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In re the Petition of Woodbridge Asset Investment Corp.

January 24, 2007

IN RE THE PETITION OF WOODBRIDGE ASSET INVESTMENT CORP.,*FN1 FOR AN ORDER ALLOWING A TURNOVER OF A PORTION OF THE LOTTERY WINNINGS OF CHIN KOON FAH PURSUANT TO N.J.S.A. 5:9-13


On appeal from Superior Court, Law Division, Civil Part, Mercer County, L-3321-00.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted December 12, 2006

Before Judges Weissbard and Lihotz.

Foong Ying Chan (Chan) appeals from an order denying her application, pursuant to R. 4:50-1, to set aside a judgment of November 3, 2000, which had granted the co-petition of Chan's late husband, Chin Koon Fah (Fah) and Woodbridge Asset Investment Corporation (Woodbridge), allowing Fah to assign to Woodbridge, for a consideration of $322,000, Fah's winnings from the New Jersey Lottery. We affirm.

The facts are relatively uncomplicated. Chan and her now deceased husband Fah were married on January 11, 1993. On or about December 10, 1997, unbeknownst to his wife, Fah won the New Jersey Lottery's "Win for Life" contest, entitling him to $1000 per week for life, with a minimum payout of $1,000,000 in the event of his death. The lottery prize was broken down into quarterly gross payments of $13,000 lasting through December 10, 2016.

In 2000, Fah agreed to assign his lottery prize payments to Woodbridge for a lump sum payment of cash. Fah and Woodbridge entered into a Lottery Prize Assignment Agreement dated September 7, 2000, according to which Fah agreed to assign Woodbridge fifty-seven quarterly lottery prize payments, each in the amount of $13,000 before taxes in exchange for a lump sum payment of $335,000. The Agreement also required Woodbridge and Fah to file a joint petition for approval of the assignment, in accordance with N.J.S.A. 5:9-13. In connection with the joint petition, Fah represented in a signed "Certificate of Marital Status," which was attached to the Agreement, that he had never been married. Fah also stated that he resided at an address in Brooklyn, New York.

Pursuant to a Receivable Purchase & Sale Agreement dated September 12, 2000, Comet Financial Corporation purchased Woodbridge's rights and obligations under the Assignment Agreement. The following day, by another Receivable Purchase & Sale Agreement, dated September 13, 2000, Comet Financial Corporation assigned its rights to Great-West Life & Annuity Insurance Company (Great-West), such that Great-West became responsible for making Woodbridge's lump sum payment to Fah, and for making Comet's payment to Woodbridge for the assignment.

Due to a delay in seeking court approval, on October 25, 2000, Woodbridge and Fah executed an Addendum to the Lottery Prize Assignment Agreement, which reduced the lump sum payment to $322,000, and reduced the number of payments to fifty-six quarterly payments of $13,000.

In accordance with the original Assignment Agreement, on October 31, 2000, Woodbridge and Fah filed a petition in the Law Division, Mercer County, for an Order allowing the matter to proceed summarily pursuant to R. 4:67-1 and R. 4:67-2(b), and for immediate entry of an Order pursuant to N.J.S.A. 5:9-13. Fah submitted an affidavit to the court in which he represented that he was not married; that he had entered into the assignment voluntarily; that he was represented by independent legal counsel; and that he had retained and consulted with an independent financial and tax advisor concerning the agreement with Woodbridge.

Judge Shuster granted the co-petition by an order dated November 3, 2000. The Assignment Order contained all the various findings required by N.J.S.A. 5:9-13(d), and expressly acknowledged that Great-West was the ultimate beneficiary of the assignment. On November 9, 2000, the New Jersey Division of State Lottery acknowledged the receipt of Judge Shuster's Order and advised that it intended to comply with the provisions of the Order.

Fah died in February 2003. Chan claims that in mid-2005 she began receiving audit and deficiency notices from the IRS and the New York State Department of Finance regarding the under-payment of taxes. After investigation, Chan learned for the first time that her husband had won the lottery and had received a lump sum payment from Woodbridge in the amount of approximately $300,000. Chan claims that before this time she had no knowledge of her husband's lottery winnings or the lump sum payment, and that the payment was never reported on their joint income tax return.

Chan thereafter applied for, and was granted, innocent spouse relief by both taxing agencies. On December 28, 2005, she filed a "Motion for Relief from Judgment Pursuant to R. 4:50-1," stating that the basis for the motion was fraud upon the court, and that she had an interest in the original assignment proceedings pursuant to N.J.S.A. 5:9-13. Specifically, Chan alleged that her husband's failure to note his marital status, his use of an address in Brooklyn, and Woodbridge's failure to conduct even minimal due diligence, demonstrated a fraud upon the court, requiring relief from the order in the interests of justice.

Responsive papers were filed by Great-West, the ultimate assignee of the lottery payments, asserting that Chan had no standing to bring the motion, that the motion was untimely, and that she was not entitled to any relief. On February 16, 2006, Judge Koenig denied Chan's application, holding that she had no standing because she was not a party to the original action.

On appeal, Chan argues that she did have standing and, further, that she was entitled to the relief sought, i.e., to have the November 3, 2000 judgment vacated. We disagree with both contentions.

I.

Rule 4:50-1 provides ...


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