Justice BEATTY.
Lauren Proctor and Trans-Union National Title Insurance Company ("Trans-Union") brought this action against Whitlark & Whitlark, Inc., d/b/a Rockaways Athletic Club ("Rockaways") and Pizza Man, Forrest Whitlark, Paul Whitlark, Charlie E. Bishop, and Brett Blanks (collectively "Defendants") seeking to recover money Proctor lost while gambling on video poker machines located at Rockaways and Pizza Man over the course of several years, including a time period following the South Carolina Legislature's ban of video poker in 2000. The circuit court granted Proctor's motion for partial summary judgment on her claim under the South Carolina Unfair Trade Practices Act ("UTPA") as to the liability of Defendants. In so ruling, the court found the Legislature had abrogated the doctrine of in pari delicto
We find our Legislature has enacted specific gambling loss statutes as the exclusive remedy for a gambler seeking recovery of losses sustained by illegal gambling. Accordingly, we now overrule our decisions that have implicitly authorized recovery beyond these statutes. As a result, we hold that one
Beginning in 1995, Proctor started gambling on video gaming machines at various restaurants and bars in Columbia, South Carolina. From 1999 to 2005, Proctor frequently gambled on video poker machines located in Rockaways and Pizza Man, which are operated by Whitlark & Whitlark, Inc. ("Whitlark"). Forest Whitlark and Paul Whitlark are part owners of Whitlark. At the time, Charlie E. Bishop and Brett Blanks co-owned a limited liability company named Zodiac Distributing, LLC, which placed one coin-operated gaming machine at the Pizza Man restaurant.
According to Proctor, she lost between $1,000 and $5,000 per week while gambling at the restaurants. Proctor claimed the two restaurants provided her cash advances on her credit cards to enable her to fund her gambling, as well as free food, alcohol, and cocaine.
Proctor also funded her gambling with money illegally obtained from her employer State Title, which her mother owned. State Title provided real estate closing services to attorney Walter Smith. During the time period at issue, Proctor forged her mother's name on checks and stole money from Smith's trust account in order to play the video poker machines. As a result of Proctor's actions, Smith's trust account contained insufficient funds to satisfy the mortgages on several properties at closing. In turn, Trans-Union
Effective July 1, 2000, the Legislature banned the operation of video poker machines in South Carolina.
On September 10, 2007, Proctor entered into a plea agreement with federal prosecutors and pled guilty to mail fraud pursuant to 18 U.S.C. § 1341. As part of the agreement, Proctor was required to pay restitution in the amount of $565,475.25 to Trans-Union and $195,000 to Smith.
Proctor and Trans-Union brought this action against Defendants to recover the losses they incurred as a result of Proctor's gambling.
Following a hearing, the circuit court granted Proctor's motion for partial summary judgment.
Additionally, the court granted Defendants' motion for summary judgment on Proctor's unjust enrichment claim based on their unclean hands defense.
After the court denied their motion for reconsideration, Defendants appealed to the Court of Appeals. The Court of Appeals affirmed. Proctor v. Whitlark & Whitlark, Inc., 406 S.C. 225, 750 S.E.2d 93 (Ct.App.2013). Like the circuit court, the Court of Appeals relied on this Court's decision in Johnson and held that sections 32-1-10 and 32-1-20 of the South Carolina Code, which authorize gamblers and affected third parties to recover gambling losses in certain limited circumstances, were viable despite the existence of the in pari delicto doctrine. Id. at 230, 750 S.E.2d at 95. Further, the court ruled that the gambling loss statutes were not the exclusive remedy and, therefore, Proctor could seek to recover her losses under other applicable laws, including UTPA. Id. at 231, 750 S.E.2d at 96.
Although the Court of Appeals acknowledged that the facts in Johnson were distinguishable from those in Proctor's case, since video poker was generally legal at the time of the Johnson case, it found three tenets recognized by this Court in Johnson were instructive and led to the same conclusion as the circuit court that an in pari delicto defense did not bar Proctor's claims. Id. at 230, 750 S.E.2d at 95. The Court of Appeals stated:
Id. at 230-31, 750 S.E.2d at 95-96.
Following the denial of their petition for rehearing en banc, this Court granted Petitioners' request for a writ of certiorari to review the decision of the Court of Appeals.
