South Carolina Cases November 22, 2024: Benito's 905, LLC v. S.C. Dep't of Revenue

Case Description

1

ORDER

HONORABLE CRYSTAL M. ROOKARD, ADMINISTRATIVE LAW JUDGE

This matter is before the South Carolina Administrative Law Court (ALC or Court) pursuant to a request for a contested case hearing filed by Benito's 905, LLC, d/b/a Benito's 905 (Petitioner). Petitioner challenged the denial issued by the South Carolina Department of Revenue (Respondent or Department) of an on-premises beer and wine permit based upon the public protest filed pursuant to section 61-4-525 of the South Carolina Code (2022).

After proper notice, the Court held a hearing on the merits on November 5, 2024, at the ALC in Columbia, South Carolina. Counsel for Petitioner and the Department were present along with Protestant Pastor Mike Kinlaw of Bethlehem Baptist Church. After careful consideration of the evidence presented, the applicable law, and the concerns raised by the Protestant, the Court finds that the Petitioner's application for an on-premises beer and wine permit should be granted, subject to the conditions set forth herein.

FINDINGS OF FACT

Having observed the witnesses and exhibits presented at the hearing and taking into consideration the burden of persuasion of Petitioner, Respondent, and Protestant, the Court makes the following Findings of Fact:

General Findings

Petitioner is seeking an on-premises beer and wine permit (Permit) for the business located at 100 Highway 66, Conway, South Carolina in Horry County. An application for the Permit was submitted by Petitioner on January 5, 2024. Notice of the Permit application was lawfully posted at both the proposed location for the Permit, for fifteen days, and in a newspaper of general

2

circulation, for three consecutive weeks. After receiving the Petitioner's Permit application, the South Carolina Law Enforcement Division (SLED) conducted a standard investigation to determine if the proposed location for the Permit complied with the statutory requirements to grant such Permit. SLED was unable to verify that the proposed location complied as the location was still under construction. On February 14, 2024, the Department issued a Conditional Application Denial Notice based upon a timely filed public protest pursuant to section 61-4-525 of the South Carolina Code (2022) and the Department's inability to determine whether the location met the statutory requirements for licensure pursuant to sections 61-4-520 and 61-4-540 of the South Carolina Code (2022).

On June 18, 2024, prior to the hearing, SLED was able to determine that the proposed location did meet the statutory requirements for licensure upon completion of the final inspection. Thus, with the exception of the suitability of the location, the qualifications set forth in section 61-4-520 and 61-4-540 of the South Carolina Code (2022) are not at issue in this case.

Suitability of Location

The proposed location for the Permit currently operates a restaurant, Benito's 905 (Restaurant), open from 11:30 a.m. until 9:00 p.m. seven days a week. The Restaurant opened on June 15,2024. The Department received a valid public protest contesting the Permit on January 9, 2024. The Protestant, Mike Kinlaw (Pastor Kinlaw), is currently a pastor at Bethlehem Baptist Church (Church) located at 5201 Highway 905, Conway, South Carolina in Horry County. Pastor Kinlaw has been a pastor for twenty-eight (28) years and his current congregation at the Church has around one hundred twenty (120) members, with most living in Horry County. Pastor Kinlaw testified that the reason for his protest is that the Restaurant is less than 500 feet from the Church and further, that he had both religious and moral objections to the consumption of alcoholic beverages. This protest was not voted on by the congregation at the Church, but rather just discussed with some of the members of leadership including Deacons. SLED established that the Restaurant and the Church are in fact not within five hundred (500) feet of one another. The Church and the Restaurant are separated by a paved residential road that leads to a neighborhood. There is no sidewalk connecting the Restaurant and the Church.

3

The Restaurant is incorporated as a Limited Liability Company owned by Scott Himmelsbach, Paul Himmelsbach, and Judith Himmelsbach. Both Scott Himelsback and Paul Himmelsbach testified at the hearing. Paul Himmelsbach has been a resident of Horry County since 1975 and has been in the restaurant business since 1987, previously holding three licenses for the sale of alcohol with no issue. Paul Himmelsbach testified that the Restaurant will sell lunch and dinner as a sit-down restaurant and does not include a bar or lounge area. Further, he testified that the Restaurant will only sell beer and wine exclusively on the premises. He insisted that the Restaurant had no intention to pursue a liquor license in the future. Further, he expressed that the Restaurant will serve the community as it is the only Restaurant within a fifteen (15) miles radius. Ultimately, he expressed that the Restaurant is intended to be a family-friendly, community-serving restaurant. The area surrounding the Restaurant is residential with most of the staff living within close proximity as members of the local community.

