Opinion ID: 895260
Heading Depth: 1
Heading Rank: 3

Heading: Construing the Statutes

Text: We review issues of statutory construction de novo. City of San Antonio v. City of Boerne, 111 S.W.3d 22, 25 (Tex.2003). In construing statutes our primary objective is to give effect to the Legislature's intent. Galbraith Eng'g Consultants, Inc. v. Pochucha, 290 S.W.3d 863, 867 (Tex.2009). We rely on the plain meaning of the text as expressing legislative intent unless a different meaning is supplied by legislative definition or is apparent from the context, or the plain meaning leads to absurd results. See City of Rockwall v. Hughes, 246 S.W.3d 621, 625-26 (Tex.2008). We presume the Legislature selected language in a statute with care and that every word or phrase was used with a purpose in mind. See In re Caballero, 272 S.W.3d 595, 599 (Tex.2008); Chastain v. Koonce, 700 S.W.2d 579, 582 (Tex.1985).
The UCC authorizes state lottery winners to freely assign their winnings. TEX. BUS. & COM.CODE § 9.406(a) (permitting account assignments); see id. § 9.102(a)(2)(viii) (including winnings in a lottery or other game of chance operated or sponsored by a state in the definition of Account). Citing section 9.201 of the UCC, the Commission asserts that Chapter 9 of the UCC conflicts with the Lottery Act and the Lottery Act controls. Section 9.201 of the UCC provides, in relevant part: (b) A transaction subject to this chapter is subject to any applicable rule of law that establishes a different rule for consumers.... (c) In case of a conflict between this chapter and a rule of law, statute, or regulation described in Subsection (b), the rule of law, statute, or regulation controls. Id. § 9.201. The Commission asserts sections 9.201(b) and (c) make it clear that any conflict between Article 9 and consumer protection laws must be resolved against Article 9 and that the Lottery Act and its anti-assignment provisions are unquestionably consumer protection provisions. FSB counters that (1) the Lottery Act provision does not establish a different rule of law for consumers because neither the Lottery Act nor the UCC refers to lottery prize winners or assignors as consumers, (2) the Lottery Act's anti-assignment provisions protect lottery winners who are not consumers, but rather who are account creditors who sell their rights, and (3) a lottery winner such as Irvan who sells his right to receive payments is not purchasing or acquiring anything, thus he cannot be a consumer as to the transaction. We agree with FSB that the Lottery Act does not provide a different rule for consumers within the meaning of section 9.201 of the UCC. Chapter 9 of the UCC does not provide a definition for consumer, but the term is defined in Chapter 1 as an individual who enters into a transaction primarily for personal, family, or household purposes. Id. § 1.201(b)(11). The Chapter 1 definitions apply to all chapters of the UCC except when the context in which they are used requires otherwise or a different definition is provided by a particular chapter. Id. § 1.201(a). Neither of the exceptions applies here, thus the definition in section 1.201(b)(11) applies. While the Lottery Act establishes a rule regarding lottery prize assignments different from the provisions in the UCC, the Lottery Act's rule is not specifically directed at or limited to individuals who enter into a transaction primarily for personal, family, or household purposes. Any purchaser of a lottery ticket, whether an individual or some type of entity such as a partnership, trust, or corporation, purchases the ticket subject to the provisions of the Lottery Act. TEX. GOV'T CODE § 466.252 (By purchasing a ticket in a particular lottery game, a player agrees to abide by and be bound by the commission's rules, including the rules applicable to the particular lottery game involved.). The Lottery Act provides that [a] person may assign, in whole or in part, the right to receive prize payments that are paid by the commission and then sets out what is required of the assignor. Id. § 466.410. The Legislature has defined the term person to include [a] corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. Id. § 311.005(2). Nothing in section 466.410 indicates the assignment provisions are applicable only when an individual purchases a ticket, much less only when an individual purchases a ticket for purposes of personal, family, or household use. See TEX. BUS. & COM.CODE § 1.201(b)(11). Nor does the Lottery Act limit the applicability of the assignment provisions and restrictions to individuals such as Irvan, even if they are entering the assignment transaction to receive and use money for personal, family, or household purposes. To the contrary, the Lottery Act contemplates that a prizewinner, and therefore a person entitled to receive and assignor restricted from assigningprize payments, may be persons who are not individuals or consumers. See TEX. GOV'T CODE § 466.406(b). Furthermore, the Lottery Act refers to individuals in several sections. See, e.g., id. § 466.3051 (providing that an individual younger than eighteen years of age may not purchase a lottery ticket); id. § 466.409 (providing that certain individuals are not eligible to receive lottery prizes). The fact that the Legislature made certain provisions of the Act applicable only to individuals indicates that its use of the word person rather than individual in section 466.410 was intentional. See Tex. Mun. Power Agency v. Pub. Util. Comm'n of Tex., 253 S.W.3d 184, 193 n. 20 (Tex.2007); see also Harris County Hosp. Dist. v. Tomball Reg'l Hosp., 283 S.W.3d 838, 842 (Tex.2009) (noting that we examine the Legislature's words in context of the statute as a whole and do not