S.C. Dep't of Revenue v. Lucky's Entm't Co.

• Decision Date: 09 September 2022
• Docket Number: 22-ALJ-17-0312-CC
• Parties: South Carolina Department of Revenue, Petitioner, v. Lucky's Entertainment Co., LLC, d/b/a Lucky's Sports Shack, Respondent.
• Court: South Carolina Administrative Law Court Decisions

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South Carolina Department of Revenue, Petitioner, v. Lucky's Entertainment Co., LLC, d/b/a Lucky's Sports Shack, Respondent.

No. 22-ALJ-17-0312-CC

South Carolina Administrative Law Court Decisions

September 9, 2022

For Petitioner: Dana R. Krajack, Esquire Jason Phillip Luther Esquire

For Respondent: S. Jahue Moore, Esquire

ORDER ON RESPONDENT'S REQUESTED RELIEF

Robert L. Reibold, Administrative Law Judge

STATEMENT OF THE CASE

This matter is pending before the South Carolina Administrative Law Court (the ALC or the Court) pursuant to a request for a contested case hearing and petition for declaratory judgment and injunctive relief filed by Lucky's Entertainment Co LLC, d/b/a Lucky's Sports Shack (Respondent). The main thrust of Respondent's filings is Respondent's request for the Court to determine that good cause exists to remand this matter to the South Carolina Department of Revenue (the Department) to allow Respondent to challenge the notice of intent to revoke Respondent's on-premises beer and wine permit and liquor-by-the-drink license. See S.C. Code Ann. § 12-60-1330(A)(3) (2014).^[1]

On May 3, 2022, the Department sent Respondent a notice of intent to revoke Respondent's on-premises beer and wine permit and liquor-by-the-drink license because Respondent permitted "gambling or games of chance" on the premises in violation of section 61-4-580(A)(3) of the South Carolina Code (2022) on or about March 23, 2022. In the notice of intent to revoke, the Department outlined Respondent's options to either consent to the revocation or the method by which to protest the possible revocation; the notice required Respondent to act by August 1, 2022. On August 23, 2022, the Department revoked Respondent's beer and wine permit and liquor license, and law enforcement seized Respondent's liquor and ordered Respondent not to sell its beer and wine that was left on its premises.

On August 30, 2022, Respondent filed a summons, a petition for declaratory judgment and injunctive relief, and an affidavit of Cheryl Gunter, the owner of Respondent, with the Court. On August 31, 2022, Respondent filed its request for a contested case hearing, which also included the May 3, 2022 notice of intent to revoke and the August 23, 2022 notice of revocation. According to Respondent's filings, Ms. Gunter received the notice of intent to revoke, but she did not file a protest on behalf of Respondent because she believed there would only be a fine based on her communications with a customer who was in law enforcement. According to Respondent's filing, it believes "good cause exists to remand the matter to the Department . . . to allow the filing of a late protest."^[2] Additionally, Respondent requested that the Court "immediately issue such order as is appropriate in order to preserve the status quo"^[3] and to hold a temporary hearing as soon as possible.

This matter was assigned to the undersigned on September 1, 2022. On the same day, the Court reached out to the parties about scheduling a hearing on this matter and informed the parties that the Court would require filings about the Court's jurisdiction prior to the hearing. On September 2, 2022, the parties provided their lack of availability, and the Department informed the Court that it planned to submit its filing by the end of the day on Tuesday, September 6, 2022. Shortly thereafter, the Court informed the parties that the Court would hold a hearing on Friday, September 9, 2022, at 10:00 A.M., that written submissions about the Court's jurisdiction were due by Wednesday, September 7, 2022, at 12:00 P.M., and a formal order would be forthcoming. The Court issued a formal order embodying the aforementioned terms on September 6, 2022.

Both parties submitted briefs on jurisdiction, and the Department did not dispute the Court's jurisdiction^[4] but asserted the central issue was whether Respondent could demonstrate good cause, which the Department asserted Respondent had not done so. The Department attached the following to its filing: (1) the May 3, 2022 notice of intent to revoke; (2) notes from the Department that logged an employee spoke with Ms. Gunter on May 17, 2022, and Ms. Gunter indicated "[s]he will be submitting an appeal"; and (3) an affidavit from Kizzy Jefferson, an Alcohol Beverage Licensing supervisor at the Department who noted the logged notice of intent to revoke letter and the employee's log related to speaking with Ms. Gunter.^[5]

The Court held the scheduled hearing on this matter as planned on September 9, 2022. Ms. Gunter testified at the hearing. The parties also submitted affidavits and argument.

