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Gambling Losses Considered Dissipation of Marital Assets
© 2004 National Legal Research Group, Inc.
MASSACHUSETTS: Kittredge v. Kittredge, 441 Mass. 28, 803 N.E.2d 306 (2004).
The trial court properly treated as dissipation only $40,000 of the husband's $400,000 in gambling losses over the course of a period of at least ten years. Despite the gambling losses, the husband's overall economic contribution to the marriage was strongly positive, and there was no evidence that he gambled for the purpose of harming the wife. With regard to roughly $40,000 in losses incurred during the last year of the marriage, however, the trial court properly found dissipation, as these losses occurred when the husband knew a divorce was coming.
The wife appealed that portion of the order granting a divorce that failed to treat the entirety of her husband's gambling losses as a dissipation of marital assets.
The wife acknowledged that during the course of their marriage the husband was an excellent economic provider, enabling the family to live an upper-class lifestyle, and that neither she nor the children wanted for anything. The husband was, however, a heavy gambler, regularly placing large wagers on sporting events through bookies, plus occasionally gambling at casinos.
The marital estate, including the wife's inheritance (which was divisible property under Massachusetts' all-property division system), was valued at $4.44 million, of which $2.44 was held by the husband and $2 million was held by the wife. The trial court awarded 62% of the estate to the wife and 38% of the estate to the husband. The trial court calculated the husband's gambling debts over the course of the marriage to be $30,000 to $35,000. It determined that those losses were not a factor in the appropriate division of the marital assets.
Both parties appealed. The intermediate court of appeals reversed and remanded on several points pertaining to the division of assets, including the amount of the husband's gambling losses and the value of his real estate investments. On remand, the trial court again listened to evidence from both sides and concluded that such losses amounted to $400,000 and ordered the husband to pay to the wife $40,000, the amount it determined to constitute the waste of marital assets as well as the adjustment in the value of the real estate investments. The wife's share was increased to 64%, and the husband's share was reduced to 36% of the marital property. She, nevertheless, appealed.
As to the trial court's calculation of the amount of the husband's gambling losses, the Massachusetts Supreme Judicial Court found no error in the figure reached by the judge below. As to the treatment of the gambling losses as waste, the high court also affirmed the lower court's determination, rejecting the wife's contention that the whole amount of the husband's gambling losses must, as a matter of law, be treated as dissipation of marital assets. In large part, her argument rested on the theory that any illegal expenditure is, by definition, a form of financial misconduct that qualifies as a dissipation and that the husband's involvement with an unlawful form of gambling required the court to treat all of his losses as dissipation.
Illegality does not automatically equate with dissipation, stated the court. Rather, the concept of dissipation or waste has several attributes which potentially cover both lawful and unlawful conduct. It is those attributes, not a simple determination of unlawfulness, that govern the determination of whether particular expenditures by a spouse constitute dissipation or waste. While there is no definition of dissipation under Massachusetts case law, the court looked to other jurisdictions that had declared that dissipation was a spouse's expenditure for his or her own personal enjoyment at a time when the marriage was coming to an end, from which it could be inferred that the spouse's expenditures were made in order to deprive the other spouse of his or her fair share of the marital estate. Moreover, it recognized that Massachusetts cases have applied the concept of dissipation when dealing with expenditures made during this period. The court further stated that, however defined, dissipation must be viewed within the context of the statutory factors governing the equitable division of marital property under Mass. Gen. Laws Ann. ch. 208, 34. To the extent that a spouse's conduct has harmed the marriage or the marital estate, dissipation may be considered as a factor that would diminish the spouse's equitable share of the marital property. As a division of the marital estate is intended to effect fairness between the parties in light of all the circumstances, it is not to punish bad behavior or enforce the criminal laws. Thus, the fact that a spouse's conduct included unlawful conduct and that the marital estate is less valuable as a result of that unlawful conduct is but one circumstance, not necessarily determinative in itself, for the trial judge to consider in equitably distributing property.
The court also identified dissipation as a factor that affects a person's contribution to the marital assets in the sense that it offsets or diminishes the value of whatever positive contributions the spouse has made. Thus, a determination of whether a spouse's expenditures constitute dissipation considers them in the light of that spouse's overall contribution, including whether the expenditures rendered the spouse unable to support the other spouse from the much diminished estate at the time of the divorce.
Looking to the specific facts of the case before it, the court concluded that there was no support for characterizing the entire $400,000 loss due to gambling as dissipation. The husband's gambling took place during the entire length of the marriage. It was not something that started in response to the marriage's breakdown or in anticipation of divorce. There was nothing to suggest that the husband intended to deprive the wife of her share of the marital estate or that he gambled the money rather than see it go to her. In addition, at no time was the husband derelict in his support of the wife or their children. In fact, to the contrary, the wife and children were more than comfortably provided for at all times, leading an upper-class lifestyle with college and graduate education for the children, and, notwithstanding the magnitude of the husband's gambling losses, the marital estate to be divided would still provide the wife with ample means to maintain that same lifestyle. Finally, while the wife did not participate in the husband's gambling, she was aware of it for many years and, whatever concerns she may have had about it, there was no evidence that she did anything to protest it. Under these circumstances, the supreme judicial court found no error by the trial judge in declining to treat the entirety of the gambling losses as dissipation.
As to the wife's assertion that the trial judge's failure to support his decision charging the husband with only $40,000 in dissipation of marital assets was serious error, the court on appeal declined to order a reversal. The husband's gambling losses of $400,000 occurred at least over a ten-year period during the marriage. It continued in the final year even after the wife filed for divorce and the husband had vacated the marital residence, and it was clear that the marital estate needed to be divided. Gambling losses that occurred from that point forward directly reduced the size of the marital estate at a time when the husband knew that the wife was entitled to her share of the estate. Charging the husband with $40,000 in dissipation of the marital assets for gambling losses he incurred during the last year of the marriage, calculated roughly as 10% of the $400,000 losses incurred over the ten-year period, was not arbitrary and would not be reversed on appeal.
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