State Of Washington v. Nicholas Jenkins ( 2013 )

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2013HAU 11 AH 10-39
IN THE COURT OF APPEALS OF THE STATE OF WASHINGTON
DIVISION ONE
STATE OF WASHINGTON, No. 68040-4-
Respondent,
v.
NICHOLAS JENKINS, UNPUBLISHED OPINION
Appellant. FILED: March 11, 2013
Verellen, J. — For a court to issue a declaratory judgment, a justiciable
controversy must exist between adverse parties. Because Nicholas Jenkins does not
demonstrate the existence of a justiciable controversy, or, in the alternative, show
that his claim is a matter of public importance, the trial court was within its discretion
to dismiss his request for declaratory relief without reaching the merits. Accordingly,
we affirm.
FACTS
The procedural history of this case is summarized from our Supreme Court's
decision in Internet Community & Entertainment Corp., d/b/a Betcha.com v.
Washington State Gambling Commission.1
1 169Wn.2d 687, 238 P.3d 1163 (2010).
No. 68040-4-1/2
Nicholas Jenkins is the founder and former chief executive officer of Internet
Community & Entertainment Corp. In 2007, Jenkins began operating a website,
Betcha.com, which he described as a "person to person betting platform" that
"connects] people who like to bet."2 Registered users of Betcha.com could post
proposed wagers on the outcomes of various events for other users to accept.
Betcha.com earned money from the transactions by charging a nonrefundable fee
whenever a user listed a bet, accepted a proposed bet, proposed a counteroffer to a
bet, or opted for a larger font size and more prominent location to make their bet
more visible. To participate, users were required to fund an online account with a
credit card to ensure they had enough money to cover the bet if they lost;
Betcha.com placed the funds into escrow pending the outcome of the wagered-on
event.
Once the event that was the subject of the wager was concluded, the loser of
the bet had the option to either pay his losses or refuse to honor the bet. A user who
refused to honor a bet suffered a loss in his "honor rating," a number visible to all
registered users that represented the relative "trustworthiness" of a user. The theory
behind the honor rating system was that, while users were not required to honor their
losses, they would voluntarily do so in order that other users would be likely to wager
with them in the future.
With a couple of weeks of the launch of Betcha.com, the Washington State
Gambling Commission determined that the website was engaging in "professional
gambling" as prohibited by the Gambling Act, chapter 9.46 RCW. The Commission
Id. at 689.
No. 68040-4-1/3
ordered Betcha.com to cease operating the website. Betcha.com sued the State,
seeking a declaratory judgment that its operations were not illegal. Betcha.com and
the State filed cross motions for summary judgment. Summary judgment was
granted in favor of the State. The trial court found that Betcha.com users were
engaged in "gambling" as defined in RCW 9.46.0237; that Betcha.com engaged in
prohibited "bookmaking" as defined in RCW 9.46.0213; and that Betcha.com's
activities were therefore "professional gambling" as defined in RCW 9.46.0269.3
In a split decision, Division Two of the this court reversed the trial court. The
Supreme Court unanimously reversed the Court of Appeals and reinstated the trial
court's grant of summary judgment in favor of the State.
In 2011, Jenkins again sued the State. Jenkins sought a declaratory judgment
that (1) the listing fees, matching fees, and counteroffer fees Betcha.com used in
2007, as well as Jenkins' idea for a "monthly subscription" business model, did not
constitute "professional gambling" as defined in RCW 9.46.0269; (2) RCW 9.46.0213
and its amendments violated both the "subject-in-title" and the "single subject"
requirements of article II, section 19 of the Washington State Constitution; and
(3) RCW 9.46.0213 was unconstitutionally vague.
Jenkins and the State filed cross motions for summary judgment. The trial
court granted summary judgment in favor of the State and denied Jenkins' request for
declaratory relief. The trial court found that Jenkins had "failed to raise a justiciable
3 «
Professional gambling" is criminalized at RCW 9.46.220-.222.
No. 68040-4-1/4
controversy" and "therefore did not reach the merits of any constitutional question
presented."4 Jenkins appeals.
DISCUSSION
Jenkins contends the trial court abused its discretion in refusing to reach the
merits of his request for declaratory relief. Jenkins argues that his claims present a
justiciable controversy, or, in the alternative, the issue is one of major public
importance warranting review.
Justiciability
Under the Uniform Declaratory Judgments Act, chapter 7.24 RCW, a person
whose rights are affected by a statute may ask the court to determine "any question
of construction or validity arising under the . .. statute . . . and obtain a declaration of
rights, status or other legal relations thereunder."5 For a trial court to render a
declaratory judgment, it must be presented with a justiciable controversy.6 A
controversy is justiciable if it presents:
"(1)... an actual, present and existing dispute, or the mature seeds of
one, as distinguished from a possible, dormant, hypothetical,
speculative, or moot disagreement, (2) between parties having genuine
and opposing interests, (3) which involves interests that must be direct
and substantial, rather than potential, theoretical, abstract or academic,
and (4) a judicial determination of which will be final and conclusive."[7]
4 Clerk's Papers at 563.
5 RCW 7.24.020.
6 Northwest Greyhound Kennel Ass'n v. State, 8 Wn. App. 314, 316, 506 P.2d
878 (1973).
