The Appellate Division handed down a decision today that will never have any impact on my life. The case — In re. Petition of BofI Federal Bank to Assign Lottery Prize Payment Rights — was a consolidated appeal of four Law Division cases that denied BofI Federal Bank's request to assign certain lottery payments from four separate prize winners.
The appeal involved four winners of the Win for Life scratch off game. (As an aside, I have loyally played this game for years in both New York and New Jersey and never even come close to winning, unless scratching off two "LIFE" symbols seemingly every time means I am getting close.) Under the rules of the game, winners receive a guaranteed prize of $1 million payable in quarterly installments for 18 years and then quarterly payments for the rest of the winner's lifetime. For reasons not disclosed in the opinion, BofI (Bank of the Internet if you are curious) filed petitions seeking approval of the assignment of the last two years of the guaranteed quarterly payments.
Although the subject matter of the appeal in this case was unique and somewhat interesting, the decision was more routine. The Appellate Division had to determine whether a regulation governing the assignment of lottery winnings was valid or, as BofI argued, invalid because it conflicted with, and impermissibly enlarged, the controlling statute. The regulation provided that "no one shall have the right to assign prize payments due during the last two years of the annuity term," while the controlling statute provided that "[a] winner shall not be permitted to assign the last two annual prize payments." The Appellate Division held that the regulation was valid and that the final two years of a lottery annuity payment could not be assigned.
The court began with a brief history lesson on the assignability of lottery winnings. Initially, the statute creating the lottery did not allow for assignment. The statute was amended in 1998, however, to allow for assignment subject to a number of requirements and conditions, including that a court order is necessary to assign the winnings and a winner cannot assign "last two annual prize payments." BofI argued that the payments for the Win for Life game are quarterly, not annual, therefore they are outside the language of the statute and cannot be brought back within the ambit of the statute by regulation.
The court then turned to whether the challenged regulation clarified the statute, which would be permissible, or expanded the scope of the statute, which would not. This involved a two step process. First, the court looked at the plain language of the statute and determined that the term "annual" was ambiguous because it could mean an event that occurs once a year (e.g., an annual report or annual event) or it could mean something that is calculated over a period of a year (e.g., annual income or an annual rate of increase).
In light of this ambiguity, the court looked next o the legislative history of the statute. Apparently, the purpose of the statute's no-assignment of the "last two annual prize payments" provision was to "promote collection of delinquent child support and debts owed to the State." By prohibiting the assignment of the last two years of annual payments, the statute guarantees that if money is owed for any of these purposes, the State will have the opportunity to collect the money before it is gone. For example, if the winner dies before the end of the guaranteed payments, and with debts owed to the State, the last two years of those guaranteed payments will be "last two years of payments from which money owed could be collected." The court concluded that this legislative purpose would be defeated if the statute were interpreted to not include the last two years of quarterly payments, as BofI had argued. Accordingly, the court held that the regulation mandating that "no one shall have the right to assign prize payments due during the last two years of the annuity term" was not only consistent with the statute and its legislative history, but was also a "sound clarification of the law that promotes the purpose of the enabling statute." It was, therefore, valid, and the trial courts' decisions were affirmed.