consider words or parts of the statute in isolation). So, while section 466.410 applies to individuals who assign or desire to assign their prize payments for personal, family, or household purposes, the use of person in context of section 466.410 does not require a different definition than that prescribed by the Code Construction Act. And, we do not see how use of the Legislature's definition yields an absurd result. Under the circumstances, we are bound to construe the term person to mean what the Legislature defined it to mean, and it is not limited to consumers as defined by the Lottery Act, the UCC, or any other applicable definition of consumer. Moreover, if section 9.201(b)'s reference to a statute or rule that establishes a different rule for consumers encompasses statutes and rules applying equally to both consumers and non-consumers, as opposed to only consumers, then all conflicting laws or rules that apply to consumers would be subject to the exception, and the exception would swallow the UCC's overarching rule that accounts are assignable. The Commission stresses that a transaction by a consumer occurred in this case: Irvan assigned his future lottery winnings in return for an up-front lump sum paymenta transaction primarily for personal, family, or household purposes. But even assuming Irvan's assignment was a consumer transaction, the UCC does not address individual transactions undertaken by consumers. It addresses rules of law, statutes, and regulations that apply broadly. Section 466.410 establishes a rule for all persons, not just individuals involved in Lottery Act transactions primarily for personal, family, or household purposes. Read in context, we do not believe section 466.410 is a statute or rule of law that establishes a different rule for consumers within the meaning of section 9.201(b).
The Commission asserts that the UCC does not render the Lottery Act assignment restrictions in sections 466.406 and 466.410 ineffective based on established canons of statutory interpretation. It points to the Code Construction Act, which provides guidance for courts when they seek to determine the Legislature's intent. Specifically, the Commission points to the following as legislative guidance that should be used here: (1) an entire enacted statute is presumed to be effective, TEX. GOV'T CODE § 311.021(2); (2) if statutes are irreconcilable, the statute latest in date of enactment prevails, id. § 311.025(a); and (3) a specific statutory provision prevails as an exception over a conflicting general provision. Id. § 311.026. FSB argues that even though the Legislature's guidance for construing statutes would confirm the conclusions of the trial court and court of appeals if they were applied, applying the canons is inappropriate because in the UCC the Legislature specifically provided the means for resolving conflicts between the UCC and other statutes such as the Lottery Act. We agree with FSB that because the Legislature expressly and unambiguously set out the method for resolving conflicts between the UCC and other statutes, it would be improper to go outside the language of the statute and use canons of construction to resolve the question. City of Rockwall, 246 S.W.3d at 626 (When a statute's language is clear and unambiguous, it is inappropriate to resort to rules of construction or extrinsic aids to construe the language.). Courts do not lightly presume that the Legislature may have done a useless act. Liberty Mut. Ins. Co. v. Garrison Contractors, Inc., 966 S.W.2d 482, 485 (Tex.1998). But we must take statutes as we find them and first and primarily seek the Legislature's intent in its language. St. Luke's Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997). Courts are not responsible for omissions in legislation, but we are responsible for a true and fair interpretation of the law as it is written. Id. Additionally, [i]t is at least theoretically possible that legislatorslike judges or anyone elsemay make a mistake. Brown v. De La Cruz, 156 S.W.3d 560, 566 (Tex.2004). Even when it appears the Legislature may have made a mistake, courts are not empowered to fix the mistake by disregarding direct and clear statutory language that does not create an absurdity. See id. (citing Touche Ross & Co. v. Redington, 442 U.S. 560, 579, 99 S.Ct. 2479, 61 L.Ed.2d 82 (1979)). And although some might believe precluding lottery prize winners from assigning all or some of their installment payments is the better policy choice, we do not see how it is an absurdity to construe this clear statutory language to mean what it says. Here the result is that lottery winners are allowed to assign what no one contests is their property, even at the risk of their making poor assignment choices. The UCC specifies that state lottery winnings are accounts and are assignable, TEX. BUS. & COM.CODE § 9.406(a), but the Lottery Act prohibits assignments of the last two prize installments. TEX. GOV'T CODE §§ 466.406, 466.410. While these statutory provisions conflict, the Legislature also explicitly provided that a rule of law, statute, or regulation that prohibits [or] restricts an assignment of a prize won in a state lottery is ineffective. TEX. BUS. & COM.CODE § 9.406(f). Giving effect to the clear legislative language about how to resolve conflicts regarding assignments results in there being no conflict to resolve because the Lottery Act's anti-assignment provisions are ineffective insofar as they conflict with the UCC. Moreover, the Commission's argument that we should not construe the UCC to render the Lottery Act anti-assignment provisions useless turns on itself. If we construe the Lottery Act's anti-assignment restrictions as valid because otherwise