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25152 - Gateway Enterprises, Inc. v. SC DOR
Gateway Enterprises, Inc. v. SC DOR


Shearouse Adv. Sh. No.
S.E. 2d


THE STATE OF SOUTH CAROLINA

In The Supreme Court



Gateway Enterprises,

Inc., Respondent,



v.



South Carolina

Department of Revenue, Appellant.



Appeal From Horry County



J. Stanton Cross, Jr., Special Circuit Court Judge



Opinion No. 25152



Heard March 18, 1998 - Filed June 19, 2000



REVERSED



General Counsel Harry T. Cooper, Jr., and Chief

Counsel for Regulatory Litigation Nicholas P. Sipe,

both of South Carolina Department of Revenue, of

Columbia, for appellant.



H. Buck Cutts, of Surfside Beach, for respondent.



JUSTICE MOORE: The circuit court reversed the

Administrative Law Judge's (ALJ's) order. We reverse.



p.269


Gateway Enterprises, Inc., v. S.C. Dep't of Revenue





FACTS



George Vinovich operated video poker machines in units 9 and 10 of a

strip mall at 1807 Decker Boulevard in Columbia. In 1995, Vinovich was

involved in litigation with appellant Department of Revenue (DOR). On

August 17, 1995, an ALJ ordered the revocation of all of Vinovich's video

poker machine licenses in units 9 and 10. Vinovich appealed the decision to

the circuit court. Circuit Court Judge Maring issued a temporary stay of the

order of revocation. After a full hearing, on May 2, 1996, Judge Maring

affirmed the ALJ and dissolved the temporary stay order. Judge Maring,

however, did not immediately file the order.







Respondent Gateway Enterprises, Inc., is also in the video gaming

industry. On May 10, 1996, Gateway leased units 3, 4, 9, and 10 at 1087

Decker Boulevard. On May 14, 1996, respondent obtained licenses for the

video poker machines in units 3, 4, 9, and 10.









On May 15, 1996, at 9:18 a.m., Judge Maring filed his order affirming

the ALJ and dissolving the temporary stay. At 2:00 p.m., DOR discovered a

video poker machine operating in unit 4 with one of Vinovich's licenses

which was subject to the revocation order. DOR seized the license and cited

Gateway for operating an unlicensed machine. On May 17 th, DOR returned

and found video poker machines operating in units 9 and 10. Gateway was

cited for violating S.C. Code Ann. § 12-21-2804(A)(Supp. 1998). Section 12

21-2804(A) prohibits the operation of video machines at a location where

licenses have previously been revoked. DOR sought the revocation of all of

Gateway's licenses and the imposition of penalties. The ALJ ordered the

revocation of all licenses being used in units 9 and 10 and imposed fines.

Special Circuit Court Judge J. Stanton Cross, Jr., reversed. DOR appealed.







ISSUES



1) Did the circuit court err in applying Rule 62(a), SCRP, to Judge

Maring's May 15th order dissolving the stay?







2) Did the circuit court err in holding that licenses could

not be revoked?



p.270




Gateway Enterprises, Inc., v. S.C. Dep't of Revenue





DISCUSSION



1) Automatic Stay



DOR contends the circuit court erred in applying Rule 62(a), SCRCP.

We agree. 1







Rule 62(a) provides "no execution shall issue upon a judgment nor

shall proceedings be taken for its enforcement until the expiration of 10 days

after its entry." "This automatic ten-day stay applies only to judgments as

defined in Rule 54(a)." See 11 Charles Alan Wright & Arthur R. Miller,

Federal Practice and Procedure § 2902 (2d ed. 1995). The May 15th order

dissolving the stay of the ALJ order is not a "judgment" subject to the

automatic 10-day stay under Rule 62(a). See Rule 54(a), SCRCP.

(" 'Judgment' as used in these rules includes any decree or order which

dismisses the action as to any party or finally determines the rights of any

party.").




1 The ALJ Division has established its own Rules of Procedure as

authorized by S.C. Code Ann. § 1-23-650 (Supp. 1999). See Al-Shabazz v.

State, Op. No. 24995 (S.C. Sup. Ct. re-filed February 14, 2000)(Shearouse

Adv. Sh. No. 6 at 37). Rule 34, ALJD, provides: "The filing of an appeal from

the final decision of an agency shall stay the final decision of that agency

unless the effect of filing an appeal is otherwise established by statute, the

Administrative Procedures Act notwithstanding; or the administrative law

judge has entered an order regarding the effect of the proceedings in the

agency." (emphasis added). Rule 29(D), ALJD, provides: "An administrative

law judge who issues a final order subject to judicial review may in the order

stay its effect." Finally, Rule 52, ALJD, provides: "The South Carolina Rules

of Civil Procedure may, where practicable, be applied in proceedings before

the [Administrative Law Judge] Division to resolve questions not addressed

by these rules."







