In Re Petition of Bofi Federal Bank to Assign Lottery Prize payment Rights of Michelle A. Glover Pursuant to N.J.S.A. 5:9-13

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1694-12T3
A-1695-12T3
A-2494-12T3
A-2689-12T3
IN RE PETITION OF BOFI FEDERAL
BANK TO ASSIGN LOTTERY PRIZE
PAYMENT RIGHTS OF MICHELLE A.
GLOVER PURSUANT TO N.J.S.A. APPROVED FOR PUBLICATION
5:9-13.
October 3, 2014
_________________________________
APPELLATE DIVISION
IN RE PETITION OF BOFI FEDERAL
BANK TO ASSIGN LOTTERY PRIZE
PAYMENT RIGHTS OF RACHAEL
ELMORE PURSUANT TO N.J.S.A.
5:9-13.
_________________________________
IN RE PETITION OF BOFI FEDERAL
BANK TO ASSIGN LOTTERY PRIZE
PAYMENT RIGHTS OF RICHARD HAAS
PURSUANT TO N.J.S.A. 5:9-13.
_________________________________
IN RE PETITION OF BOFI FEDERAL
BANK TO ASSIGN LOTTERY PRIZE
PAYMENT RIGHTS OF DEANNE
MCMILLION PURSUANT TO N.J.S.A.
5:9-13.
_________________________________
Argued September 9, 2014 — Decided October 3, 2014
Before Judges Reisner, Koblitz and Higbee.
On appeal from the Superior Court of New
Jersey, Law Division, Mercer County, Docket
Nos. L-2122-12, L-2405-12, L-1793-12 and
L-2406-12.
Douglas K. Eisenstein of the New York bar,
admitted pro hac vice, argued the cause for
appellant BofI Federal Bank (Bressler, Amery
& Ross, P.C., attorneys; Heather A. Novison,
on the briefs).
Jonathan B. Peitz, Deputy Attorney General,
argued the cause for respondent State of New
Jersey, Division of State Lottery (John J.
Hoffman, Acting Attorney General, attorney;
Lewis A. Scheindlin, Assistant Attorney
General, of counsel; Mr. Peitz, on the
brief).
The opinion of the court was delivered by
HIGBEE, J.S.C. (temporarily assigned).
BofI Federal Bank (BofI) filed petitions seeking approval
of the assignment of certain New Jersey State Lottery payments
from four separate prize winners. The four petitions were heard
and denied by three different judges pursuant to N.J.A.C. 17:20-
7.9(j), which states that "no one shall have the right to assign
prize payments due during the last two years of the annuity
term." BofI argued in each case, and now contends in this
consolidated appeal, that N.J.A.C. 17:20-7.9(j) is invalid
because it is in conflict with and impermissibly enlarges the
controlling statute N.J.S.A. 5:9-13, which regulates the
assignment of the final two years of prize payments.
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We find N.J.A.C. 17:20-7.9(j), as promulgated by the New
Jersey Division of State Lottery, is valid, and effectuates the
legislative intent of N.J.S.A. 5:9-13. We therefore affirm all
four decisions of the Law Division judges.
The relevant facts of each of the four cases are similar.
Richard Haas won the Win for Life instant game on March 5, 1998.
Under the rules of the game, he became entitled to a guaranteed
prize of $1,000,000 payable in quarterly installments through
the year 2016. Following the guaranteed portion of the annuity,
he will receive quarterly payments for his lifetime.
Michelle Glover, Rachael Elmore, and Deanne McMillion were
also winners of the Win for Life game and received the same type
of payments. BofI unsuccessfully petitioned the court in each
case to obtain assignment of the last two years of guaranteed
quarterly payments. Each of these petitions were denied by the
trial judges.1
Legislative history sets the framework for our decision.
The New Jersey State Lottery was established by N.J.S.A. 5:9-4
1
In the case of Richard Haas, the original trial judge
granted the petition. The State Lottery Division filed a timely
motion for reconsideration. Judge Anthony M. Massi, to whom the
case had been reassigned, granted the motion to reconsider and
denied the petition. BofI has appealed the decision to allow
reconsideration, but we find this portion of the appeal is
without sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E).
3 A-1694-12T3
on February 16, 1970, and is governed by N.J.S.A. 5:9-1 to -25.
When the legislation was first enacted, a State Lottery Division
was created in the Department of Treasury. A State Lottery
Commission was also created within the Department as defined by
N.J.S.A. 5:9-3. Instead of establishing specific games of
chance with set rules and prizes, the Legislature gave this
power to the Commission. See N.J.S.A. 5:9-7. The purpose for
creating the lottery was to provide economic benefit to State
institutions and provide State aid for education. N.J.S.A. 5:9-
2. Particularly relevant here, the statutes did not initially
allow for assignment of lottery prizes. However, the law was
amended in 1998.
The controlling statute states a lottery prize "shall not
be assignable except as permitted by this section." N.J.S.A.
