among other requirements, the accessory use is customarily incidental to the permitted use. For all commercial and business uses, Ordinance 96-56 added the following description of an accessory use: 1102.d. In the case of commercial or business uses, does not produce gross proceeds which exceed forty percent of the combined gross proceeds produced by the accessory use and the permitted principle [sic] use; and does not occupy in excess of forty percent of the available floor space in the business activity.

With regard to coin-operated amusement devices, Ordinance 96-56 added the following description of an accessory use:

1102.6 Coin-operated amusement devices. Coin-operated amusement devices permitted as accessory uses are subject to the following restrictions:

a. Maximum number of machines per principal use is five.⁴

b. Only allowed as an accessory use to bars and restaurants of at least 1,000 square feet of gross floor space or as an accessory use to retail facilities of at least 2,000 square feet of gross floor space.⁵

Ordinance 96-56 provides:

703.10.6 Cessation. Coin operated amusement devices operated as accessory uses not in conformance with the provisions... must be removed within 2 years from the effective date of this ordinance....

The effective date of Ordinance 96-56 is May 28, 1996.

It is undisputed Bugsy's proceeds from video game machines exceed 40% of the gross proceeds of each of the businesses. It is also undisputed the three retail businesses do not meet the 2000 square foot requirement or the 40% area distribution requirement to operate video game machines as accessory uses pursuant to Ordinance 96-56.⁶ The City has never cited Bugsy's for violation of any zoning ordinance.

ISSUES

I. Did the master-in-equity err by ruling Ordinance 96-56 is not preempted by state law?

II. Did the master-in-equity err by ruling Ordinance 96-56 does not conflict with state law?

III. Did the master-in-equity err by ruling Ordinance 96-56 is not a criminal ordinance?

IV. Is Ordinance 96-56 arbitrary, capricious, or unreasonable?

V. Did the master-in-equity err by ruling the two year amortization period is valid?

DISCUSSION

I.

Bugsy's argues the State has both expressly and impliedly preempted the regulation of video poker machines and, therefore, the City was precluded from passing Ordinance 96-56. Specifically, Bugsy's asserts the General Assembly expressly retained state regulatory control of video poker machines through S.C.Code Ann. § 12-21-2720(B)(Supp.1998) which provides: "[n]o municipality may limit the number of machines within the boundaries of the municipality." It asserts the General Assembly impliedly retained State control of video poker machines by enacting a comprehensive regulatory scheme in the Coin-Operated Machines and Devices and Other Amusements Act⁷ and Video Game Machines Act.⁸ We disagree.

Determining whether a local ordinance is valid is a two-step process. The first step is to determine whether the municipality had the power to adopt the ordinance. If no power existed, the ordinance is invalid. If the municipality had the power to enact the ordinance, the second step is to determine whether the ordinance is consistent with the Constitution and general law of the State. Diamonds v. Greenville County, 325 S.C. 154, 480 S.E.2d 718 (1997). In order to pre-empt an entire field, an act must make manifest a legislative intent that no other enactment may touch upon the subject in any way. Town of Hilton Head Island v. Fine Liquors, Ltd., 302 S.C. 550, 397 S.E.2d 662 (1990). In Fine Liquors, Ltd., the Court held, although the General Assembly gave the Alcoholic Beverage Control Commission the sole and exclusive authority to sell beer, wine, and alcohol, it had not preempted the field so as to preclude the Town of Hilton Head from passing a zoning ordinance which prohibited internally illuminated "red dot" signs.

Section 12-21-2720(B) does not express the State's intent to preempt the field of video poker machines. It only prohibits municipalities from limiting the number of video poker machines within their boundaries. While Ordinance 96-56 effectively limits the location of video game machines in the City, it does not limit the number of machines within the municipality.⁹

Moreover, while the General Assembly has enacted a comprehensive scheme regulating many aspects of video poker machines, the scheme does not manifest an intent to prohibit any other enactment from touching on video poker machines. State regulation of video poker machines does not preclude a municipality from passing a zoning ordinance which impacts businesses which have video game poker like the State's regulation of the sale of beer, wine, and alcohol does not preclude a municipality from passing a zoning ordinance which impacts a business which sells those products.

Bugsy's maintains Martin v. Condon, 324 S.C. 183, 478 S.E.2d 272 (1996), supports its argument regarding the preemptive effect of the video gaming statutes and "directly controls the outcome of this case." In Martin, the plaintiff challenged a statute which provided for county referenda to determine the legality of non-machine cash payouts for coin-operated video machine games. The Court held because the local option law could criminalize conduct which was legal under state law, it was constitutionally prohibited. Martin did not hold the State preempted local government from taking any action which touches video poker machines.

II.

Bugsy's argues Ordinance 96-56 directly conflicts with two provisions of State law and, therefore, is invalid. We disagree.

First, Bugsy's argues because the 40% gross proceeds requirement of Ordinance 96-56 is more restrictive than the State's "primary and substantial" gross proceeds requirement in S.C.Code Ann. § 12-21-2804(A)(Supp.1998), the ordinance impermissibly conflicts with State law. We disagree.

Where an ordinance is not preempted by State law, the ordinance is valid if there is no conflict with State law. In order for there to be a conflict between a state statute and a municipal ordinance, both must contain either express or implied conditions which are inconsistent and irreconcilable with each other. If either is silent where the other speaks, there is no conflict. Barnhill v. City of North Myrtle Beach, 333 S.C. 482, 511 S.E.2d 361 (1999).

Section 12-21-2804(A) provides the South Carolina Department of Revenue (DOR) may not issue permits for more than five machines at a single place or premises. It further provides: "[n]o machine may be licensed or relicensed in any location where the primary and substantial portion of the establishment's gross proceeds is from machines licensed under Section 12-21-2720(A)(3) ...".

Section 12-21-2804(A) governs the DOR's issuance of machine permits. The 40% gross proceeds requirement of Ordinance 96-56 is a portion of the City's definition of accessory use for commercial and business zoning purposes. Assuming the DOR's definition of "primary and substantial" is less restrictive than Ordinance 96-56's 40% gross proceeds requirement, the two provisions are neither inconsistent nor irreconcilable with each other because the definitions are for different purposes. The DOR's "primary and substantial" definition governs which establishments may obtain machine licenses from the DOR while Ordinance 96-56's 40% gross proceeds requirement governs where those establishments may be located within the City. There is no conflict between State law and the City's ordinance. See id. (state statute regulating activity on state waters is not irreconcilable with city ordinance regulating...