Lottery battle puts spouse in the red
If you didn’t get along with your spouse – in fact you were contemplating filing for dissolution of the marriage and you hit the California Lottery jackpot unbeknownst to your spouse – what would you do?
You would do the normal thing, of course: consider the winnings your separate property, file for dissolution without listing the asset, and live life ever after as a wealthy divorcee. Until your “ex” found out.
Denise and Thomas were married in 1971. In 1996, Denise participated with a group of her co-workers, each contributing $5 per week for lottery tickets. A month later, Denise and her group hit the lottery jackpot with a prize $6,680,000.
Denise felt Thomas would try to take the money away from her, so she told the lottery commission she was married but contemplating divorce. Supposedly they told her to file for divorce before she gets her first check. She had the checks, which she considered to be her separate property, sent to her mother’s address.
The parties moved forward with the dissolution and ultimately signed a marital settlement agreement, which recited that both parties had disclosed all property. The lottery winnings were not listed among Denise’s assets.
The judgment of dissolution was finalized. Thomas then received a letter addressed to Denise inquiring whether she was interested in a lump sum buyout of her lottery winnings. That piqued Thomas’ interest.
So far, Denise has the money and Thomas is feeling left out. And angry.
Thomas filed a suit to set aside the dissolution of marriage based on fraud, breach of fiduciary duty, and failure to disclose assets. He also sought to recover 100 percent of the lottery winnings pursuant to the Family Code, plus attorneys’ fees. Yes that’s right, not half, but 100 percent.
Denise claimed that Thomas had mistreated her during their marriage, had filed bankruptcy the previous year, and her co-workers had “gifted” her the money making it her separate property.
Thomas claimed the $5 lottery pool money came from her earnings, making the jackpot community property.
You be the judge
How would you vote: (A) Thomas was a chump and Denise gets the money, or (B) Thomas gets the money because Denise didn’t tell him, or (C) They split the jackpot 50-50 as community property, or (D) You don’t really give a hoot.
Looking in the mirror
Denise should have looked in the mirror when she decided to carve Thomas out of her winnings. She could have listed the earnings as an asset of the marriage and kept half of the money. Coulda, shoulda.
But Denise did not do the right thing and talked herself into believing the money was hers.
The trial court and the court of appeal found that Denise had intentionally breached her fiduciary duty to Thomas and her representations in the marital settlement agreement amounted to fraud. The Family Code controls.
If you picked Answer (B), you win the jackpot (Don’t tell your spouse).
Jim Porter is an attorney with Porter-Simon, with offices in Truckee, South Lake Tahoe and Reno. He is a mediator and was the Governor’s appointee to the Bipartisan McPherson Commission and the California Fair Political Practices Commission. He may be reached at email@example.com or at the firm’s Web site http://www.portersimon.com.