Wednesday, May 28, 1997 | 10:48 a.m.
In another courtroom in the same Salinas building, a second judge considering a separate case reached the opposite conclusion.
The conflict mirrors the statewide confusion in California appellate courts, which have issued contrary rulings on the legal status of out-of-state gambling debts. Until a definitive ruling by the state Supreme Court, which last considered the issue in 1947, or a change in state law, trial judges essentially are on their own.
"Reasonable judges will differ. ...Some judges will say yes and some will say no," said Barry Jones, lawyer for the Credit Bureau of Tahoe Truckee, which filed all three Monterey County lawsuits to collect the casino debts.
"You should not have different interpretations on what the public policy is," I. Nelson Rose, a professor at Whittier Law School and a writer on legal issues related to gambling, told The Monterey Herald.
Californians wager $3.8 billion a year in Nevada, according to a state study quoted by the newspaper.
One player is Lorraine Lauderdale, an elderly Seaside resident who occasionally goes to Reno with her husband, Fred. Last year, after writing a $1,000 check to Harrah's, she hit a streak of bad luck and ran short of bank funds to cover the check, she said. She said she and her husband, who recently had heart-bypass surgery, owe about $200,000 in medical bills.
She stopped payment on the check, was sued by a collection agency, and became the beneficiary of a ruling by Monterey County Superior Court Judge William Curtis. He said the debt was uncontested but could not be enforced in California on "public policy" grounds - the same reason courts would refuse to enforce contracts for illegal activities.
Curtis, a former district attorney, issued a similar ruling in another gambling-debt case. But fellow Judge Robert O'Farrell ruled another casino's debt enforceable.
Debtors who win such rulings aren't off the hook. Attorney Jones, who represented the collection agency, said it can refile the suit in Nevada, where such debts are enforceable, and then return to the California court, which would be constitutionally required to honor an out-of-state judgment.
But such suits carry an additional expense and the further burden of a Nevada law that imposes lesser penalties for bad checks than California. On the other hand, Jones said, the availability of such suits makes it unlikely that either side in a case would incur the expense of a lengthy appeal to the California Supreme Court.
Enforcement of gambling debts has been a legal issue in California since Gold Rush days. In 1851, a year after statehood, the state Supreme Court refused to enforce a card-player's $4,000 debt to an unlicensed San Francisco gaming house.
Similar rulings followed for more than a century. But in 1988, the 2nd District Court of Appeal in Los Angeles said the "public policy" defense could no longer be maintained "in view of the expanded acceptance of gambling in this state as manifested by the introduction of the California lottery and other innovations."
Five years later, the 1st District Court of Appeal in San Francisco disagreed, saying increased public tolerance of gambling did not justify court enforcement of gambling debts.
"Gambling debts are characteristic of pathological gambling," said the opinion by now-retired Justice Donald King. "...If Californians want to play, so be it. But the law should not invite them to play themselves into debt."
Rose, a consultant on gambling issues to government and industry, said most states still refuse to enforce out-of-state gambling debts but the trend is in the other direction.
"There is a movement, as gambling spreads and is being actively promoted or even operated by the state, for courts to say the state's public policy against gambling has changed," he said.
Even in California, Rose said, a law allows members of "lottery pools" - co-workers, for example, who split the cost of a ticket - to go to court if a another pool member refuses to pay a debt.
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