When reviewing the grant of a summary judgment motion, an appellate court applies the same standard that governs the trial court under Rule 56(c), SCRCP, which provides that summary judgment is proper when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Rule 56(c), SCRCP; Fleming v. Rose, 350 S.C. 488, 493, 567 S.E.2d 857, 860 (2002). "Determining the proper interpretation of a statute is a question of law, and this Court reviews questions of law de novo." Town of Summerville v. City of N. Charleston, 378 S.C. 107, 110, 662 S.E.2d 40, 41 (2008).
Petitioners primarily contend the Court of Appeals erred in holding that the doctrine of in pari delicto has been abrogated. In support of this contention, Petitioners claim the
Based on these purported errors, Petitioners maintain that the Court of Appeals created new law that allows a person, who voluntarily engages in an illegal trade or activity, to recover under UTPA. By doing so, Petitioners aver that the Court of Appeals' decision not only contradicts public policy of this state and this Court's decisions, but also effectively eliminates any personal responsibility of the gambler.
The doctrine of in pari delicto is grounded in the "general principle that a person cannot base a cause of action upon an illegal or immoral act, transaction or contract." 4 S.C. Jur. Action § 21 (1991 & Supp.2015). "It has been succinctly stated that no court will lend its aid to a man who founds his cause of action upon an immoral or an illegal act." Id. (internal quotation marks and alterations omitted). "The policy is reflected in the general rules providing that where parties are in pari delicto, that is, equally in the wrong, no affirmative relief will be given to one against the other and that no one shall be permitted to profit by his own wrong." Id. (footnote omitted). "On the other hand, there may be an
Despite the well-established doctrine of in pari delicto, the Legislature in 1712 received into law
Notably, these code sections were drafted in general terms and did not qualify whether recovery was permitted for losses sustained by illegal gambling. Consequently, as originally codified, the Legislature created a civil remedy akin to a strict liability offense as it authorized "any person" or third party to recover for gambling losses regardless of the legality of the game. By implication, the Legislature abrogated the doctrine of in pari delicto as it authorized an at-fault party to recover losses sustained by illegal gambling.
Sections 32-1-10 and 32-1-20 remained essentially unchanged until 2000. Justice v. The Pantry, 335 S.C. 572, 577 n. 2, 518 S.E.2d 40, 43 n. 2 (1999) ("Sections 32-1-10 & -20 were originally adopted in 1712 and statutory language has changed very little since then."). Effective July 1, 2000, the Legislature promulgated Act No. 125 to ban video gambling. Act No. 125, 1999 S.C. Acts 1319. As part of this Act, the Legislature expressly amended sections 32-1-10 and 32-1-20. Act No. 125, 1999 S.C. Acts 1319, 1384. Significantly, the Legislature enacted section 32-1-60, which states that "[b]eginning on the effective date of this section, the provisions of Sections 32-1-10, 32-1-20, and 32-1-30 apply only to those
By enacting section 32-1-60, the Legislature purposefully retained sections 32-1-10 and 32-1-20 and limited their application to losses sustained by illegal gambling. More specifically, because video poker is no longer authorized by law, the Legislature clearly intended for gamblers or third parties to recover losses sustained by illegal video poker gambling. As a result, section 32-1-60 constitutes definitive evidence that the Legislature abrogated the doctrine of in pari delicto in the context of recovery for illegal gambling losses. See Hodges v. Rainey, 341 S.C. 79, 85, 533 S.E.2d 578, 581 (2000) ("What a legislature says in the text of a statute is considered the best evidence of the legislative intent or will. Therefore, the courts are bound to give effect to the expressed intent of the legislature." (quoting Norman J. Singer, Sutherland Statutory Construction § 46.03, at 94 (5th ed.1992))). However, this conclusion does not end our analysis as we must also determine whether the gambling loss statutes are the exclusive remedy.
Although our decisions have effectuated the intent of the Legislature to permit recovery for illegal gambling losses under sections 32-1-10 and 32-1-20, this Court has expanded recovery beyond these statutes. We take this opportunity to re-evaluate a line of decisions that implicitly permit one engaged in illegal gambling to recover under UTPA. For reasons that will be discussed, we find these decisions are contrary to the intent of our Legislature.
In a case pre-dating the ban on video gambling, this Court considered "whether S.C.Code Ann. § 32-1-10 (1991), requires the playing of an illegal game as a prerequisite to the recovery of a gambling loss." Berkebile v. Outen, 311 S.C. 50, 52, 426 S.E.2d 760, 761 (1993). In analyzing this question, the Court initially noted that "[e]xcept for the changing of [the] monetary threshold, this statute has remained unchanged since
Id. at 53-54, 426 S.E.2d at 762 (footnote omitted and emphasis added).
