Reifschneider v. Kansas State Lottery

Davis, J.,

concurring: According to the majority opinion, the claim of the Reifschneiders remains open for judicial review under the Kansas Act for Judicial Review and Civil Enforcement of Agency Actions (KJRA), K.S.A. 77-601 et seq. While not required by law, the Reifschneiders thus may still seek reconsideration of the Lottery’s final agency action. Because the Reifschneiders have raised a due process argument in their brief, and the Lottery has responded to the argument, I would elect to resolve the question.

The Reifschneiders contend that their due process rights are guaranteed under the Kansas Administrative Procedures Act (KAPA), K.S.A. 77-501 et seq. However, the KAPA applies “only to the extent that other statutes expressly provide that the provisions of this act govern proceedings under those statutes.” K.S.A. 77-503. Nothing in the Kansas Lottery Act, K.S.A. 74-8701 et seq., expressly provides that the KAPA governs proceedings regarding the Lottery. Therefore, by its own terms, the KAPA does not apply.

In the alternative, the Reifschneiders argue that the procedure employed by the Lottery in this case did not afford them due process. The Reifschneiders complain that without notice and an opportunity for a hearing such as that permitted under the KAPA, *344they would have no opportunity to develop a record that the district court could review under the KJRA and would have no access to the agency’s records in order to discover whether the agency’s allegations are true. I believe their point is well taken. The Lottery denied their claim by letter. The Reifschneiders had no notice or opportunity for a hearing prior to the final agency action.

As a general rule, due process trial requirements are applicable to actions which are quasi-judicial in nature while such trial-type requirements are not applicable to quasi-legislative actions or purely executive acts. See Ryan, Kansas Administrative Law With Federal References § 7.03 (3d. ed. 1991). An often used example of a quasi-judicial proceeding requiring a full hearing maybe found in Rydd v. State Board of Health, 202 Kan. 721, 726, 451 P.2d 239 (1969). In Rydd, an applicant was denied a license to operate a day care due to her individual fitness and character. We stated that the procedure was adjudicative in nature and, thus, required a hearing because “[t]he license was denied because of particular facts pertaining to the appellee — the kind of facts which normally ought not to be found without allowing the party a chance to rebut, explain and cross-examine.” 202 Kan. at 726.

Conversely, in Kansas Racing Management, Inc. v. Kansas Racing Comm’n, 244 Kan. 343, 770 P.2d 423 (1989), we found no due process hearing required where an applicant was denied a racing license. In reaching this decision, we noted that under the pertinent statutes, the Kansas Racing Commission had the broad discretion to grant or deny a license to any or all applicants even if the applicants had complied with the statutory requirements. 244 Kan. at 355. Thus, the plaintiff in that case had no protected property interest in receiving a license, unlike the situation in Rydd. 244 Kan. at 358. Concerning the necessity of a protected interest in fife, liberty, or property for due process to apply, we stated:

“When an interest involving life, liberty, or property is implicated, due process considerations apply. However, a protected due process right must encompass an interest recognized by the Constitution. [Citations omitted.] To prevail on their due process claim, appellants must show that they possess a definite liberty or property interest and that this interest was abridged, under color of state law, without appropriate process. [Citation omitted.]
*345“To establish a property interest in a particular benefit, appellant must have a ‘legitimate claim of entitlement to it.’ [Citation omitted.] A person’s interest in a benefit becomes a property interest for due process purposes if there are ’rules or mutually explicit understandings’ that support the claim of entitlement to the benefit and that the person may invoke at a hearing. [Citation omitted.]” 244 Kan. at 354.

The question, therefore, is whether the Reifschneiders have a protected property interest in the remaining proceeds of the jackpot based upon possession of the winning lottery ticket. The Reifschneiders allege that they have complied with the law by presenting the only winning ticket for the Kansas Cash Lotto game. If they are correct in their statutory interpretation, then they are entitled to the disputed share of the prize money. This is not a case, as in Kansas Racing Management, where the administrative agency has the discretion over the award of prize money. Rather, the situation is similar to that in Rydd, where once the statute has been complied with, the award is mandatory. The final agency action is not a discretionary act. I would conclude that the Reifschneiders have established a sufficient property right in the prize share which may not be infringed upon without due process of law. See Rydd, 202 Kan. at 729-30.

The determination made by the Lottery in this case is an adjudication concerning the rights of the plaintiffs to approximately $177,000, representing one-half of the proceeds of a Kansas Lottery game. Without deciding or reaching the merits of the Reifschneiders’ claim and the Lottery’s basis for denial of that claim, I would conclude that the Reifschneiders are entitled to the minimum procedural requirement of due process. The letter decision of the Lottery in this case was adjudicatory in nature. Adjudicatory actions are defined as actions that “culminate in final determination affecting personal or property rights.” Black’s Law Dictionary 42 (6th ed. 1990). Before such rights may be affected, a hearing must be made available. Black’s defines an adjudicatory hearing as “[a] proceeding before an administrative agency in which the rights and duties of particular persons are adjudicated after notice and opportunity to be heard.” Black’s Law Dictionary 42.

*346The fact that the Kansas Lottery was not made subject to the KAPA does not in my mind signal an intent by the legislature that the Lottery may disregard procedural due process when deciding questions affecting property rights. It does indicate to me that all the formality required in a hearing under the KAPA may not be required in a proceeding before the Kansas Lottery. In most instances, the issue raised before the Lottery will be a question of law. In such cases, due process may be satisfied with notice and an opportunity for the affected party to present his or her legal position to the Executive Director of the Kansas Lottery. Obviously, more would be required if a disputed question of fact were involved.

It is not entirely clear from the record in this case whether there is a disputed question of fact. It appears that the main issue is a question of law involving statutory interpretation: whether a holder of a vanning ticket who has received one-half of the prize may claim the other half when the second vanning ticket is not redeemed within the given time period. However, there may also be a factual dispute as to whether a second winning ticket was actually sold. The issues raised by the Reifschneiders in this case would determine what process is due. At a minimum, I would conclude that they are entitled to notice with an opportunity for a hearing before the Executive Director of the Kansas Lottery.