7 Nollette v. Christianson. 115 Wn.2d 594, 599, 800 P.2d 359 (1990) (quoting
Diversified Indus. Dev. Corp. v. Ripley, 82 Wn.2d 811, 815, 514 P.2d 137 (1973)).
No. 68040-4-1/5
All four justiciability factors must be present "to ensure that the court will be rendering
a final judgment on an actual dispute between opposing parties with a genuine stake
in the resolution."8
We review a trial court's refusal to consider a declaratory judgment action on
the merits for abuse of discretion.9 A trial court abuses its discretion only when its
decision is manifestly unreasonable or based on untenable grounds.10
The trial court did not abuse its discretion in finding the lack of a justiciable
controversy because Jenkins does not show that he has an actual, present and
existing dispute. Rather, Jenkins requests a determination of the legality of operating
his website based on a hypothetical set of facts. Betcha.com is currently not in
operation and has not been since 2007. Jenkins may or may not relaunch
Betcha.com; the website may be situated in Washington or in another state; and the
fees charged to users of the website may be the same as those charged by
Betcha.com in 2007, or they may be different.11
8 To-Ro Trade Shows v. Collins, 144 Wn.2d 403, 411, 27 P.3d 1149 (2001).
9 Nollette, 115 Wn.2d at 599. As the State correctly notes, the granting of
summary judgment in a declaratory judgment action is reviewed de novo. Internet
Cmtv., 169 Wn.2d at 691. Because Jenkins does not assign error to the trial court's
grant of summary judgment in favor of the State, our review is limited to whether the
trial court abused its discretion in determining Jenkins's claim was not a justiciable
controversy.
10 State v. Rohrich, 149 Wn.2d 647, 654, 71 P.3d 638 (2003) (quoting State v.
Blackwell, 120 Wn.2d 822, 830, 845 P.2d 1017 (1993)).
11 See, e.g.. Clerk's Papers at 536 (Jenkins "would prefer to operate a
functionally-identical site ['Betcha II'] here at the conclusion of this litigation, albeit
with a different blend of revenue streams, including some of the fees charged on
Betcha I and/or a flat subscription fee.").
No. 68040-4-1/6
Because Betcha.com is not currently in operation, there is no actual legal
controversy. Rather, there is only the possibility of a future legal dispute. Where the
event at issue has not yet occurred or remains a matter of speculation, no justiciable
controversy exists.1213
Public Importance
Where all four justiciability factors are not met, "the court steps into the
prohibited area ofadvisory opinions."14 We exercise our discretion and deliver
advisory opinions only "on those rare occasions where the interest of the public in the
resolution of an issue is overwhelming" and where the issue has been "'adequately
12 Jenkins claims the fact that he "lost his property and cannot operate his
business" proves the existence of an actual and existing controversy. Reply Br. at 2.
The seizure and forfeiture of property associated with Betcha.com was resolved in
2010 when Jenkins did not appear at the forfeiture hearing. See Clerk's Papers at
502-04. And Jenkins does not have a vested interest in operating a business in
violation of the law. Jenkins' claim that criminal charges could still be filed against
him for his activities in 2007 is similarly without merit, as any such charges are
merely speculative.
13 Diversified Indus. Dev. Corp. v. Ripley, 82 Wn.2d 811. 815, 514 P.2d 137(1973); see also State ex rel. Wulfsberg v. MacDonald, 103 Wn. App. 208, 211-12,
11 P.3d 333 (2000) (appellant sought declaratory judgment that imprisonment as a
sanction for failing to pay child support is not available once the child is emancipated;
no justiciable controversy because appellant was never jailed for failure to pay);
Lawson v. State, 107 Wn.2d 444, 460, 730 P.2d 1308 (1986) (where railroad had not
abandoned right of way and county had expressed no intent to acquire it, property
owners' challenge to statutes permitting recreational public use of rights of way was
"premature"); DiNino v. State ex rel. Gorton, 102 Wn.2d 327, 331, 684 P.2d 1297(1984) (woman challenged constitutionality of statute that a directive to withhold life-
sustaining procedures was nullified if the patient was pregnant; because she was
neither terminally ill nor pregnant, cause was not "ripe" for declaratory judgment);
Adams v. City of Walla Walla, 196 Wash. 268, 270-71, 82 P.2d 584 (1938) (labor
union's constitutional challenge to municipal loitering ordinance on grounds that labor
strike would violate ordinance was "purely academic" in the absence of an actual
strike occurring).
14 Diversified Indus. Dev. Corp., 82 Wn.2d at 815.
No. 68040-4-1/7
briefed and argued.'"15 But Jenkins does not show that further guidance would
benefit a substantial portion of the public. Instead, Jenkins' dispute is private in
nature. What Jenkins in essence seeks is a declaration from this court that he may
operate his website in contravention of the Supreme Court's decision in Internet
Community. Because this is not a matter of broad public importance, we decline to
issue an advisory opinion.
Affirmed.
WE CONCUR:
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15lnreMatterofDeming, 108 Wn.2d 82, 122-23, 736 P.2d 639, 744 P.2d 340(1987) (quoting Citizens Coun. Against Crime v. Biork, 84 Wn.2d 891, 895, 529 P.2d
1072(1975)).