Tak Chun Gaming Promotion Co. v. Long
| Docket Number | B317918 |
| Decision Date | 26 October 2023 |
| Parties | TAK CHUN GAMING PROMOTION COMPANY LIMITED, Plaintiff and Appellant, v. KEVIN C.S. LONG, Defendant and Respondent. |
| Court | California Court of Appeals Court of Appeals |
APPEAL from a judgment of the Superior Court of Los Angeles County 21BBCV00094 John J. Kralik, Judge. Affirmed.
Greenan, Peffer, Sallander &Lally, John P. Makin, Nelson S. Hsieh, and Helen H. Chen for Plaintiff and Appellant.
Bird Marella, Boxer, Wolpert, Nessim, Drooks, Lincenberg &Rhow, Thomas R. Freeman, Ekwan E. Rhow, and Kimmy Yu for Defendant and Respondent.
During our state's infancy, our Legislature declared "[t]he common law of England" to be "the [default] rule of decision in all the courts of this State." (Civ. Code § 22.2; see also former Pol. Code, § 4468; Merritt v. Hill (1894) 104 Cal.184, 185.) In so doing, our state imported the English common law rule that prohibits resort to the courts to enforce gambling debts. (E.g., Bryant v. Mead (1851) 1 Cal. 441, 442-443 (Bryant).) In the intervening 173 years, our state has legalized many discrete types of gambling. Does this shift to a selective and partial legalization of gambling warrant the abandonment of the common law rule shuttering the California courts to lawsuits seeking to enforce gambling debts? We hold that it does not. The public policy basis for not legalizing gambling and the public policy basis for not providing a judicial forum to enforce gambling debts are distinct; erosion of the former does not call the latter into question. We consequently agree with the trial court that the lawsuit in this case seeking to enforce a gambling debt was properly dismissed. Thus, we affirm.
Kevin C.S. Long (Long) resides in Arcadia, California, and holds a Chinese resident identification card. In 2019, Long made several trips to Macau, which is an autonomous region on the south coast of China.[1] Gambling is legal in Macau.
While in Macau, Long entered into seven loan agreements with Tak Chun Gaming Promotion Company Limited (Tak Chun)-one in January 2019, five in September 2019, and one in November 2019. Tak Chun is a licensed junket operator that owns and operates gaming clubs inside Macanese casinos; among other things, Tak Chun loans funds to gamblers. The agreements obligated Long to repay the loaned amounts within 30 or 45 days, or face an interest rate at "five times the amount stipulated by law" in Macau. The agreements did not contain a forum selection clause.
Tak Chun loaned Long "casino tokens" worth a total of $88 million in Hong Kong currency (that is, over US$11 million); Long repaid only HK$13,668,680 (that is, around US$1.7 million).
On February 1, 2021, Tak Chun sued Long in a California state court seeking HK$74,331,320 (that is, US$9,904,787) under causes of action for (1) breach of contract, (2) quantum meruit, and (3) common counts.
Long moved for judgment on the pleadings, arguing that the lawsuit was barred by California's public policy against allowing the California courts to be used as a forum for enforcing gambling debts, even when the gambling giving rise to those debts was lawful where it occurred.[2] Tak Chun opposed, urging that this public policy was now outdated. After further briefing and a hearing, the trial court granted Long's motion.
The court acknowledged that California's legalization of certain pockets of gambling had "undoubtedly reduced the integrity and moral force" of California's public policy against gambling, but ruled that the prohibition on using California's courts as a forum to collect gambling debts had been a "clear[] and consistent[]" policy for "hundreds of years." As for Long specifically, the court noted that he was "headed down the road to perdition," yet Tak Chun continued "giving him more help along the way again and again and again." The court concluded that "California['s] public policy" "strongly disfavor[ing]" the "enforcement of gambling debts" barred Tak Chun's claims.
Following the entry of judgment for Long, Tak Chun filed this timely appeal.
Tak Chun argues that the trial court erred in granting judgment on the pleadings.
A motion for judgment on the pleadings is appropriate when the operative complaint "does not state facts sufficient to constitute a cause of action ...." (Code Civ. Proc § 438, subds. (c)(1)(B)(ii) &(c)(3)(B)(ii).) A motion brought on this basis is equivalent to a demurrer (People ex rel. Harris v. Pac Anchor Transportation, Inc. (2014) 59 Cal.4th 772, 777), such that our task is to examine the complaint's allegations and any judicially noticed documents in order to assess whether the pled causes of action are legally viable (ibid.; Barajas v. Sativa L.A. County Water Dist. (2023) 91 Cal.App.5th 1213, 1224 (Barajas)). A cause of action is not viable if, as pertinent here, it offends public policy. (Griffin v. McCoach (1941) 313 U.S. 498, 506 ["It is 'rudimentary' that a state 'will not lend the aid of its courts to enforce a contract founded upon a foreign law where to do so would be repugnant to good morals . . . or . . . violate the public policy of the State where the enforcement of the foreign contract is sought'"].) As to contract claims specifically, although public policy encourages the making of contracts, the courts will decline to enforce a contract if it violates "'"'sound public policy.'"'" (Dunkin v. Boskey (2000) 82 Cal.App.4th 171, 184.)