Scott Himmelsbach, Paul Himmelsbach's son, testified that he oversees the day-to-day operations of the Restaurant. He testified that the Restaurant has around a 40-space parking lot on the side of the Restaurant not facing the Church. Scott Himmelsbach also noted that the Restaurant was approved by Horry County after a hearing was held. Horry County's approval included the sale of beer and wine; however, the County's approval was based upon the stipulation that the outdoor area be enclosed. Scott Himmelsbach clarified that should the Restaurant expand its outdoor seating, it will enclose the area as to reduce the noise emanating into the community. Scott Himmelsbach provided photographs to the Court showcasing the Restaurant's location within the community along with its proximity to the Church. Additionally, he insisted that the Restaurant does not have, or plan to have, a traditional bar area or live music and entertainment. He clarified that the Restaurant does contain a high-top area, but its primary purpose is for patrons to interact with the employees who can be seen behind the area making food. This area is not separate from the traditional dining area. Furthermore, Scott Himmelsbach indicated that the last call for beer and wine will occur at 8:30 p.m. He insisted, as did his father, that the Restaurant had no intention to pursue a liquor license, and the primary purpose of the establishment is to operate as a family restaurant. Scott Himmelsbach also indicated to the Court that his establishment will remain responsible and address any issues should they arise in the future.

4

Conclusion

While it is clear that the Protestant's concerns are sincere, as he testified that the consumption of alcoholic beverages is against his religious and moral beliefs. If the sale of beer and wine is conducted as proposed by Petitioner - with an 8:30 p.m. last call, no future application for a liquor license, an enclosed outdoor area, and no live entertainment - the Court finds that the proposed location for the Permit is suitable. Further, if a significant change occurs as a result of Petitioner receiving this Permit, the proposed location would no longer be suitable and the community and/or the Department could properly bring an action to prohibit the renewal of Petitioner's Permit.

CONCLUSIONS OF LAW

Based upon the foregoing Findings of Fact, the Court concludes the following as a matter of law:

General Conclusions

The South Carolina Administrative Law Court is vested with jurisdiction over this case. S.C. Code Ann. §§ 1-23-600 (2005 & Supp. 2024) and 61-2-26 (2022). "[T]he issuance or granting of a license to sell beer or alcoholic beverages rests in the sound discretion of the body or official to whom the duty of issuing it is committedf.]" S.C. Code Ann. § 61-2-80 (2022); Palmer v. S.C. Alcoholic Beverage Cntrl Comm'n 282 S.C. 246, 248, 317 S.E.2d 476,477 (Ct. App. 1984); see also, Wall v. S.C Alcoholic Beverage Control Comm'n, 269 S.C. 13, 235 S.E.2d 806 (1977). Further, the weight and credibility assigned to evidence presented at the hearing is within the province of the trier of fact. S.C. Cable Television Ass'n v. S. Bell Tel. & Tel. Co., 308 S.C. 216, 222, 417 S.E.2d 586, 589 (1992). The trier of fact, who observes a witness, is in the best position to judge the witness' demeanor and veracity and to evaluate the credibility of his testimony. Woodall v. Woodalh 322 S.C. 7, 10,471 S.E.2d 154, 157 (1996); Wallace v. Milliken & Co., 300 S.C. 553, 556, 389 S.E.2d 448, 450 (Ct. App. 1990). Additionally, the standard of proof in administrative proceedings is a preponderance of the evidence unless otherwise specified. Anonymous v. State Bd. of Med. Exam'r, 329 S.C. 371, 375, 496 S.E.2d 17, 19 (1988). "A preponderance of the evidence is evidence which convinces the fact finder as to its truth." Pascoey v. Wilson, 416 S.C. 628, 640, 788 S.E.2d 686, 693 (2016) (citing Gorecki v. Gorecki, 387 S.C. 626, 633, 693 S.E.2d 419, 422 (Ct. App. 2010)). As the party who requested the contested case and seeks a beer and wine permit, Petitioner has the burden of proving its case by a preponderance

5

of the evidence. See Leventis v. S.C. Dep 't of Health and Envtl Cntrl. 340 S.C. 118, 132-33, 530 S.E.2d 643, 651 (Ct. App. 2000) (holding that the burden of proof in administrative proceedings generally rests upon the party asserting the affirmative of an issue).

Suitability of Location

Sections 61-4-520 and 61-4-540 of the South Carolina Code (2022) generally set forth the requirements for the issuance of a beer and wine permit. A license for the sale and consumption of beer and wine is not a contract or property right; rather, it is a privilege "granted in the exercise of the State's police power to do what otherwise would be unlawful to do." Feldman v. S.C. Tax Comm'n, 203 S.C. 49, 26 S.E.2d 22, 25 (1943). Section 61-2-100 of the South Carolina Code (2022) sets forth general requirements that all applicants for permits must satisfy in order for the Department to issue such permit. Petitioner has complied with these provisions. As such, this case centers upon the suitability of the proposed location.

