Aguimatang v. California State Lottery

• Decision Date: 25 September 1991
• Docket Number: No. C007401,C007401
• Citation: 286 Cal.Rptr. 57,234 Cal.App.3d 769
• Court: California Court of Appeals Court of Appeals
• Parties: Federico S. AGUIMATANG, Jr., Plaintiff and Appellant, v. CALIFORNIA STATE LOTTERY et al., Defendants, Cross-defendants and Respondents; Arnulfo M. Chanquin, Defendant, Cross-complainant and Appellant.

Page 57

286 Cal.Rptr. 57

234 Cal.App.3d 769

Federico S. AGUIMATANG, Jr., Plaintiff and Appellant, v. CALIFORNIA STATE LOTTERY et al., Defendants, Cross-defendants and Respondents Arnulfo M. Chanquin, Defendant, Cross-complainant and Appellant.

No. C007401.

Court of Appeal, Third District, California.

Sept. 25, 1991.

Rehearing Denied Oct. 21, 1991.

Review Denied Jan. 15, 1992.

Rentzer & Rentzer, Robert D. Rentzer, Philip C. Greenwald, Encino, for plaintiff and appellant.

Elaine Buhan, North Hollywood, Judith P. Blinco, Los Angeles, and Arthur Azdair, Pasadena, for defendant, cross-complainant and appellant.

John K. Van de Kamp, Atty. Gen., N. Eugene Hill, Asst. Atty. Gen., Cathy A. Neff, Supervising Deputy Atty. Gen., and Linda A. Cabatic, Deputy Atty. Gen. for defendants, cross-defendants and respondents.

SIMS, Associate Justice.

Plaintiff Federico S. Aguimatang, Jr., and cross-complainant Arnulfo Melgar Chanquin appeal from summary judgment entered in favor of defendants/cross-defendants California State Lottery Commission, State Controller, Director of California State Lottery, California State Lottery, State of California, James Barnett, Timothy Ford and California State Lottery Education Fund (collectively "State Lottery"). ¹ The litigation involves appellants' claims under the California State Lottery Act of 1984 (Cal. Const., art. IV, § 19, subd. (d); ² Gov.Code, § 8880 et seq. ³ ) that they, as holders of winning "California Lotto 6/49" tickets, were deprived of a portion of their winnings when the State Lottery divided a $15,900,000 Lotto jackpot into four shares, with one unclaimed share reverting to the Education Fund, rather than dividing the jackpot equally between the three persons who came forward with winning tickets. ⁴ The State Lottery prevailed on a motion for summary judgment by showing its computer records indicated four winning transactions. Appellants attempted to raise a triable issue as to whether the fourth transaction was an aborted wager for which no valid ticket ever issued. The trial court concluded it was immaterial whether a valid fourth ticket ever issued.

Appellants contend (1) the jackpot should be divided by the number of winning tickets presented; (2) the statutory reversion of unclaimed prizes to the Education Fund does not apply to annuitized prizes; (3) issuance of a ticket is required in order to create a prize, and a triable issue of material fact exists as to whether a fourth ticket issued; (4) the trial court erroneously presumed that if the lottery's computer shows an uncancelled wager, a valid ticket has been issued; (5) the trial court considered inadmissible evidence; and (6) the trial court improperly denied a continuance and foreclosed discovery. ⁵

We will conclude (1) assuming four winning wagers, the method of division of the jackpot and reversion of the unclaimed share to education complied with the statutes; (2) the issuance of a ticket is material to the determination of a winning wager and the creation of a "prize"; and (3) the trial court abused its discretion in denying a continuance to allow further discovery, based on its conclusion that issuance of a fourth ticket was immaterial. We will therefore reverse the judgment and remand to the trial court for further proceedings.

FACTUAL AND PROCEDURAL BACKGROUND

In January 1988, Aguimatang filed a complaint for breach of contract and conversion, alleging he was one of three winning claimants entitled to share a $15,900,000 Lotto jackpot but that the State Lottery awarded him only one-fourth of the jackpot. An amended complaint alleged the State Lottery's identification of four winners and set forth Aguimatang's theory that a Lotto jackpot must be divided by the number of claimants who come forward with valid tickets, not by the number of winners reflected in the State Lottery's computer. The misrepresentation cause of action alleged the State Lottery falsely represented that four winning tickets were presented. Aguimatang thus claimed the State Lottery had deprived him of his entitlement by transferring the fourth, unclaimed share to the Education Fund. Aguimatang claimed entitlement to the entire fourth share and therefore joined as necessary parties the Education Fund and the other winning claimants, Chanquin and Jorgenson.

