R & P Capital Resources, Inc. v. California State Lottery

• Decision Date: 23 January 1995
• Docket Number: No. C018032,C018032
• Court: California Court of Appeals Court of Appeals
• Parties: R & P CAPITAL RESOURCES, INC., Plaintiff and Appellant, v. CALIFORNIA STATE LOTTERY, Defendant and Respondent.

Page 436

37 Cal.Rptr.2d 436

31 Cal.App.4th 1033

R & P CAPITAL RESOURCES, INC., Plaintiff and Appellant, v. CALIFORNIA STATE LOTTERY, Defendant and Respondent.

No. C018032.

Court of Appeal, Third District, California.

Jan. 23, 1995.

McKernan, Lanam, Bakke, Benson & Bodney and John A. Bodney, Paradise, for defendant and appellant.

Daniel E. Lungren, Atty. Gen., Henry G. Ullerich, Asst. Atty. Gen., Jose R. Guerrero and Robert R. Buell, Deputy Attys. Gen., for plaintiff and respondent.

MORRISON, Associate Justice.

Prior to recent amendment, the State Lottery Act provided: "The right of any person to a prize shall not be assignable, except that the payment of any prize may be paid ... to a person designated pursuant to an appropriate judicial order...." (Gov.Code, § 8880.32, subd. (g), as amended by Stats.1992, ch. 500, § 3.) The sole issue presented in this appeal is whether that language permits the voluntary assignment of the right to lottery prize payments. In a declaratory action, the trial court held it did not. Plaintiff, R & P Capital Resources, Inc., the would-be assignee, appeals, urging a different statutory interpretation. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

David Gintowt won $2,575,000 in the California State Lottery in 1987, payable in 20 annual installments of $128,750 each. In May 1993, Gintowt entered into a sale and assignment agreement to assign his right, title and interest in and to six annual payments to R & P Capital Resources in exchange for $400,000. The agreement provided that in order to comply with California law, the parties would obtain a court order approving the assignment. The parties obtained an order from the Butte County Superior Court confirming the assignment.

In 1988, Gary Mawer won $1,000,000 in the California State Lottery (the Lottery), payable in 20 annual installments of $50,000 each. In August 1993, he entered into a similar agreement with R & P Capital Resources The Lottery refused to honor the assignments, contending Government Code section 8880.32, subdivision (g) prohibited assignments of lottery prizes.

to assign four installments in exchange for $100,125. The parties also obtained a court order confirming the assignment.

In October 1993, Gintowt, Mawer, and R & P Capital Resources brought an action for declaratory relief, seeking to compel the Lottery to honor the assignments. ¹

The plaintiffs moved for a judgment on the pleadings, contending the clear, unambiguous language of the statute permitted assignments that were approved by a court. In opposition, the Lottery stated it had consistently interpreted the "appropriate court order" language to refer to final distributions in probate, orders affecting property distributions in dissolution proceedings, and orders made in disputes over ownership rights to the prize; in short, contested court proceedings settling competing claims to a lottery prize. In support of its position, the Lottery provided the declaration of its chief counsel, stating the Lottery had always interpreted the statute to prohibit assignments. He argued the exceptions in the statute were not assignments, but involved issues of ownership. He noted the Lottery had sponsored legislation to permit payments to be made to the winner's trust.

The parties stipulated to treat plaintiffs' motion for judgment on the pleadings as a motion for summary judgment.

The court found each party's policy arguments plausible, but found dispositive the Lottery's argument that plaintiffs' interpretation of the statute would lead to collusive, nonjusticiable proceedings. It granted declaratory relief in favor of the Lottery, finding Government Code section 8880.32, subdivision (g) prohibits the sale and assignment of lottery prizes as proposed by plaintiffs.

R & P Capital Resources appeals.

DISCUSSION

The only issue in this case is the interpretation of a statute. That is a question of law that we review de novo. (County of Los Angeles v. Superior Court (1993) 18 Cal.App.4th 588, 594.)

As originally enacted by initiative measure, subdivision (g) of Government Code section 8880.32 (hereinafter "subdivision (g)") read:

"The right of any person to a prize shall not be assignable, except that payment of any prize may be paid to the estate of a deceased prize winner or to a person designated pursuant to an appropriate judicial order. The Director, Commission, and State shall be discharged of all further liability upon such payment of a prize pursuant to this subsection." (Ballot Pamp., Proposition 37 analysis by the Legis. Analyst as presented to the Voters, Gen.Elec. (Nov. 6, 1984) p. 78.) (Emphasis added.)

