Monthly Archives: December 2015

What Happens In A California Divorce When The Parties Do Not Disclose ALL of Their Assets?-The Case of the Lotto Ticket

lotto case family lawIn a California divorce proceeding, both parties are required to disclose all information regarding their assets and debts.  The parties have a fiduciary duty to one another, which remains in effect until the dissolution has been finalized. Family law judges have wide discretion in dividing property and awarding sanctions when the parties intentionally breach this fiduciary duty. That includes an unequal division of community property, or, in more extreme cases, awarding an entire asset to only one spouse.

The case that immediately comes to mind is Marriage of Rossi (2001) 90 Cal. App. 4th 34. That case hit the press in 2001, and received wide applause from our male population. However, Rossi was not really a case about men’s rights. Rather, it was a case which illustrated the requirement of full disclosure.

In the Rossi matter, the wife had purchased a lottery ticket while the parties were still married. Therefore, any potential earnings from the lotto ticket would be community property. Ms. Rossi subsequently filed for divorce. Her lotto winnings came in during the dissolution proceeding. She had won about $1,336,000.00.  Yet, Ms. Rossi intentionally did not disclose this information on her schedules of assets and debts, which is a document that the parties are required to  sign under the penalty of perjury. The proceedings continued to judgment. The community property, as then know to the judge and the other party, was divided per California law.

Either during, or shortly after the dissolution was finalized, Mr. Rossi filed for bankruptcy. He was about $14,000 in debt. He had continued to reside in the former family home. One day, Mr. Rossi unexpectedly got a phone call from the lottery, informing him that his lotto winnings had come through.  Apparently, Ms. Rossi had forgotten that she had listed their former residence phone number with the lottery. In any event, I am sure you know what happened next. Mr. Rossi went back to court and made a motion to re-open the judgment.

I think you all know where this is going. The judge exercised his discretion and awarded the entire earnings from the lotto, i.e., the entire $1,336,000.00, to Mr Rossi. This ruling was intended to punish Ms. Rossi for non disclosure of her lottery winnings during the dissolution proceeding. The judge ruled that Ms. Rossi had breached her fiduciary duty to fully disclose all of her assets.

So, what is the moral of this story? Failure to disclose pertinent information regarding assets and debts  in a California dissolution matter is the equivalent of lying. Don’t risk it. It is not worth the gamble. The price you may have to pay is too large.