A beer and wine permit may be denied if the proposed location is not suitable. See Schudel v. S.C. Alcoholic Beverage Control Comm'n, 276 S.C. 138, 276 S.E.2d 308 (1981). A suitable location is not statutorily defined, but broad discretion is vested in the trier of fact to determine the fitness or suitability of a proposed location requesting a permit. See Fast Stops, Inc. v. Ingram, 276 S.C. 593, 281 S.E.2d 118 (1981). With regard to the suitability of the location, the Court may consider any evidence that shows adverse circumstances of the location as to in determining whether a proposed location is suitable. Kearney v. Allen, 287 S.C. 324, 326, 338 S.E.2d 335, 337 (1985); Palmer, 282 S.C. at 249,317 S.E.2d at 478 (citing Smith v. Pratt, 258 S.C. 504,189 S.E.2d 301 (1972)). The determination of whether a proposed location is suitable involves various considerations related to the nature and operation of the proposed business as well as its impact on the surrounding community. Kearney, at 326-27, 338 S.E.2d at 337; Schudel, at 138, 276 S.E.2d at 308.

Qualifying members of the public may formally object to the issuance of a beer and wine permit by tendering a valid protest to the Department. S.C. Code Ann. §§ 61-4-525 (2022) and S.C. Code Regs. 7-201 (2011). The mere fact a permit or license is protested, however, is not a sufficient reason, by itself, to deny an application. See 48 CIS. Intoxicating Liquors § 194 (May 2024 Update). Rather, in the absence of a sufficient reason to deny the application, "[a]n applicant who meets, or complies with, the statutory requirements is entitled to the issuance of a license or permit..." Id. Thus, "[g]ood cause must be shown for the denial of a license." Id. "A license may

6

properly be refused where a statutory ground for refusal exists, provided there is a reasonable basis for believing in its existence ..." Id. Additionally, in making its determination, the Court must consider whether the testimony in opposition to the granting of a license is based on opinions, generalities, and conclusions, or whether the case is supported by facts. See Smith v. Pratt, 258 S.C. 504, 508, 189 S.E.2d 301, 302 (1972); Taylor v. Lewis, 261 S.C. 168, 171, 198 S.E.2d 801, 802 (1973).

Here, Pastor Kinlaw raised issues relating to the consumption of alcohol violating both his religious and moral beliefs. His testimony sparked some concern to the Court, yet, overall, the Protestant's testimony was largely opinionated and unsubstantiated. Moreover, Pastor Kinlaw indicated that the decision to protest was not. made by vote of his congregation, but rather the decision was made after a discussion with some of the leadership at the Church. Based upon the Protestants testimony, the concerns seem to pertain to the Restaurant's proximity to the Church and the nature of the Permit. While Pastor Kinlaw expressed concerns about the issuance of the Permit, he did not provide the Court with a sufficient reason to deny the application. Rather, his testimony was based on generalities, and his opinion, that alcohol consumption is against religious and moral beliefs. While the Court respects Pastor Kinlaw's beliefs, there is no sufficient legal basis for the Court to deny the issuance of the Permit.

Conclusion

The Court is authorized to grant the issuance of a permit and may likewise place restrictions or conditions on the permit or license. See Feldman v. S.C. Tax Commission, 203 S.C. 49, 26 S.E,2d 22 (1943). The arguments proffered do not constitute a sufficient basis upon which to deny Petitioner's application. However, the Court does find a sufficient basis to implement conditions to Petitioner's Permit to ensure the continued suitability of the location. Because Petitioner meets the general qualifications for an on-premises beer and wine permit and Protestants failed to show the location is not suitable, the Court concludes the location is proper and suitable with the incorporation of the conditions set forth herein, which include: an 8:30 p.m. last call for the sale of beer and wine, no future application for a liquor license, an enclosed outdoor area, and no live entertainment. The Court finds that these conditions are necessary to ensure that the Restaurant continues to be a suitable location and to assuage the concerns of the Protestant.

7

ORDER

IT IS THEREFORE ORDERED that this matter shall be REMANDED to the Department for further processing.

IT IS FURTHER ORDERED that if the Department determines Petitioner has met all statutory requirements, it shall GRANT the Petitioner's application for an on-premises beer and wine permit for its business located at 100 Highway 66, Conway, South Carolina, subject to the conditions set forth in this Order.

AND IT IS SO ORDERED.

8

CERTIFICATE OF SERVICE

I, Elizabeth Brown, hereby certify that I have this date served this Order upon all parties to this cause by depositing a copy hereof in the United States mail, postage paid, in the Interagency Mail Service, or by electronic mail, to the address provided by the party(ies) and/or their attorney (s).