COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 84886 JOHN W. STRUNA : : Plaintiff-Appellee/ : Cross-Appellant : JOURNAL ENTRY : vs. : and : : OPINION CONVENIENT FOOD MART, ET AL. : : Defendants-Appellants/ : Cross-Appellees DATE OF ANNOUNCEMENT OF DECISION: April 21, 2005 CHARACTER OF PROCEEDING: Civil appeal from Court of Common Pleas Case No. CV-460755 JUDGMENT: REVERSED AND REMANDED DATE OF JOURNALIZATION: ______________________ APPEARANCES: For Plaintiff-Appellee/ ANDREW A. KABAT Cross-Appellant: FRANKLIN C. MALEMUD JAMES O'CONNOR Reminger & Reminger Co., LPA 101 Prospect Avenue, West Cleveland, Ohio 44115-1093 DONALD A. MAUSAR Weltman, Weinberg & Reis 323 Lakeside Avenue, West Cleveland, Ohio 44113 For Defendants-Appellants/ J. GARY SEEWALD Cross-Appellees: Henkin & Seewald 1220 West 6th Street, #205 Cleveland, Ohio 44113-1021 -2- COLLEEN CONWAY COONEY, J.: Defendants-appellants/cross-appellees, Convenient Food Mart, Amanpreet, Inc., Harleen, Inc., and Harjinder Singh (collectively "CFM") appeal the trial court's denial of their motions for directed verdict, judgment notwithstanding the verdict, or in the alternative, a new trial, following a jury verdict in favor of plaintiff-appellee/cross-appellant John Struna ("Struna") on his claims for fraud, violations of Ohio Consumer Sales Practice Act ("OCSPA"), and unjust enrichment. We find merit to the appeal and reverse the trial court's denial of CFM's motion for a directed verdict. On October 25, 2001, Struna purchased 52 winning Buckeye 5 tickets, with the same five-number combination on each lottery ticket, at Convenient Food Mart in Euclid. As a result of his purchase of 52 of the 53 winning tickets, he won approximately $981,000.1 Struna filed suit against Convenient Food Mart ("CFM") and its owner, Harjiner Singh ( "Singh"), alleging, inter alia, fraud, violations of OCSPA, and unjust enrichment.2 Struna sought compensatory and punitive damages, claiming that Singh and other CFM employees never informed him of the $1 million payout cap for 1 The other winning lottery ticket was sold to another person. 2 Struna also named Amanpreet, Inc., the corporation which owned CFM at the time that he purchased the winning tickets, and Harleen, Inc., the successor corporation, as defendants. -3- the Buckeye 5 game and that they intentionally misrepresented that there was no cap to induce his purchasing more tickets. He further claimed that, had he known of the $1 million cap, he would have purchased only ten tickets with the same five-number combination, rather than his average of 50 tickets per drawing. The matter proceeded to trial, and the jury found in favor of Struna on his fraud and OCSPA claims and awarded him $250,000 in compensatory and $1,100,000 in punitive damages. The jury further awarded him $22,000 on his unjust enrichment claim. CFM appeals, raising two assignments of error, and Struna cross-appeals, arguing one assignment of error. In its first assignment of error, CFM contends that the trial court erred in denying its motion for a directed verdict on all three claims. The applicable standard of review for a directed verdict is set forth in Civ.R. 50(A)(4), which provides: "When a motion for a directed verdict has been properly made, and the trial court, after construing the evidence most strongly in favor of the party against whom the motion is directed finds that upon any determinative issue reasonable minds could come to but one conclusion upon the evidence submitted and that conclusion is adverse to such party, the court shall sustain the motion and direct a verdict for the moving party as to that issue." A motion for directed verdict tests the legal sufficiency of the evidence presented; accordingly, neither the weight of the evidence nor the credibility of witnesses may be considered. Cater v. Cleveland (1998), 83 Ohio St.3d 24, 33, citing Strother v. -4- Hutchinson (1981), 67 Ohio St.2d 282. In addition, all reasonable inferences that may be drawn from the evidence must be made in favor of the non-moving party. Rinehart v. Toledo Blade Co. (1985), 21 Ohio App.3d 274. If substantial, competent evidence has been presented from which reasonable minds could draw different conclusions, the motion must be denied. Wagner v. Roche Laboratories, Inc. (1996), 77 Ohio St.3d 116, 119. Because a directed verdict presents a question of law, we review the trial court's judgment de novo. Hardy v. General Motors Corp. (1998), 126 Ohio App.3d 455, 462, citing Howell v. Dayton Power & Light Co. (1995), 102 Ohio App.3d 6, 13. CFM argues that the trial court should have granted its motion for a directed verdict on all of Struna 's claims because: (1) Struna was not justified in relying on Singh's alleged representations of the lottery rules; (2) Struna was bound by the contract terms of the