Monday, June 13, 2011

How Thomas Rossi Won The Lottery Without Ever Buying A Lottery Ticket

What is the first thing you would do if you won the lottery?  Would you buy a house?  Book an exotic vacation?  Buy gifts for friends and family?  How about file for divorce?

While this is not the first thing most people would think of, this is exactly what a wife did in the 2001 case In re Marriage of Rossi, 90 Cal.App.4th 34.

When Denise Rossi unexpectedly filed for divorce in January 1997, she told Thomas, her husband of over 25 years, that their marriage was over.  What she didn’t tell him, however, was that, just 11 days earlier, she won $1,336,000 in a lottery pool at work. 

To ensure fairness in divorce proceedings, the California Family Code requires divorcing parties to provide to one another a full disclosure of all assets and liabilities in which one or both parties have or may have an interest in the early stages of a proceeding for dissolution of marriage or legal separation.  Moreover, the law provides that the parties have a continuing duty to immediately, fully, and accurately update and augment that disclosure to the extent there have been any material changes.  California Family Code, Section 2100(c).

Mrs. Rossi filled out the required disclosure forms, but failed to mention her lottery winnings.  The parties’ divorce became final in April of 1997. 

Two years later, in May 1999, Thomas Rossi opened his mailbox to find a letter, asking whether Denise was interested in a lump-sum buy-out of her lottery winnings.  After confirming that Denise was, in fact, a lottery winner, Thomas hired an attorney and brought this new fact to the attention of the Court.  During the ensuing hearing, Thomas was able to show the Court that Denise went to great lengths to avoid notifying him of her lottery winnings, such as consulting the Lottery Commission personnel about ways in which she could avoid sharing the jackpot with her husband, and using her mother's address for all communications with the Lottery Commission.

Section 721 of the California Family Code provides that the relationship between husband and wife is a confidential relationship, which imposes a duty of the highest good faith and fair dealing on each spouse, and neither shall take any unfair advantage of the other. This confidential relationship is a fiduciary relationship subject to the same rights and duties of nonmarital business partners.  The Court found that Mrs. Rossi intentionally violated her fiduciary duty to her husband, and that her conduct met the definition of fraud, as defined under California civil law. 

Pursuant to Section 1101(h) of the California Family Code, the remedy for such an egregious breach of fiduciary by one spouse may include an award of 100% of the undisclosed asset to the other spouse.  In this case, the trial court did just that, and awarded Thomas 100% of Denise’s lottery winnings.  The California Court of Appeal later affirmed this ruling. 

Had Mrs. Rossi complied with the requirements of the law, she and her ex-husband would share the winnings 50/50, each walking away with a substantial amount of money.  Instead, because of her greed, she walked away with nothing but thousands of dollars in attorney’s fees. 

If you are considering a divorce, remember: full financial disclosure is absolutely mandatory.  An experienced family law attorney can guide you through the complex process of these legal requirements. 

Marina Ayzenstein
Family Law Attorney

Marina Ayzenstein is a Family Law attorney in California who is a member of the Family Law Bar Associations in both Ventura and Los Angeles Counties.
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