5:9-13(a), as amended. There are numerous requirements before
an assignment can be approved. Moreover, under N.J.S.A. 5:9-
13(d), a court order necessitating compliance with those
requirements is a prerequisite to assignment. Ibid. Clearly,
the Legislature was concerned about assignments of lottery
winnings, and wanted them carefully controlled.
The most relevant part of the statute in this appeal is
N.J.S.A. 5:9-13(h), which states "[a] winner shall not be
permitted to assign the last two annual prize payments." To
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this, BofI responds that the payments in these cases are not
"annual" payments but "quarterly" payments, and are therefore
outside the language of the statute. We disagree.
The Commission set up the payments for the guaranteed
annuity in the Win for Life games to be paid quarterly as it was
authorized to do. Previously, the Commission had promulgated as
part of its regulation of the lottery N.J.A.C. 17:20-7.9(j),
which interpreted N.J.S.A. 5:9-13(h). In that respect, the
regulation clarified that any assignment of winnings paid during
the last two years of an annuity was prohibited regardless of
whether the payments were made yearly, monthly, quarterly or
weekly. It is this regulation we are asked to find invalid.
There are two steps in evaluating whether an agency
regulation clarifies an ambiguous statute, conflicts with it, or
impermissibly expands it. First, we look to the plain language.
If it is clear, our task is complete. N.J. Ass'n of School
Adm'rs v. Schundler, 211 N.J. 535, 549 (2012). Second, if the
language is ambiguous, "courts may look to extrinsic evidence."
Ibid. (quoting Burnett v. Cnty of Bergen, 198 N.J. 408, 421
(2009)).
With that in mind, we approach the validity of agency
regulations with deference to the expertise of the agency.
"Regulations adopted by administrative agencies are accorded
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substantial deference provided they are consistent with the
governing statutes' terms and objectives." State Dept. of
Labor, 395 N.J. Super. 394, 406 (App. Div. 2007).
The games offered, the amount of the prize, and the
frequency of payments were delegated by the Legislature to the
discretion of the Commission to fulfill the purpose of the
statutes. While N.J.S.A. 5:9-13 may, at first, appear clear and
unambiguous, the New Jersey Supreme Court has found that the
meaning of a statute, "in light of related legislation and of
surrounding facts and circumstances" may render what appeared to
be a clear meaning ambiguous. Watt v. Mayor & Council of
Franklin, 21 N.J. 274, 277-78 (1956).
First, we note that the word "annual" could be defined as
an adjective that describes an event as occurring once a year,
such as an annual report or an annual event, as argued by BofI.
However, "annual" is also commonly used as an adjective to
describe something calculated over or covering a period of a
year. For example, "annual income" and "an annual rate of
increase." In fact, property owners regularly pay their annual
real estate taxes in quarterly payments. See N.J.S.A. 54:4-66a.
In the Haas case, Judge Massi found that the Win for Life
payments are annual payments made on a quarterly basis. We
agree that the word "annual" is not always limited to payments
6 A-1694-12T3
made only once a year, and therefore not, as BofI argues, a
completely unambiguous term. Since there is some ambiguity, we
look to the intent and purpose of the legislation.
In State v. Spindel, 24 N.J. 395, 403 (1957), the Supreme
Court held "the intention is to be taken or presumed according
to what is consonant to reason and good discretion," and in New
Jersey Builders, Owners & Managers Ass'n v. Blair, the Court
held
[i]t is the proper function, indeed the
obligation, of the judiciary to give effect
to the obvious purpose of the Legislature,
and to that end words used may be expanded
or limited according to the manifest reason
and obvious purpose of the law. The spirit
of the legislative direction prevails over
the literal sense of the terms.
[60 N.J. 330, 340 (1972) (quoting Alexander
v. N.J. Power & Light Co., 21 N.J. 373, 378
(1956)) (internal quotations omitted).]
All parties have agreed that one purpose of N.J.S.A. 5:9-
13(h) was to promote collection of delinquent child support and
debts owed to the State. By prohibiting assignment of the last
two years of annual payments, the statute guarantees that if
money is owed by the winner for child support, college loans,
taxes, or welfare liens, the State will have the opportunity to
collect what is owed before the money is gone. If the winner
dies before the end of the guaranteed payments in the Win for
Life game, the last two years of guaranteed payments will be the
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last two years of payments from which money owed could be
collected. The legislative intention to preserve the last two
years of payments for the payment of any outstanding debts
incurred by the winner would be defeated if the statute is
interpreted to not include the last two years of quarterly
payments. While none of these four winners owes money now, the
statute seeks to protect the State from losses due to debts that
may be incurred and owed in the future when these last two years
of payments are received.
N.J.A.C. 17:20-7.9(j) is a sound clarification of the law
that promotes the purpose of the enabling statute, N.J.S.A. 5:9-
13(h).
We affirm the denial of the petitions in all four cases.
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