WILLIAMS, J.
Whitlark & Whitlark, Inc. d/b/a Rockaways Athletic Club and Pizza Man, Forrest Whitlark, Paul Whitlark, Charlie E. Bishop, and Brett Blanks (collectively, Appellants) appeal the circuit court's order granting Lauren Proctor's motion for summary judgment,
In 1995, Proctor began gambling on video gaming machines located in restaurants and bars in Columbia, South Carolina. From 1999 until 2005, Proctor frequently gambled on video poker machines located in the Pizza Man and Rockaways Athletic Club (Rockaways) restaurants.
Proctor was employed by State Title, which her mother owned. State Title provided real estate closing services to attorney Walter Smith. Proctor began forging her mother's name on checks and stealing money from Smith's trust account to use video poker machines. Because of Proctor's activities, Smith's trust account contained insufficient funds to satisfy the mortgages on several properties at closing. Accordingly, Trans-Union National Title Insurance Company
In July 2000, the operation of video poker machines became illegal in South Carolina. Proctor admitted she was aware her use of the video poker machines was illegal. Pizza Man and Rockaways continued to operate video poker machines in their establishments until a Federal Bureau of Investigation sting operation in 2005.
On September 10, 2007, Proctor entered into a plea agreement with federal prosecutors and pled guilty to mail fraud under 18 U.S.C. § 1341. In addition, Proctor agreed to pay
Proctor and Trans-Union brought the instant action against Appellants to recover the losses they incurred as the result of Proctor's gambling. Specifically, Proctor and Trans-Union asserted claims for unjust enrichment, violations of the South Carolina Unfair Trade Practices Act (SCUTPA), and civil conspiracy. Appellants filed a motion for summary judgment, arguing the doctrine of in pari delicto barred Proctor's claims and challenging Trans-Union's standing. In addition, Proctor moved for partial summary judgment against the Whitlarks on the issue of liability. The circuit court found Trans-Union lacked standing to bring the action and granted Appellants' motion for summary judgment on Proctor's unjust enrichment claim based on their unclean hands defense. However, the circuit court found that the doctrine of in pari delicto has been abrogated in South Carolina with regard to gambling losses. Accordingly, the circuit court granted Proctor's motion for partial summary judgment on the issue of liability against the Whitlarks and denied Appellants' motion for summary judgment based on the in pari delicto defense. This appeal followed.
Appellants argue the circuit court erred in granting Proctor's partial motion for summary judgment. Specifically, Appellants contend the circuit court erred in finding that the doctrine of in pari delicto has been abrogated in South Carolina with regard to losses sustained in illegal gambling. We disagree.
"The common-law defense at issue in this case derives from the Latin, in pari delicto potior est conditio defendentis: `In a case of equal or mutual fault ... the position of the [defending] party ... is the better one.'" Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 306, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985) (alterations in original); see also Myatt v. RHBT Fin. Corp., 370 S.C. 391, 395, 635 S.E.2d 545, 547 (Ct.App.2006) ("The doctrine of in pari delicto is the principle that a plaintiff who has participated in wrongdoing may not recover damages resulting from the wrongdoing." (internal quotation marks and alterations omitted)). South Carolina
Similarly, if a person who lost money gambling does not bring suit pursuant to section 32-1-10 within three months of the gambling loss, section 32-1-20 allows any person to bring suit against the winner for treble damages within one year of the date of the loss. See S.C.Code Ann. § 32-1-20 (2007) ("In case any person who shall lose such money ... shall not, within the time aforesaid, ... sue and with effect prosecute for the money or other things so by him or them lost and paid and delivered as aforesaid, it shall be lawful for any other person ... to sue for and recover the same and treble the value thereof, with costs of suit, against such winner or winners as aforesaid....").
This court and our supreme court have recognized in more recent cases that sections 32-1-10 and -20 "promote a policy which prevents a gambler from allowing his vice to overcome his ability to pay" and "protect a citizen and his family from the gambler's uncontrollable impulses." Johnson v. Collins Entm't Co., 349 S.C. 613, 635, 564 S.E.2d 653, 664-65 (2002) (internal quotation marks omitted); see also McCurry v. Keith, 325 S.C. 441, 444, 481 S.E.2d 166, 168 (Ct.App.1997) ("The purpose of [section 32-1-10] is to punish excessive gaming and to prevent a gambler from allowing his vice to
In Johnson, the supreme court rejected the argument that section 32-1-10 provides the exclusive remedy to recover gambling losses and explicitly recognized that a plaintiff may also seek to recover gambling losses pursuant to SCUTPA. Id. at 634-35, 564 S.E.2d at 664-65. In addition, the court declined to apply the defendants' in pari delicto defense to the plaintiffs' SCUTPA claim. Id. at 639 n. 13, 564 S.E.2d at 639 n. 13. The court reasoned, in part, that because the operators of the video poker machines were operating in a regulated area of the law, they should "be held to a greater knowledge and understanding of the laws than their customers, particularly where the laws are designed to protect the player from his or her own bad judgment." Id.
Based upon the supreme court's holding in Johnson, we find the circuit court did not err in rejecting Appellants' in pari delicto defense. We acknowledge the facts of the instant case are distinguishable from those in Johnson because video poker gambling was illegal when Proctor suffered her losses. Nevertheless, three tenets recognized by the supreme court in Johnson are instructive to our analysis and lead to the same conclusion that the in pari delicto defense does not bar Proctor's claims. First, statutory and case law in South Carolina support the policy of allowing plaintiffs to recover gambling losses as a way of both discouraging illegal gambling and of protecting gamblers and their family members from imprudent gambling activities. See Johnson, 349 S.C. at 635, 564 S.E.2d at 664-65 (noting that sections 32-1-10 and -20
Courts in other jurisdictions have similarly found that the in pari delicto defense does not bar the recovery of illegal gambling losses. For example, in O'Neil v. Crampton, 18 Wn.2d 579, 140 P.2d 308 (1943), the Washington Supreme Court employed a similar approach and explained the policy reasons for declining to apply the doctrine to gambling losses. The court acknowledged the general rule that "one cannot establish a right and invoke a remedy if he himself is a wrongdoer...." Id. at 310. Nevertheless, the court found that a Washington statute providing for a civil remedy to recover money lost while engaged in gambling
Id. The court noted that the fact that the gambler was engaged in an illegal activity should not preclude recovery
Based on this case and statutory law and for the reasons set forth above, we find the circuit court did not err in granting Proctor's motion for summary judgment on the issue of liability against the Whitlarks. As noted by the supreme court in Johnson, statutory and case law in South Carolina support a policy of allowing plaintiffs to recover gambling losses as a way of both discouraging illegal gambling and of protecting gamblers and their family members from imprudent gambling activities. 349 S.C. at 635, 564 S.E.2d at 664-65. We hold that with respect to gambling losses under the circumstances of the instant case, the doctrine of in pari delicto has been abrogated for reasons of public policy and does not bar the recovery of such losses. Accordingly, we affirm the circuit court's order granting Proctor's motion for summary judgment.
Based on the foregoing, the circuit court's order granting Proctor's motion for summary judgment on the issue of liability against the Whitlarks is
HUFF and KONDUROS, JJ., concur.