Here, pursuant to Rule 34, the appeal of DOR's final decision to the

ALJ was automatically stayed. The ALJ then issued his final order.

Pursuant to Rule 29, there was not an automatic stay of the ALJ's order.

Judge Maring, however, issued a stay pursuant to Rule 62, SCRCP.



p.270


Gateway Enterprises, Inc., v. S.C. Dep't of Revenue





Judge Maring filed his order affirming the ALJ's order and dissolving

his order staying the ALJ's order on May 15, 1996. Since there is not an

automatic 10-day stay, once Judge Maring dissolved the stay he had

previously granted, DOR was entitled to immediately enforce the ALJ's order

revoking the licenses.







2) Revocation of Licenses



DOR contends the circuit court erred in holding licenses could not be

revoked because a licensee could not violate § 12-21-2804(A). 2 We agree.







The pertinent portion of § 12-21-2804(A)(emphasis added) provides:

"[DOR] shall revoke the licenses of an establishment which fails to meet the

requirements of this section. No license may be issued for a machine in an

establishment in which a license has been revoked for a period of six months

from the date of revocation." The circuit court held that Gateway could not

violate this section as it refers to only DOR's actions in refusing to issue a

license. In other words, the circuit court held the statute is a directive only to

DOR not to issue licenses for certain machines. We disagree. Under this

section, DOR clearly has the authority to refuse to issue any licenses to

Gateway for the six month period and to revoke Gateway's licenses because

it failed to meet the requirements of this section. Accordingly, the circuit

court erred in reversing the ALJ. 3







The circuit court's order is




2 We note the ALJ erred in ruling on the constitutionality of the

statute. See Al-Shabazz v. State, Op. No. 24955 (S.C. Sup. Ct. filed February

14, 2000)(Shearouse Adv. Sh. No. 6 at 21)(ALJs must leave question of

statute's constitutionality to the courts).







3 DOR contends the circuit court erred in holding 2 12-21-2804(A) is a

penal statute and should be strictly construed against DOR. We agree.

We do not find the statute ambiguous and therefore we do not need to apply

any rules of statutory construction, including the one which requires penal

statutes to be strictly construed against the State. Thus, we do not need to

decide if the statute is, in fact, penal.



p.271


Gateway Enterprises, Inc., v. S.C. Dep't of Revenue





REVERSED.



FINNEY, C.J., TOAL, J. and Acting Justice George T. Gregory, Jr., Concur

BURNETT, J., dissenting in a separate opinion.





p.272


Gateway Enterprises, Inc., v. S.C. Dep't of Revenue





JUSTICE BURNETT: I concur in the majority's analysis of § 12-21-

2804(A). However, I disagree with the majority's conclusion Rule 62(a) does

not apply to Judge Maring's May 15, 1996 order.







Rule 62(a), SCRCP, provides for an automatic stay of ten days after the

entry of a final judgment. The purpose of the stay is to give the losing party

a chance to comply with the order or file a notice of appeal and seek a stay

pending appeal.







The majority holds "The May 15th order dissolving the stay of the ALJ

order is not a `judgment' subject to the automatic 10-day stay under Rule

62(a)." I agree the language dissolving the stay is not an appealable

"judgment." However, the order does not merely dissolve the stay, but

affirms the ALJ's decision revoking Vinovich's video poker licenses.

"Judgment" under Rule 54 is defined as "any decree or order which dismisses

the action as to any party or finally determines the rights of any party."

Rule 54(a), SCRCP. The May 15th order is a judgment because it finally

determined the rights of the parties. See First Union National Bank of

South Carolina v. Hitman. Inc., 306 S.C. 327, 330, 411 S.E.2d 681, 683 (Ct.

App.1991), aff'd, 308 S.C. 421, 418 S.E.2d 545 (1992).







DOR contends it was the ALJ's order, not the circuit court's, it was

enforcing, and the ALJ's order became enforceable the moment the stay was

lifted. While not specifically adopting this argument, the majority

nevertheless reaches the same result. In my opinion, DOR's argument is

unpersuasive. The argument confuses the discretionary stay pending appeal

from an administrative order under S.C. Code Ann. § 1-23-380(A)(2) with the

automatic 10-day stay under Rule 62(a). Once the matter was appealed,

jurisdiction transferred to the circuit court and its order was the final order

of the case. The discretionary stay Judge Maring issued during the

pendency of the appeal in no way affects the automatic 10-day stay of his

final judgment under Rule 62(a).







I would hold Judge Maring's May 15, 1996 order was a final judgment

under Rule 54, subject to Rule 62(a)'s ten-day stay.





p.273