Judge: Kevin C. Brazile, Case: 22STCV19043, Date: 2023-02-07 Tentative Ruling

Hearing Date: February 7, 2023

Case Name: Densley v. California State Lottery Commission, et al.

Case No.: 22STCV13089

Matter: Demurrer

Moving Party: Defendants California State Lottery Commission and California State 

Lottery 

Responding Party: Plaintiff James Densley

Notice: OK

Ruling: The Demurrer is overruled.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly 

encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic. 

On April 19, 2022, Plaintiff James Densley filed the operative Complaint against Defendants California State Lottery Commission and California State Lottery for breach of contract/failure to discharge mandatory duty.  Plaintiff alleges that he turned in a winning High Card Poker ticket to Defendants, but Defendants, without explanation, improperly told Plaintiff that his ticket was not a winner.  

Defendants demur to the Complaint for failure to state sufficient facts.  

When considering demurrers, courts read the allegations liberally and in context, and “treat the demurrer as admitting all material facts properly pleaded, but not contentions, deductions or conclusions of fact or law.” (Serrano v. Priest (1971) 5 Cal.3d 584, 591.)  “A demurrer tests the pleadings alone and not the evidence or other extrinsic matters. Therefore, it lies only where the defects appear on the face of the pleading or are judicially noticed. The only issue involved in a demurrer hearing is whether the complaint, as it stands, unconnected with extraneous matters, states a cause of action.”  (Hahn v. Mirda¿(2007) 147 Cal.App.4th 740, 747.)  It is error “to sustain a demurrer without leave to amend if the plaintiff shows there is a reasonable possibility any defect identified by the defendant can be cured by amendment.”  (Aubry v. Tri-City Hospital Dist.¿(1992) 2 Cal.4th 962, 967.)

Defendants argue that (1) the lottery system does not create a contractual relationship and (2) no mandatory statutory duty has been identified, the general rule being immunity for Defendants.  

Plaintiff contends that “Defendant is correct: the State Lottery has no contractual relationship arising with players from the mere purchase of a ticket. Where Defendant is incorrect is that the State Lottery does have a mandatory obligation to conduct all lottery games ‘to promote and ensure integrity, security, honesty, and fairness in the operation and administration of the Lottery’ (Government Code § 8880.24), in part by promulgating and following the regulations it devises under its authority.”

Gov. Code 815.6 states, “Where a public entity is under a mandatory duty imposed by an enactment that is designed to protect against the risk of a particular kind of injury, the public entity is liable for an injury of that kind proximately caused by its failure to discharge the duty unless the public entity establishes that it exercised reasonable diligence to discharge the duty.”  Gov. Code § 815.6 imposes liability on a public entity when “[(1)] an enactment . . . impose[s] a mandatory, not discretionary, duty; [(2)] the enactment must intend to protect against the kind of risk of injury suffered by the party asserting the statute as a basis for liability; [(3)] and breach of mandatory duty must be a proximate cause of the injury suffered.”  (Ibarra v. California Coastal Com. (1986) 182 Cal.App.3d 687, 693.) 

By Defendants’ logic, the State’s subdivisions can run a scam operation in which they collect ticket money; refuse to pay actual winners; and then claim immunity.  This is an abhorrent factual scenario.

Government Code § 8880.24(a) states that Defendants “shall act to promote and ensure integrity, security, honesty, and fairness in the operation and administration of the Lottery.”

Defendants’ implementing regulations state, “A Winner is a Player who is not a Disqualified Person, who legally acquires a winning Ticket and owns it at the time it is determined to be a winning Ticket either by a Draw or by scratching the play area. Except as otherwise provided in these regulations, a Winner need not have purchased the Ticket; however, the Winner must Claim the Prize. . . .”  (RJN, Exhibit 1, § 5.4.2.)  Further, “If a person submits a valid winning Ticket bearing his/her signature on the back, and a Claim form which bears his/her signature and complete information consistent with his/her ownership of the Ticket, the Lottery will pay the Prize in reliance upon presumptions. The Lottery will not withhold payment in the absence of a court order requiring it to do so.”  (§ 5.4.6.)

The Court believes that Defendants have few mandatory duties.  However, Defendants do have a duty to implement a fair and honest operation; there is a regulation that, in mandatory fashion, requires actual winners be paid absent court order; these laws partly seek to create an even-handed system; and Plaintiff claims harm from Defendants running their operation without regard for the rules for distributing a prize.  That is, one of the few mandatory duties is to pay actual winners.  Surely, this is the thrust of the whole lottery system.  The Court notes that other jurisdictions have required lottery commissions to pay actual winners.  (See, e.g., State ex rel. Barnett v. Missouri State Lottery Comm'n (Mo. Ct. App. 2006) 196 S.W.3d 72, 79.) 

The Demurrer is overruled.  An answer is to be filed within twenty days.  The Request for Judicial Notice is granted.

Moving parties to give notice.

If counsel do not submit on the tentative, they are strongly encouraged to appear by LACourtConnect rather than in person due to the COVID-19 pandemic.