In re Acubens, LLC, 17AP-870

• Decision Date: 29 June 2018
• Docket Number: No. 17AP-906,No. 17AP-870, No. 17AP-877,17AP-870
• Citation: 116 N.E.3d 793,2018 Ohio 2607
• Parties: IN RE: ACUBENS, LLC, Transferee-Appellant. In re: Acubens, LLC, Transferee-Appellant. In re: Acubens, LLC, Transferee-Appellant.
• Court: Ohio Court of Appeals

116 N.E.3d 793

2018 Ohio 2607

IN RE: ACUBENS, LLC, Transferee-Appellant. In re: Acubens, LLC, Transferee-Appellant. In re: Acubens, LLC, Transferee-Appellant.

No. 17AP-870

No. 17AP-877

No. 17AP-906

Court of Appeals of Ohio, Tenth District, Franklin County.

Rendered on June 29, 2018

On brief: Steven W. Mastrantonio, Akron, for appellant. Argued: Steven W. Mastrantonio.

On brief: Michael DeWine, Attorney General, and Charles E. Febus, Columbus, for appellee Ohio Lottery Commission. Argued: Charles E. Febus.

DECISION

DORRIAN, J.

{¶ 1} In this consolidated matter, appellant, Acubens, LLC ("Acubens"), appeals three judgments of the Franklin County Court of Common Pleas, Probate Division, which denied Acubens's three applications to receive transfers of future prize installment payments from the Ohio Lottery Commission ("Lottery Commission").

I. Facts and Procedural History

{¶ 2} Non-parties, Patrick L. Berry, Sr., Donteze Morris, and Michael Yopko (collectively referred to as "prize winners"), won prizes in the Ohio lottery. All three prize winners elected to receive their lottery prize winnings in installment payments over time. All three prize winners then proceeded over time to sell, assign, or redirect some or all of their future prize installment payments. In order to do this, title to the future prize installment payments had to be transferred to the persons or entities receiving the payments. After the initial transfer by the prize winners, the same Berry, Morris, and Yopko future prize installment payments were transferred multiple times again. Ultimately, an agreement was made to transfer the same future prize installment payments to Acubens.

{¶ 3} On January 30, 2017, Acubens filed in the trial court applications for approval of the transfer of numerous future lottery prize installments payments. The Lottery Commission intervened, and on July 13, 2017, the Lottery Commission filed a brief opposing the applications to transfer. On July 14, 2017, Acubens filed a brief in support of the applications to transfer. On August 10, 2017, the parties filed joint stipulations of fact. According to the joint stipulations, Acubens entered into a Lottery Receivables Purchase and Sale Agreement ("the agreement") with two entities, B of I Lottery Receivables LLC I ("B of I") and Travilah Road Titling Trust ("Travilah") (collectively, "the transferors") for the purpose of transferring future prize installment payments from 32 awards from the transferors to Acubens.

{¶ 4} According to the joint stipulations, the transferors "acquired the rights to receive the 32 prize awards from Ohio ‘prize winners’ as defined in the Ohio Lottery Act." (Joint Stip. at 1.) The trial court previously granted 20 of 32 applications to transfer. The Lottery Commission objected to the remaining 12¹ applications, including the applications to transfer the future prize installments from the Berry, Morris, and Yopko awards at issue in the present appeal.

{¶ 5} The parties agreed that "B of I and Travilah are ‘transferors’ as defined in R.C. 377[0].10(H) in the [3] transactions presently before the Court." (Joint Stip. at 1.)

{¶ 6} The joint stipulations provided additional details relevant to each of the three prize winners' awards. Berry previously made three transfers, in addition to the retitling transfer from the transferors to Acubens at issue in the present appeal. Berry had no remainder from his award. Yopko previously made three transfers and there was one "retitling transfer from [B of I] to Acubens on October 26, 2016," in addition to the retitling transfer from the transferors to Acubens at issue. (Joint Stip. at 2.) Yopko had a remainder from the original award. Morris previously made three transfers and "[t]here was a retitling transfer on July 28, 2016," in addition to the proposed retitling transfer from the transferors to Acubens. (Joint Stip. at 3.) Morris had a remainder from the original award.

{¶ 7} On August 15, 2017, the magistrate filed decisions denying the requests to transfer the Berry, Morris, and Yopko future prize installment payments. On August 29, 2017, Acubens filed objections to the magistrate's August 15, 2017 decisions. On November 16, 2017, the trial court filed decisions overruling the objections to the magistrate's decisions and adopting the magistrate's decisions filed August 15, 2017.

II. Assignment of Error

{¶ 8} Acubens appeals and assigns the following single assignment of error for our review:

The Trial Court erred as a matter of law when it concluded that all transfers are subject to the restrictions contained in R.C. § 3770.121.

III. Discussion

{¶ 9} In its assignment of error, Acubens argues the trial court erred in applying R.C. 3770.121 to bar the transfers at issue. Specifically, Acubens contends the restrictions, pursuant to R.C. 3770.121, on the number of allowable transfers apply only to "prize winners" as that term is defined by R.C. 3770.10. The Lottery Commission responds that R.C. 3770.121, when considered in conjunction with Ohio Adm.Code 3770:1-8-01(B)(5), applies to bar the transfers.