We independently evaluate whether the trial court properly granted judgment on the pleadings.[3] (Barajas, supra, 91 Cal.App.5th at p. 1224.) We also independently review any subsidiary questions of law, including whether enforcement of a contract in the California courts is contrary to public policy. (Bovard v. American Horse Enterprises, Inc. (1988) 201 Cal.App.3d 832, 838.)
Although Tak Chun's complaint alleges three causes of action, all seek to enforce the gambling debts Long incurred in Macau. Thus, the legal viability of Tak Chun's claims turns on whether California provides a judicial forum for their adjudication.
It does not.
In 1850, our Legislature enacted a statute declaring that "[t]he common law of England . . . is the rule of decision in all the courts of this State" unless "repugnant to or inconsistent with" federal or state constitutional law or state statutes. (Civ. Code, § 22.2; former Pol. Code, § 4468; Tufeld Corp. v. Beverly Hills Gateway, L.P. (2022) 86 Cal.App.5th 12, 21 [].) Through this statute, California imported not only the "whole" "'body of judge-made,'" decisional law of the English courts, but also "the written statutes enacted by Parliament." (Martin v. Superior Court (1917) 176 Cal. 289, 292-293 (Martin); People v. Williams (2013) 57 Cal.4th 776, 782; Moore v. Purse Seine Net (1941) 18 Cal.2d 835, 838-839; Tennant v. John Tennant Memorial Home (1914) 167 Cal. 570, 573-574; but see In re Estate of Fair (1901) 132 Cal. 523, 534 [], overruled by Martin, at pp. 292-293.) Among the enactments of Parliament adopted as California common law was the Statute of Anne, which declared all gambling debts "utterly void, frustrate, and of none effect, to all intents and purposes whatsoever." (9 Anne, ch. 14, § 1.)
On this basis, our Supreme Court has issued a long line of unbroken decisions "traced back virtually to the inception of statehood," declaring the California courts off limits when it comes to enforcing gambling debts. (Kelly v. First Astri Corp. (1999) 72 Cal.App.4th 462, 477 (Kelly); Bryant, supra, 1 Cal. at pp. 442-443; Carrier v. Brannan (1853) 3 Cal. 328, 329 (Carrier).) With one exception, the intermediate appellate courts have all uniformly toed that line. (Lane &Pyron, Inc. v. Gibbs (1968) 266 Cal.App.2d 61, 64-65; Metropolitan Creditors Service v. Sadri (1993) 15 Cal.App.4th 1821, 1824 (Metropolitan); Kelly, at p. 477; Kyablue v. Watkins (2012) 210 Cal.App.4th 1288, 1294 (Kyablue); but see Crockford's Club Ltd. v. Si-Ahmed (1988) 203 Cal.App.3d 1402, 1406 (Crockford's Club).)
Adhering to this line of precedent, the trial court properly dismissed Tak Chun's complaint because it seeks to use the California courts to enforce Long's gambling debts.
Tak Chun offers what boil down to three reasons why we should take the common law of our state in a new direction and depart from this precedent.
First and chiefly, Tak Chun makes a "times have changed" argument. It observes that, over the last several decades, California has legalized gambling in four discrete areas-namely, (1) pari-mutuel horse racing (Bus. &Prof. Code, § 19400 et seq.); (2) the California State Lottery (Cal. Const., art IV, § 19, subd. (d); Gov. Code, § 8880 et seq.); (3) draw poker clubs and similar card games (Bus. &Prof. Code, § 19800 et seq.); and, although it springs from a federal mandate, (4) gambling on tribal land pursuant to the federal Indian Gaming Regulatory Act of 1988 (25 U.S.C. §§ 2701-2721). From this receptivity to legalize gambling in certain circumstances, Tak Chun extrapolates that it "defies facts and logic" to believe that there remains any "moral" justification for shuttering the California courts to claims seeking to collect gambling debts.
To be sure, California's public policy against gambling has "wan[ed]" and "eroded" somewhat as our state's initial and more sweeping...
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