FINDINGS OF FACT

Having observed the witness(es) and reviewed the exhibit(s) presented and taking into consideration the burden of persuasion and the credibility of the witness(es), I make the following findings of fact by a preponderance of the evidence:

1. All parties to this matter received proper notice of the hearing in this matter and agreed with the date and time scheduled for the hearing.

2. Respondent held an on-premises beer and wine permit and liquor-by-the-drink license issued by the Department for its location at 3030 Charleston Highway, West Columbia, South Carolina 29172 (the Licensed Premises).

3. "Sometime ago" customers of Respondent started a game of Yahtzee, or other similar dice game, on the Licensed Premises, and Respondent allowed the game to exist even though it did not make "any profit off of the game."

4. On March 23, 2022, South Carolina Law Enforcement Division (SLED) agents seized the cup, dice, and approximately $44.00 that were part of the Yahtzee game. The SLED agents left a violation report at the bar, which Ms. Gunter received on behalf of Respondent.

5. Ms. Gunter contacted a customer, who was "in law enforcement," and that customer contacted SLED. That customer was informed by SLED that Respondent would simply receive a fine and communicated such to Ms. Gunter. Respondent has not had any violations in approximately eleven years.^[6]

6. Thereafter, on or about May 3, 2022, Respondent, through Ms. Gunter, received the notice of intent to revoke that informed Respondent of its right to protest. In the notice of intent to revoke, the Department outlined Respondent's options: (1) consent to the revocation and surrender its license and permit by August 1, 2022, or (2) protest the revocation by submitting a protest to the Department by August 1, 2022. See generally S.C. Code Ann. § 12-60-1310(B) (2014).

7. On May 7, 2022, Respondent telephoned the Department about the notice of intent to revoke. The only evidence of the content of that conversation was submitted by the Department. While Respondent did not recall the conversation, she did not dispute that the conversation occurred. The Department made the following note in its system with regard to the conversation: "File 114873566 - Spoke with Cheryl Gunter about the violation for the Intent to Revoke. She will be submitting an appeal." Respondent's statement to the Department that "she will be submitting an appeal" is a verbal representation to the Department that Respondent disputed the revocation.

8. Respondent has disallowed the Yahtzee dice game on its premises following receipt of the notice of violation.

9. Respondent had not filed any written protest nor consented in writing to the revocation by surrendering its license and permit by August 1, 2022, to the Department.

10.Ms. Gunter testified she misunderstood the filing requirement. She stated she did not file a written protest because she did not dispute that the violation occurred, and to her, Respondent had nothing to protest.

11.Respondent received the notice of revocation on August 23, 2022, and SLED agents removed the liquor from the Licensed Premises and informed Respondent that it could not sell the beer and wine that were left on the Licensed Premises.

12. On August 30, 2022, Respondent filed a summons, a petition for declaratory judgment and injunctive relief, and an affidavit of Ms. Gunter with the Court. On August 31, 2022, Respondent filed the request for a contested case hearing with the Court.

CONCLUSIONS OF LAW

Based upon the above findings of fact, the Court makes the following conclusions of law:

1. The Court has jurisdiction over this matter to hold a "good cause" hearing to determine whether to remand this matter to the Department. See S.C. Code Ann § 12-60-1330(A)(3). See generally S.C. Code Ann. § 1-23-600 (Supp. 2021); S.C. Code Ann. § 61-2-260 (2022).

2. The standard of proof in this matter is the preponderance of the evidence, and Respondent has the burden of proof for its request to remand this matter to the Department for a late protest based on good cause. See Anonymous v. State Bd. of Med. Exam'rs, 329 S.C. 371, 378, 496 S.E.2d 17, 20 (1998); § 12-60-1330(A)(3); see also Jamal Amer d/b/a JD's Market, Docket No 15-ALJ-17-0104-CC, 2015 WL 3822541 at *1 n.1.

3. Pursuant to section 61-2-20 of the South Carolina Code (2022), the Department is obligated to "administer the provisions of [Title 61 of the South Carolina Code (2022)]." See also S.C. Code Ann. § 61-2-10(A)(1) (defining the "Department").

4. "Liquor licenses are neither contracts nor rights of property." Feldman v. S.C. Tax Comm'n, 203 S.C. 49, 26 S.E.2d 22, 25 (1943). "They are mere permits, issued or granted in the exercise of the police power of the state to do what otherwise would be unlawful to do; and to be enjoyed only so long as the restrictions and conditions governing their continuance are complied with." Id.

5. Section 61-4-580(A)(3) of the South Carolina Code prohibits gambling or games of chance except under certain circumstances; none of which are present here. Ms. Gunter testified that she understood that the

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