In January 1989, Chanquin filed a cross-complaint which was premised on the same theory as the complaint but also added allegations that no fourth ticket ever issued.

At the demurrer stage, the trial court ruled that no cause of action was stated on the basis that there were only three claimants for the prize; division of the jackpot by the number of winning wagers, with reversion of the unclaimed share to education, conformed to the governing statutes. However, the court ruled a cause of action could be stated on the theory that the fourth ticket either never issued or was cancelled.

Amended pleadings were filed.

Aguimatang's second amended complaint asserts causes of action for breach of contract, declaratory relief, breach of statutory duty, conversion, and negligent misrepresentation, alleging that only three winning tickets were validly issued and so the jackpot should have been divided into thirds.

Chanquin's first amended cross-complaint alleges breach of contract, declaratory relief, breach of statutory duty and injunction, and conversion, premised on the same theories as Aguimatang's action. Chanquin additionally alleges violation of the statutory requirement that 50 percent of lottery revenues to be returned to the public in the form of prizes.

In May 1989, the State Lottery filed a motion for summary judgment or summary adjudication of issues as to both Aguimatang's second amended complaint and Chanquin's first amended cross-complaint.

In support of the summary judgment motion, the State Lottery submitted evidence of the following:

The State Lottery invited the public to participate in the California Lotto 6/49 Drawing for January 17, 1987 (Draw No. 14), with an expected "jackpot" of over $15,000,000. The general public was informed that the jackpot would be paid out on a "parimutuel" basis, i.e., divided among winning players who match all six numbers drawn. ⁶

On January 17, 1987, a drawing was held, and the State Lottery announced the winning numbers. After the numbers were announced, the lottery auditors began calculating the prize pools for the different categories of prizes, based upon computer reports. Once all computer reports were completed, the State Lottery began final calculations and verifications of the amount of the prize pools for the different categories.

The State Lottery contracts with GTECH Corporation to operate the on-line lottery system. All betting transactions originate at retailer terminals. The central computer receives, processes, and stores the transaction. After the central computer determines that the transaction has been properly stored, a response is sent to the terminal to print the ticket. Information printed on the ticket includes numbers played, issuing retailer, date purchased, drawing date, and a secure control number.

Records for all transactions are stored in the computer in a file called Transaction Master File (TMF). A Transaction Master File Information Retrieval Report (TMIR) is used to report on the transactions stored in the TMF. Information on the TMIR includes the date, time, and amount of the transaction, and whether the transaction is good or cancelled. Certain error conditions would show under the column title "ERR" on the TMIR.

The State Lottery maintains an Internal Control System (ICS) of total sales that is compared with the TMF's record of total sales.

When a Drawing is held, the winning numbers are entered into the computer to check for winning transactions. The prize pool for each prize category is calculated based on the amount of sales. ⁷ Prizes are determined based on the number of winners found in each prize category. High tier prize winners are identified on a computer report entitled "FINDBIG." Information on FINDBIG includes identification of retailers.

Retailers are provided with an On-Line Retailer/Operator Manual that requires each retailer to complete a "weekly settlement" used for final accounting of transactions. A Request for Adjustment Form is provided for those instances when a retailer is unable to cancel a transaction due to a failure of the on-line system. The Request for Adjustment must indicate the date, approximate time, and circumstances of the failure.

For the January 17, 1987 Drawing, the computer records show five transactions ⁸ matching all six winning numbers. The FINDBIG report shows one of those five transactions was cancelled before the drawing. ⁹ The other four transactions were shown on the computer as uncancelled, good transactions.

There was no indication of error in the computer system, dedicated lines, or retailer terminals. There was no discrepancy between computer reports generated by GTECH and by the State Lottery. The accounts receivable records balanced with ticket sales.

Of the four uncancelled transactions, the one for which no claim was made is serial number 7715988, which was a $1 sale made at the New Lun Wah Company in San Francisco on January 17, 1987, at 3:43 p.m. New Lun Wah Company's settlement envelope for that Drawing period reconciled with the computer report of total sales. All cancelled transactions for the drawing period were accounted for. New Lun Wah Company's settlement envelope also contained a retailer Request for Adjustment dated January 18, 1987, and signed by owner Paul Lee. Lee sought adjustment for a $5 sale that occurred on January 17, 1987, at approximately 1 p.m., due to printer fault and cutter fault. The settlement envelope contained a misprinted ticket and a cut-off "Reprint" ticket.

Based upon all its information, on January 20, 1987, the State Lottery announced there were four winners of the January 17,...