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.
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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licenses have previously been revoked.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?
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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.
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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.
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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.
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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