lottery ticket; (3) Struna lacked standing to assert any claim under the OCSPA; and (4) the existence of a valid contract negated any claim of unjust enrichment. In Struna v. Ohio Lottery Comm., Franklin App. No. 03AP-787, 2004-Ohio-5576, discretionary appeal not allowed, 2005-Ohio-763, 3 the Tenth District Court of Appeals succinctly set forth the law governing participation in the lottery, as follows: 3This case is a related action Struna commenced against the Lottery Commission involving the same subject matter as the within case. -5- "The sale and purchase of lottery tickets is governed by the general principles of contract law. Peters v. Ohio Lottery Comm. (1992), 63 Ohio St.3d 296, 299, 587 N.E.2d 290. `Simply stated, the state of Ohio `agrees' to pay the holder of a lottery ticket containing the winning numbers as chosen by the State Lottery Commission, the `jackpot' amount * * *. It is this promise which induces the purchase of the lottery tickets.' (Footnote omitted.) Couchot v. State Lottery Comm. (June 30, 1994), Franklin App. No. 93APE09-1337, 1994 Ohio App. LEXIS 2844, reversed on other grounds, Couchot v. State Lottery Comm. (1996), 74 Ohio St.3d 417, 1996-Ohio-262, 659 N.E.2d 1225. Thus, plaintiff's purchase of lottery tickets, including the 52 winning tickets, is subject to the law of contracts. Moreover, lottery `ticket holders, by their purchase and redemption, agree to be bound by the terms of the game.' Woodbridge Partners Group, Inc. v. Ohio Lottery Comm. (1994), 99 Ohio App.3d 269, 273, 650 N.E.2d 498; see Board v. Ohio Lottery Comm. (Dec. 14, 1999), Franklin App. No. 99AP-208, 1999 Ohio App. LEXIS 5979 ( `lottery players are deemed to agree to abide by the terms of the game')."4 Thus, by virtue of Struna's purchase and presentation of the lottery tickets for redemption, he agreed to be bound by the terms and conditions of the Buckeye 5 game, as set forth in Ohio Adm.Code 3770:1-9-22, which provides in pertinent part: "(D) Structure, nature and value of prize awards. Based upon the numbers drawn in each regular drawing for game number twenty-two, prizes shall be awarded to holders of valid tickets for that drawing as follows: (1) For each ticket bearing a selection which matches two, and only two, of the five integers drawn, the prize is one dollar. (2) For each ticket bearing a selection which matches three, and only three, of the five integers drawn, the prize is ten dollars. 4 The Struna court also noted that the 52 tickets purchased by Struna contained language that "[a]ll tickets, drawings, and prizes are subject to the Rules and Regulations of the Lottery Commission." -6- (3) For each ticket bearing a selection which matches four, and only four, of the five integers drawn, the prize is two hundred fifty dollars. (4) For each ticket bearing a selection which matches all five integers drawn, the prize is one hundred thousand dollars. The director shall have discretion to change the prizes and percentages which represent the prize pools in each of the categories referred to in paragraphs (D)(1), (D)(2), (D)(3) and (D)(4) of this rule. * * * (E) For each individual drawing there shall be a jackpot payout cap of one million dollars for tickets bearing selections which match all five integers drawn. If there are more than ten winners matching all five integers drawn, the total jackpot of one million dollars shall be divided by the number of winning tickets to determine the amount of the prize award for each winning ticket for that drawing." At trial, Struna presented evidence that Singh, who owned and operated CFM, misrepresented the Buckeye 5 rules by stating that there was no payout cap.5 He further produced evidence that, as a result of such misrepresentations, he purchased an average of 50 tickets per drawing, resulting in his spending approximately $206,000 at the store during the past three years. However, in applying the above case law and the "rules of the game,"we find that Struna's fraud claim fails as a matter of law. In order to prevail on his fraud claim, it was incumbent upon Struna to prove that he justifiably relied on Singh's 5 Struna also testified that, in addition to Singh, another CFM employee told him that there was no payout cap and that he could win $100,000 for each ticket, which matched all five numbers in the Buckeye 5. -7- representations of the Buckeye 5 rules. See Burr v. Board of County Commrs. (1986), 23 Ohio St.3d 69, paragraph two of the syllabus (justifiable reliance upon the representation or concealment is a material element of fraud). Because Struna agreed to be bound by the rules and regulations of the game, which included the $1 million payout cap, he was not justified in relying on Singh's misrepresentation to the contrary. Struna, supra, -13; see, also Greathouse v. E. Liverpool, Columbiana