A. Applicable Law and Standard of Review

{¶ 10} R.C. Chapter 3770 governs the state lottery, including the Lottery Commission. R.C. 3770.03(A) vests the Lottery Commission with authority to promulgate rules regarding subjects delegated to its authority, providing in part:

The state lottery commission shall promulgate rules under which a statewide lottery may be conducted, which includes, and since the original enactment of this section has included, the authority for the commission to operate video lottery terminal games. * * * The rules shall be promulgated pursuant to Chapter 119. of the Revised Code, except that instant game rules shall be promulgated pursuant to section 111.15 of the Revised Code but are not subject to division (D) of that section. Subjects covered in these rules shall include, but need not be limited to, the following:

(1) The type of lottery to be conducted;

(2) The prices of tickets in the lottery;

(3) The number, nature, and value of prize awards, the manner and frequency of prize drawings, and the manner in which prizes shall be awarded to holders of winning tickets.

{¶ 11} Generally, "administrative rules do not dictate public policy, but rather expound upon public policy already established by the General Assembly in the Revised Code." Chambers v. St. Mary's School , 82 Ohio St.3d 563, 567, 697 N.E.2d 198 (1998). The purpose of administrative rulemaking is to facilitate an administrative agency's placing into effect the public policy embodied in legislation to be administered by the agency. AMOCO Oil Co. v. Petroleum Underground Storage Tank Release Comp. Bd. , 89 Ohio St.3d 477, 483, 733 N.E.2d 592 (2000). "Administrative agencies may make only ‘subordinate’ rules." Chambers at 567, 697 N.E.2d 198, quoting Belden v. Union Cent. Life Ins. Co. , 143 Ohio St. 329, 342-43, 55 N.E.2d 629 (1944).

{¶ 12} Courts generally accord deference to an administrative agency's interpretation of its own administrative rules. HCMC, Inc. v. Ohio Dept. of Job & Family Servs. , 179 Ohio App.3d 707, 2008-Ohio-6223, 903 N.E.2d 660, ¶ 24 (10th Dist.). This deference is based on recognition that "[t]he General Assembly created these administrative bodies to facilitate certain areas of the law by placing the administration of those areas before boards or commissions composed of individuals who possess special expertise." Salem v. Koncelik , 164 Ohio App.3d 597, 2005-Ohio-5537, 843 N.E.2d 799, ¶ 16 (10th Dist.). See also Chambers at 567, 697 N.E.2d 198 (stating that "[a]dministrative agencies have the technical expertise to compose [administrative] rules").

{¶ 13} "Due deference to an administrative agency's interpretation of its own administrative rules, however, is not unfettered." HCMC at ¶ 25. "If an agency's interpretation is unreasonable and fails to apply the plain language of a statute or rule, then an appellate court need not defer to such an unreasonable interpretation." Id. See AMOCO at 484, 733 N.E.2d 592 ("Rules adopted by administrative agencies are valid and enforceable unless unreasonable or in conflict with the statutory enactment covering the same subject matter."). An appellate court exercises plenary review on questions of law. 1609 Gilsey Invests., Inc. v. Liquor Control Comm. , 10th Dist. No. 07AP-1069, 2008-Ohio-2795, 2008 WL 2350017, ¶ 9, citing Chirila v. Ohio State Chiropractic Bd. , 145 Ohio App.3d 589, 592, 763 N.E.2d 1192 (10th Dist.2001).

B. Analysis

{¶ 14} We begin our analysis by reviewing the statutory text, keeping in mind that "our paramount concern" in statutory interpretation "is the legislative intent in enacting the statute." State ex rel. Steele v. Morrissey , 103 Ohio St.3d 355, 2004-Ohio-4960, 815 N.E.2d 1107, ¶ 21, citing State ex rel. United States Steel Corp. v. Zaleski , 98 Ohio St.3d 395, 2003-Ohio-1630, 786 N.E.2d 39, ¶ 12. "In determining this intent, we first review the statutory language, reading words and phrases in context and construing them according to the rules of grammar and common usage." Id. , citing State ex rel. Rose v. Lorain Cty. Bd. of Elections , 90 Ohio St.3d 229, 231, 736 N.E.2d 886 (2000), and R.C. 1.42.

{¶ 15} R.C. 3770.121 provides:

Any state lottery commission rules allowing lottery prize awards to be paid in installments also shall allow a prize winner who is being paid a prize award in that manner to transfer all or a portion of the remainder of the prize award, subject to each of the following conditions:

(A) If each transfer is for less than one hundred per cent of the remainder of the prize award, the remainder of the prize award for each transfer must be five hundred thousand dollars or greater at the time of the transfer. If the lottery prize award is a lifetime prize, for each transfer the remainder of the minimum guaranteed prize to which the prize winner is entitled must be five hundred thousand dollars or greater at the time of the transfer.

(B)

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