their enactment would be a useless legislative action, we render UCC section 9.406(f) useless as it applies here. Under that construction section 9.406(f) would be useless legislative action, at least in part, because that section clearly was enacted to address situations in which the Legislature enacted a conflicting statute. The Commission points to cases from other jurisdictions holding that statutory restrictions on lottery assignments are effective. In three of the cases the facts and statutes are distinguishable from those at issue here. See In re Guluzian, No. BK 04-10390-JMD, 2004 WL 2813523, at  (Bankr.D.N.H. Dec. 3, 2004) (noting that legislation amending the UCC assignment provisions to include lottery payments also amended the lottery statute to provide that the lottery prize assignment prohibition prevailed over UCC provisions); In re Duboff, 290 B.R. 652, 656 (Bankr.C.D.Ill. 2003) (holding that UCC provision was inapplicable because it was not enacted until nineteen months after the assignment was executed); Midland States Life Ins. Co. v. Cardillo, 59 Mass.App.Ct. 531, 797 N.E.2d 11, 17-18 (2003) (noting that at the same time the UCC was amended, the lottery statute was amended to provide that it prevailed over UCC provisions). In two cases factually similar to the one before us, courts held that statutory restrictions on lottery prize assignments prevailed over UCC provisions declaring such restrictions ineffective. See Stone St. Capital, LLC v. Cal. State Lottery Comm'n, 165 Cal.App.4th 109, 80 Cal.Rptr.3d 326, 340 (2008); Va. State Lottery Dept. v. Settlement Funding, LLC, No. CH-2003-183848, 2005 WL 3476682, at  (Va.Cir.Ct. Nov. 7, 2005). But in both those cases, the courts relied on statutory construction aids to reach their conclusions. Stone St. Capital, 80 Cal.Rptr.3d at 333 (noting that under California rules of statutory construction, a more specific statute controls over a general statute, regardless of which statute was passed earlier); Va. State Lottery Dep't, 2005 WL 3476682, at -3 (applying the rule of statutory construction that a specific statute applies over a general one). While we have no argument with how those courts resolved their statutory conflicts, neither court discussed resolving the conflict by initially and primarily looking at the language in the statutes themselves. In contrast, we construe statutes by first looking to the statutory language for the Legislature's intent, and only if we cannot discern legislative intent in the language of the statute itself do we resort to canons of construction or other aids such as which statute is more specific. City of Rockwall, 246 S.W.3d at 626. Under Texas rules of statutory construction, the language of UCC section 9.406 prevails because on its face it manifests clear legislative intent that conflicting statutes are ineffective. The Commission argues that failing to give effect to the Lottery Act would essentially amount to an impermissible requirement that the Legislature use explicit language to carve out the Lottery Act from the reach of section 9.406; in other words, a requirement of a magical password. See Lockhart v. United States, 546 U.S. 142, 149, 126 S.Ct. 699, 163 L.Ed.2d 557 (2005) (Scalia, J., concurring) (When the plain import of a later statute directly conflicts with an earlier statute, the later enactment governs, regardless of its compliance with any earlier-enacted requirement of an express reference or other `magical password.'). But Justice Scalia was referring to provisions that require Congress to use specific language in order to repeal, limit, or modify a statutory provision. See id. Here, UCC section 9.406(f) does not require some specific language to be included in subsequent legislation in order for it to be modified or repealed. Nor does the Commission contend that the Legislature was attempting to repeal or otherwise modify section 9.406(f) when it enacted the prohibition on lottery prize assignments. Finally, the Commission asserts that we should give serious consideration to the Commission's construction of the Lottery Act, by which it gives full effect to the assignment restrictions. See Tarrant Appraisal Dist. v. Moore, 845 S.W.2d 820, 823 (Tex.1993) (Construction of a statute by the administrative agency charged with its enforcement is entitled to serious consideration, so long as the construction is reasonable and does not contradict the plain language of the statute.). But here we are not construing the Lottery Act. We are construing the UCC and determining whether it renders sections 466.406 and 466.410 of the Lottery Act ineffective. The Commission does not argue that it is charged with enforcement of the UCC, and even if it were so charged, its interpretation of the UCC contradicts the plain language of that statute. See id. In sum, the language of UCC section 9.406(f) is clear; we need not use a canon of construction to construe it other than the prime canon: we construe statutes by first looking to the statutory language for the Legislature's intent, and only if we cannot discern legislative intent in the language of the statute itself do we resort to canons of construction or other aids such as which statute is more specific. City of Rockwall, 246 S.W.3d at 626. Here the statute's unambiguous words disclose the legislative intent: if the Legislature should happen to have enacted, or enacts, a conflicting statute, the conflicting statute is ineffective to the extent that the ... statute ... prohibits [or] restricts the assignment of an account. TEX. BUS. & COM.CODE § 9.406(f). Section 9.406(f) makes sections 466.406 and 466.410 of the Lottery Act ineffective to the extent they prohibit or restrict Irvan's assignment.