This story was updated on June 24 at 11:02 a.m. to include the comments of Clark's attorney.
A Missouri lottery winner who borrowed money from a bank, gave the bank a security interest in the lottery proceeds, defaulted on the loan and then sued the bank on the grounds Missouri’s lottery law prohibits the assignment of lottery prizes has found an unsympathetic ear in the Missouri Court of Appeals.
On Tuesday, the court upheld summary judgment against the man, Gary Michael Clark, who won the Missouri Lottery “Lifetime Riches” prize in 2006. The prize entitled Clark to receive $50,000 a year for life.
"I fought the good fight," Clark's attorney, Kendall Reid Vickers, said in a phone interview. "I did it out of loyalty to a longtime client. I'm not happy, but I'm not shocked at the outcome."
Vickers said Clark borrowed the money to help his father's failing business, which built modified dirt-track race cars.
"I would have been less sympathetic if he'd borrowed the money to buy six Jaguars," Vickers said. "He was trying to keep this business that was very successful for a long time afloat."
Clark sued Community Bank of El Dorado Springs and the Missouri Lottery in 2013 after borrowing nearly $714,000 from the bank and then defaulting on the loan. The loan was secured by his lottery winnings.
Clark claimed the loan agreement was invalid because Section 313.285.1 of Missouri’s lottery law states that “No prize, nor any portion of a prize, nor any right of any person to a prize awarded shall be assignable.”
Cole County Circuit Judge Jon Edward Beetem didn’t buy that argument and in September he awarded the bank and the Missouri Lottery summary judgment.
Clark appealed, and on Tuesday the Missouri Court of Appeals affirmed Beetem’s ruling.
The appeals court said Clark was correct that Missouri’s lottery law limits the assignment of lottery prizes. But it also said that a 2001 amendment to the Uniform Commercial Code (UCC), which governed the bank’s loan, says that any law prohibiting the assignment of an “account,” which the amendment defines to include lottery winnings, is ineffective.
Clark had argued that the lottery law trumped the UCC. The court disagreed.
"The law prohibiting the assignment of lottery winnings was meant to protect people from making foolish decisions," Vickers said. "But I knew this was going to be a long shot."
Vickers' client did manage to eke out a small victory. Beetem had ordered Clark to pay the bank’s attorney’s fees and costs of $11,300.47. The appeals court said the loan agreement made no provision for that.
Dan Margolies, editor of the Heartland Health Monitor team, is based at KCUR.