In 1986, subdivision (g) was amended to provide for payment pursuant to Government Code section 21211 when the prize winner is deceased and there is no probate. (Stats.1986, ch. 55, § 7, p. 154.) An amendment in 1989 set forth the order of distribution when there was no probate. (Stats.1989, ch. 917, § 5, pp. 3184-3186.) In 1992, the subdivision was amended to "authorize payment of a prize to a trust established for the benefit of a prize winner." (Legis. Counsel's Dig., Assem. Bill No. 3824, Stats.1992, ch. 500, § 3.) At all times up to 1994, subdivision (g) read in pertinent part: "The right of any person to a prize shall not be assignable, except that payment of any prize may be paid ... to a person designated pursuant to an appropriate judicial order." (Ballot Pamp., Proposition 37 analysis by the Legis. Analyst as presented to the Voters, Gen.Elec., supra, p. 78; Stats.1986, ch. 55, § 7, p. 154; Stats.1989, ch. 917, § 5, p. 3185; Stats.1992, ch. 500, § 3.) This is the language we interpret.

"In construing a statute, our first task is to look to the language of the statute itself." (DuBois v. Workers' Comp. Appeals Bd. (1993) 5 Cal.4th 382, 387, 20 Cal.Rptr.2d 523, 853 P.2d 978.) "If the language is clear and unambiguous there is no need for construction, nor is it necessary to resort to indicia of the intent of the Legislature (in the case of a statute) or of the voters (in the case of a provision adopted by the voters). [Citations.]" (Lungren v. Deukmejian (1988) 45 Cal.3d 727, 735, 248 Cal.Rptr. 115, 755 P.2d 299.)

The opening language of subdivision (g) is clear and unambiguous; it establishes that lottery winnings are not assignable. An exception is provided for payment to persons designated by an appropriate judicial order. This language is arguably ambiguous. R & P Capital Resources reads it to permit any assignment that is approved by a court. The Lottery contends it applies only to an order following a contested proceeding establishing ownership and does not permit a voluntary assignment. As we explain, we agree with the Lottery.

The provision for payment to persons designated by an appropriate judicial order is an exception to the general rule of no assignment. As an exception, it is strictly construed. (City of Lafayette v. East Bay Mun. Utility Dist. (1993) 16 Cal.App.4th 1005, 1017, 20 Cal.Rptr.2d 658; Barnes v. Chamberlain (1983) 147 Cal.App.3d 762, 767, 195 Cal.Rptr. 417.) "In interpreting exceptions to the general statute courts include only those circumstances which are within the words and reason of the exception. [Citations.]" (Barnes, id. at p. 767, 195 Cal.Rptr. 417.) As originally written, the only other exception in subdivision (g) provided for payment to a decedent's estate. Later, the subdivision was amended to provide for payment where the winner was deceased and there was no probate. These provisions address determining the proper payee when the winner is deceased. They are not truly exceptions to the prohibition against assignment, but speak to the issue of determining ownership. Construing "appropriate judicial order" to refer only to an order following a contested proceeding over ownership would place it in the same category of ownership concerns.

"[T]he provision must be given a reasonable and common sense interpretation consistent with the apparent purpose and intention of the lawmakers, practical rather than technical in nature, which upon application will result in wise policy rather than mischief or absurdity. [Citations.]" (DeYoung v. City of San Diego (1983) 147 Cal.App.3d 11, 18, 194 Cal.Rptr. 722.) If the "appropriate judicial order" provision is interpreted to permit a voluntary assignment subject to court approval, the exception would swallow the rule of no assignment. If an assignment could be made with court approval, the general prohibition against assignment would be rendered nearly meaningless. This is so particularly because the statute provides no guidance to courts to determine which assignments should be accepted and which rejected.

Subsequent legislative action also supports the Lottery's interpretation of subdivision (g). In 1992, the subdivision was amended to permit payments to a trust established for benefit of the winner. (Stats.1992, ch. 500, § 3.) If the assignment to the trust could be accomplished by a court order in an uncontested proceeding, the amendment would have been largely unnecessary. Anyone seeking to assign payments to a trust could have simply gotten a court order. In deference to the Legislature, we assume its acts do not produce meaningless results; therefore, we must construe the amendment as accomplishing something and not as an idle act. (Stafford v. Realty Bond Service Corp. (1952) 39 Cal.2d 797, 805, 249 P.2d 241; Clavell v. North Coast Business Park (1991) 232 Cal.App.3d 328, 332, 283 Cal.Rptr. 419.) The amendment permitting payments to a trust was necessary because assignments were not permitted.

In 1994, subdivision (g) was extensively amended. This subsequent legislative change, which allows lottery prize winnings to be used as collateral for a loan, provides the most compelling evidence in support of the Lottery's interpretation. "Although subsequent legislation cannot change the meaning of an earlier enactment, it does supply an indication...