App. No. 03-CO-58, 2004-Ohio-6498 (plaintiff could not justifiably rely on employer's misrepresentations of employee benefits when such representations were contrary to law). Moreover, Singh had no express authority to change the rules of the game, even as a licensed agent of the lottery. Struna, supra, -14. Thus, Struna 's reliance on the misrepresentations of a person without authority to modify the rules negates any claim of justifiable reliance. Accordingly, the trial court should have directed a verdict in CFM's favor. As to Struna's claims of violations of the OCSPA, we reach the same conclusion. Struna alleged that CFM engaged in "unfair, deceptive, and unconscionable conduct"in violation of R.C. 1345.02 and 1345.03. In support of these allegations, Struna relied on the same conduct supporting the fraud claim, i.e., CFM employees making material misrepresentations as to the rules of the Buckeye 5 game to sell more tickets. -8- However, as discussed above, lottery players are on notice of the rules set forth in the Ohio Administrative Code and are deemed to follow the rules. Further, courts shall apply a reasonableness standard in determining whether an act amounts to deceptive, unconscionable, or unfair conduct. Conley v. Lindsay Acura (1997), 123 Ohio App.3d 570, 575. Accordingly, Struna's claim of an unfair and deceptive act fails as a matter of law because he was on notice of the $1 million payout cap (Ohio Adm.Code 3770:1-9-22) and he presented no evidence that Singh or any other CFM employee had the authority to modify the rules. Struna, supra, -20. Thus, we find that a lottery player, who is presumed to know the rules of the game, cannot be deceived by misrepresentations made by a person without authority to modify such rules. Similarly, his claim that CFM's conduct was unconscionable fails because, even though Singh made a misleading statement as to the rules of the game, Struna was on notice of the rules as provided in the Ohio Administrative Code and as contained on the Ohio Lottery website. Accordingly, as a matter of law, Struna could not reasonably rely on any representations which contradicted the Lottery Commission's promulgated rules and regulations.6 6 While we are not condoning CFM's misrepresentation, we follow Ohio law which recognizes that those who participate in the lottery are responsible for understanding the rules and regulations of the game. Those who rely on individuals do so at their own risk, knowing that the promulgated rules and regulations of the Lottery Commission will govern any dispute. -9- In finding that Struna's OCSPA claims fail as a matter of law, we decline to reach the issue of standing. Finally, we find that the trial court should have directed a verdict on Struna's unjust enrichment claim. In order to recover on a claim of unjust enrichment, the party asserting the claim must demonstrate that (1) the claimant conferred a benefit upon the recipient; (2) the recipient had knowledge of that benefit; and (3) circumstances render it unjust or inequitable to permit the recipient to retain the benefit without compensating the party who conferred it. Bd. of Educ. v. Bd. of Educ., Cuyahoga App. No. 84372, 2004-Ohio-6422, citing Hambleton v. R.G. Barry Corp. (1984), 12 Ohio St.3d 179, 183. Struna's unjust enrichment theory was based on the commission CFM received for his purchase of Buckeye 5 tickets (5.5% on each $1 ticket) combined with the amount it received in bonuses for each of the 52 winning tickets ($500 per ticket). However, Struna did not confer this benefit on CFM; rather, it was the Lottery Commission. Furthermore, although the Lottery Commission would not have conferred this benefit absent Struna's purchase of the tickets, any benefit Struna claimed in connection with the Buckeye 5 tickets was governed by the express terms of the contract. Accordingly, we find that his claim of unjust enrichment fails as a matter of law. The first assignment of error is sustained. -10- Given our disposition of the first assignment of error, we find that CFM's remaining assignment of error that the verdict was against the manifest weight of the evidence and Struna 's cross- assignment of error relating to the issue of treble damages are moot. Judgment is reversed. Case remanded for entry of judgment for defendants-appellants. -11- It is, therefore, considered that said appellants recover of said appellee the costs herein. It is ordered that a special mandate be sent to the Cuyahoga County Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. FRANK D. CELEBREZZE, JR., P.J. and CHRISTINE T. McMONAGLE, J. CONCUR JUDGE COLLEEN CONWAY COONEY N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 22. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the clerk per App.R. 22(E). See, also, S.Ct.Prac.R. II, Section 2(A)(1). .