Further, the Court recognized that section 32-1-10 applies regardless of the legality of the game. Specifically, the Court stated:
Id. at 54, 426 S.E.2d at 762-63 (first emphasis added and footnote omitted). The Court went on to state that, since the statute does not include an explicit requirement that the gambling be illegal, it would not go beyond the plain and ordinary meaning of the statute to find that an illegal game
Six years after Berkebile, at a time when video poker was still legal, this Court considered a class action lawsuit brought by gamblers against owners and operators of video poker machines, alleging causes of action pursuant to the Racketeer Influenced and Corrupt Organizations Act ("RICO") and UTPA based on the operators offering "special inducements" by advertising jackpots in excess of the statutory $125 payout limit. Gentry v. Yonce, 337 S.C. 1, 522 S.E.2d 137 (1999). On appeal, the Court analyzed whether the circuit court erred in granting the video poker operators' motion to dismiss both causes of action. Id. at 4-5, 522 S.E.2d at 138-39. Ultimately, the Court found the gamblers sufficiently pled their causes of action. Id. at 14, 522 S.E.2d at 144. The Court concluded that "on the basis of the complaint it cannot be stated appellants are not entitled to any relief whatsoever." Id. Although the analysis was limited due to the procedural posture of the appeal, the Court recognized that gamblers may present cognizable claims under RICO and UTPA to recover for losses incurred during gambling. Id.
Three years later, this Court reaffirmed its holding in Gentry. Johnson v. Collins Entm't Co., 349 S.C. 613, 564 S.E.2d 653 (2002). In Johnson, gamblers brought suit in June 1997, a time in which video poker was legal but limited by law, alleging that defendants operated video poker machines in a manner that violated state law limiting the amount of payouts. Id. at 621, 564 S.E.2d at 657. The gamblers asserted causes of action under RICO, the South Carolina UTPA, and sections 32-1-10 and 32-1-20. Id.
One of the seven issues certified to this Court by the United States District Court for the District of South Carolina was whether sections 32-1-10 and 32-1-20 provide the exclusive remedy for gambling losses and, thus, precludes recovery under other state law theories. Id. at 634, 564 S.E.2d at 664. With respect to the plaintiffs' claims under UTPA, the Court found sections 32-1-10 and 32-1-20 had no preclusive effect. Id. at 635, 564 S.E.2d at 665. The Court stated:
Id. Additionally, the Court emphasized that section 39-5-160 of UTPA states, "The powers and remedies provided by this article shall be cumulative and supplementary to all powers and remedies otherwise provided by law." Id. (quoting section 39-5-160 of UTPA). Further, the Court noted that its decision in Gentry "clearly envision[ed] that both remedies would be available to the plaintiffs." Id. The Court explained that "[n]othing in [Gentry] would indicate sections 32-1-10 and 20 were the sole causes of action available to plaintiffs." Id.
The Court also rejected the operators' attempt to shift the blame to the gamblers based on an in pari delicto defense. In a footnote, the Court stated:
Id. at 638-39 n. 13, 564 S.E.2d at 667 n. 13 (third emphasis added).
Although Berkebile, Gentry, and Johnson were based on facts that occurred when video gambling was legal, we affirm these decisions to the extent that their holdings are consistent with the gambling loss statutes as currently codified. Specifically, we find these decisions correctly suggested that sections 32-1-10 and 32-1-20 permit recovery for gambling losses sustained by illegal gambling. However, we overrule Gentry and Johnson to the extent these decisions authorized a gambler or third party to recover for illegal gambling losses under UTPA. We now hold that the gambling loss statutes are the exclusive remedy. While we recognize
We find determinative the disparity in the potential recovery for a claim under section 32-1-10 versus UTPA.
Significantly, our appellate courts have expressly ruled that a gambler is only entitled to net losses. See McCurry v. Keith, 325 S.C. 441, 444, 481 S.E.2d 166, 168 (Ct.App.1997) (stating, in a case pre-dating the ban of video poker, "[t]o allow a gambler to recover losses and pocket winnings would create a perverse result contrary to legislative intent: Granting a windfall to a gambler would neither punish excessive gaming nor protect a gambler and his family from the gambler's irresistible impulses" (emphasis added)).
