Mibbs v. SOUTH CAROLINA DEPT. OF REVENUE, 25024.

• Court: United States State Supreme Court of South Carolina
• Writing for the Court: MOORE, Justice
• Citation: 524 S.E.2d 626,337 S.C. 601
• Parties: MIBBS, INC., Appellant, v. SOUTH CAROLINA DEPARTMENT OF REVENUE, Respondent.
• Docket Number: No. 25024.,25024.
• Decision Date: 06 December 1999

337 S.C. 601
524 S.E.2d 626

MIBBS, INC., Appellant,
v.
SOUTH CAROLINA DEPARTMENT OF REVENUE, Respondent

No. 25024.

Supreme Court of South Carolina.

Heard November 3, 1999.

Decided December 6, 1999.

337 S.C. 604

A. Camden Lewis and Mark W. Hardee, both of Lewis, Babcock & Hawkins, L.L.P.; and Richard A. Harpootlian and Robert G. Rickard, both of Law Offices of Richard A. Harpootlian, P.A.; all of Columbia, for appellant

James D. Brice and Ronald K. Wray, II, both of Gibbes, Gallivan, White & Boyd, PA., of Greenville, for respondent.

MOORE, Justice:

Appellant (Mibbs) commenced this action against respondent (Department) to recover for business losses allegedly incurred when cash payouts for video poker were banned in Anderson and Oconee counties pursuant to a November 1994 local option referendum. The trial judge granted Department summary judgment. We affirm.

FACTS

Mibbs operated two convenience stores, one in Oconee County and one in Anderson County. In July 1993, the legislature enacted S.C.Code Ann. § 12-21-2806 which provided for the local option referendum regarding cash payouts to be held in November 1994. Mibbs subsequently entered into written contracts¹ with Best Amusement, Inc. (Best) for the placement of nine video poker machines in its stores in exchange for a 50% share of the profits for a term of five years.² At the time, the Best employee discussed with Mibbs's owner the recent enactment of § 12-21-2806 and its possible effect. Best held the licenses for the machines. Mibbs paid no charge to lease the machines.

In November 1994, Oconee County and Anderson County voted against continuing cash payouts for video poker. On

337 S.C. 605

July 1, 1995, cash payouts became illegal and Department revoked Best's licenses for the machines. Mibbs's Anderson County store was sold sometime in 1995; the Oconee County store went out of business in September 1996. In November 1996, this Court struck down the law providing for the local option referendum as unconstitutional. Martin v. Condon, 324 S.C. 183, 478 S.E.2d 272 (1996)

Mibbs subsequently commenced this action to recover damages allegedly resulting from the loss of video poker revenue. The complaint alleged a regulatory taking of Mibbs's contracts with Best and an unconstitutional impairment of contract. Department asserted immunity as a defense and moved for summary judgment.

The trial judge found no taking or impairment of contract. In addition, he found Department absolutely immune under S.C.Code Ann. § 15-78-60(4) (Supp.1998) which provides that a government entity is not liable for the enforcement of any law "whether valid or invalid."

DISCUSSION

The trial judge's ruling regarding Department's immunity was not appealed and is the law of the case. In re Morrison, 321 S.C. 370, 468 S.E.2d 651 (1996). Since Department is immune, summary judgment was properly granted on all causes of action. Failure to appeal an alternative ground of the judgment will result in affirmance. South Carolina Tax Comm'n v. Gaston Copper Recycling Corp., 316 S.C. 163, 447 S.E.2d 843 (1994); Biales v. Young, 315 S.C. 166, 432 S.E.2d 482 (1993). Further, the issues raised regarding the taking and impairment of contract causes of action are completely without merit as discussed below.

Takings clause

Mibbs contends the ban on cash payouts resulted in a regulatory taking of Mibbs's property interest in the contracts in violation of due process.

In determining whether governmental regulation violates the takings clause, the Court will consider the economic impact of the regulation, its interference with reasonable

337 S.C. 606

investment-backed expectations, and the character of the governmental action. Eastern Enterprises v. Apfel, 524 U.S. 498, 118 S.Ct. 2131, 141 L.Ed.2d 451 (1998). Where there is no reasonable investment-backed expectation, no taking will be found. Id.; Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986). In this case, there is no "investment-backed" expectation since Mibbs invested nothing in obtaining or performing these contracts

Further, Mibbs complains of no taking except lost business profits. Collateral damages, including lost business profits, are not recoverable on a takings claim. United States v. General Motors Corp., 323 U.S. 373, 65 S.Ct. 357, 89 L.Ed. 311 (1945) (Fifth Amendment takings clause concerns itself solely with the owner's relation to the physical thing and not with consequential damages); Carolina Power & Light Co. v. Copeland, 258 S.C. 206, 188 S.E.2d 188 (1972). Here, the contracts entitled Mibbs to no contractual amount in exchange for placement of the machines in his stores. Had no one played the video poker machines,...