We believe that to permit a gambler to recover a windfall under UTPA when the Legislature has specifically limited losses to actual damages under section 32-1-10 would be in
Furthermore, if a gambler were permitted to recover under UTPA for losses sustained by illegal gambling, such a decision would have significant repercussions. Taken to its logical extreme, anyone engaged in an illegal activity could allege an UTPA claim to recover losses sustained by the illegal activity. For example, one who purchases illegal drugs could seek to recover against the drug dealer pursuant to UTPA. We do not believe this was the intent of the Legislature. Rather, by enacting section 32-1-60 in 2000, we conclude the Legislature purposefully retained sections 32-1-10 and 32-1-20 to provide the exclusive remedy for losses sustained by illegal gambling.
Despite our holding, we must affirm a portion of the result reached by the Court of Appeals. In granting Proctor's motion for partial summary judgment as to the liability of Defendants, the circuit court found that "the operation of video poker machine[s] in contravention of state law is an unfair act as defined in the [UTPA]."
Nonetheless, Proctor is only entitled to seek recovery for those losses that were allegedly sustained prior to July 1, 2000, the effective date of the ban on video poker. In her pleadings, Proctor alleged that she sustained gambling losses "[b]eginning in 1999, and continuing until June 2005." Because it was legal for Proctor to engage in video poker prior to July 1, 2000, we find that she may pursue her UTPA claim for gambling losses allegedly sustained between 1999 and July 1, 2000. We emphasize that this case was presented in the posture of a summary judgment motion. Thus, Proctor still bears the burden of proving her alleged damages.
Based on the foregoing, the decision of the Court of Appeals is
KITTREDGE, J., and Acting Justices JAMES E. MOORE and LETITIA H. VERDIN, concur. TOAL, C.J., concurring in part and dissenting in part in a separate opinion.
Chief Justice TOAL.
I concur in part and respectfully dissent in part. I concur with the majority in affirming the court of appeals' decision allowing Proctor to pursue her UTPA claim for gambling losses she sustained between 1999 and July 1, 2000—a period of time in which video poker was legal in South Carolina. I further concur with the majority's finding that the doctrine of in pari delicto does not prevent recovery in this situation. Indeed, the operators of video poker machines should "be held to a greater knowledge and understanding of the laws than their customers," and while those who play the machines are not without fault, "the fault or culpability is certainly not `equal.'" Johnson v. Collins Entm't Co., 349 S.C. 613, 639 n. 13, 564 S.E.2d 653, 667 n. 13 (2002). Nevertheless, I write to emphasize that the General Assembly has not altogether abolished the doctrine of in pari delictio, but instead, has
Unlike the majority, however, I would hold that Proctor may pursue her UTPA claim for losses sustained after July 1, 2000, because I find the majority's decision prohibiting Proctor's UTPA claim for losses sustained while video poker was illegal to be a departure from our precedent, as well as South Carolina's anti-gambling public policy. Therefore, I dissent from the majority's reversal of the court of appeals' decision upholding the circuit court's order granting Proctor's motion for summary judgment on her UTPA claim.
As the majority acknowledges, this Court's opinions in Johnson and Gentry v. Yonce, 337 S.C. 1, 522 S.E.2d 137 (1999), at the least, do not prohibit—and at the most, authorize—a gambler or third party's UTPA claim to recover for illegal gambling losses. See Johnson, 349 S.C. at 635, 564 S.E.2d at 665; Gentry, 337 S.C. at 14, 522 S.E.2d at 144. I disagree with the majority's decision to partially overrule those cases for two reasons. First, the General Assembly has not responded to Johnson and Gentry to indicate its intention that sections 32-1-10 and 32-1-20 of the South Carolina Code provide the exclusive remedy for losses sustained by illegal gambling. Moreover, unlike the majority, I do not find the damages recoverable under those statutes indicative of the General Assembly's intent on this matter. Rather, in my view, without evidence to the contrary, recovery under the UTPA is "cumulative and supplementary" to recovery under sections 32-1-10 and 32-1-20, and the recovery provided by those statutes has no bearing on the possible UTPA claim. See S.C.Code Ann. § 39-5-160 (1985) ("The powers and remedies provided by [the UTPA] shall be cumulative and supplementary to all powers and remedies otherwise provided by law.").
For these reasons, I would allow Proctor to pursue her UTPA claim in full against Defendants, who engaged in deliberate conduct that fed Proctor's gambling addiction. Accordingly, I would affirm in full the court of appeals' decision
S.C.Code Ann. § 32-1-10 (2007) (emphasis added).
S.C.Code Ann. § 39-5-140(a) (1985) (emphasis added); see id. § 39-5-20(a) ("Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are hereby declared unlawful.").
S.C.Code Ann. § 32-1-20 (2007) (emphasis added).