Matter of 321 Henderson Receivables Origination LLC v Campos
Annotate this CaseDecided on December 21, 2006
Supreme Court, Bronx County
In the Matter of the Petition of Henderson Receivables Origination, LLC, Petitioner,
against
Ramiro Campos, Hartford Life Insurance Company and Hartford CEBSCO, As Interested Persons Pursuant to GOL §5-1701( c).
20912/06
Alexander W. Hunter, J.
Upon the foregoing papers, the motion by petitioner, for an order pursuant to General Obligations Law (GOL) §5-1706, approving the transfer of structured settlement payment rights of Ramiro Campos to petitioner, is granted.
The structured settlement that is the subject of this application was obtained as a result of [*2]the death of one of Mr. Campos' parents, Amparo Campos. Under the terms of the structured settlement, Mr. Campos is the recipient of the following payments: two (2) monthly payments of $672.32 each, beginning September 30, 2006 and ending on October 31, 2006; eighty-two (82) monthly payments of $692.49 each, increasing 3% every twelve (12) months, beginning on November 30, 2006 and ending on August 31, 2013. The aggregate amount of these payments is $63,364.94.
Mr. Campos seeks to transfer all of the aforementioned structured settlement payments. The gross amount of the payments to be transferred is $38,750 and after payment of filing and related expenses fees in the amount of $2,250, the net advance payable to Mr. Campos is $36,500. In his affidavit in support of the petition, Mr. Campos states that he is twenty-five (25) years of age, he is single and has no children. He is employed by Federal Express as a baggage handler and earns $18.00 per hour. Mr. Campos states that he intends to use the total amount of $36,500 toward payments of a truck/vehicle he purchased. On the structured settlement client application which is annexed to petitioner's application as Exhibit C, Mr. Campos indicates that he purchased a vehicle approximately four (4) months ago under his uncle's credit. He states that he does not think he can afford the payments as he earns approximately $900 per month and the vehicle payments are $770 per month for six (6) years. However, because he has to pay rent, car insurance and utilities, he will be unable to make the vehicle payments and does not want to lose his car or ruin his uncle's credit.
According to the Disclosure Statement which was signed by Mr. Campos and which is annexed to petitioner's motion as Exhibit B, the discounted present value of the aggregate payments to be transferred is $50,933.18. The annual discount rate for this transaction is 16.80%. The discounted present value is calculated by using the applicable federal rate of 6.00%.
The Structured Settlement Protection Act (SSPA) codified under General Obligations Law , Title 17, was enacted in July of 2002 because of the concern that "...a growing number of factoring companies have used aggressive advertising, plus the allure of quick and easy cash, to induce settlement recipients to cash out future payments, often at substantial discounts, depriving victims and their families of the long-term financial security their structured settlements were designed to provide. Although transfers of structured settlements payments are generally prohibited by contract...factoring companies have built a rapidly expanding business around circumventing these prohibitions." (NY Spons. Memo., 2002 Ch. 537). A determination would be made by a Supreme Court judge as to whether the transfer is "in compliance with applicable law, that key terms have been disclosed, that the transfer meets a hardship standard, and that independent professional advice has been obtained." (NY Bill Jacket, 2002 A.B. 6936, Ch. 537). In 2004, the SSPA was amended in that the hardship requirement was"eliminated as a precondition to transfers and the requirement that disclosures be made at the front end' was added." (NY Spons. Memo., 2004 Ch. 480).
The procedural requirements that must be met for approval of a transfer are found under [*3]General Obligations Law §5-1705. The requirements are that a copy of the notice of petition and petition by order to show cause be served upon all interested parties at least twenty days before the time at which the petition is noticed to be heard, the petition must include a copy of the transfer agreement, a copy of the disclosure statement and proof of notice of that statement as well as a listing of each of the payee's dependents along with the dependents' age. Procedurally, the petitioner herein has met all of the aforementioned requirements.
Pursuant to General Obligations Law §5-1706, the court must make the following findings before a transfer can be effectuated. These are that: "(a) the transfer complies with the requirements of this title; (b) the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants; and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable. Provided the court makes the findings as outlined in this subdivision, there is no requirement for the court to find that an applicant is suffering from a hardship to approve the transfer of structured settlement payments under this subdivision; ( c) the payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing; (d) the transfer does not contravene any applicable statute or the order of any court or other government authority; and (e) is written in plain language and in compliance with section 5-702 of this article."
In the case at bar, Mr. Campos was advised in writing to seek independent professional advice, which he sought from an attorney by the name of Habib George, Esq. A letter from Mr. George addressed to the petitioner states that he reviewed the documents and explained the purchase price agreement to Mr. Campos who agreed after consultation to enter into said agreement. However, Mr. George does state that his review "does not constitute a recommendation to enter the agreement." (Exhibit B).
The two most important components of the SSPA are whether or not the transaction, including the discount rate and the amount of fees and expenses, is fair and reasonable and whether the transaction is in the best interest of the payee. The trial courts have ruled on what is determined to be fair and reasonable and whether the transfer is in the best interest of the payee on a case by case basis viewing the totality of the circumstances. Matter of Settlement Capital Corp. v. Yates, 12 Misc 3d 1198(A) [2006].
This court finds that the transaction herein is both fair and reasonable and in the best interest of Mr. Campos, considering the fact that the net amount he will be receiving represents 71.70% of the estimated current value of the payments to be transferred. Although Mr. Campos should have considered the large monthly payments he would be required to make toward the purchase of his vehicle before he decided to purchase it, he has no dependents, he is employed and uses his monthly income to pay rent and household bills. In addition, the transfer would help him to keep his vehicle and preserve his uncle's credit. [*4]
Accordingly, the petition is hereby granted.
If petitioner requires a separate order in addition to this court's decision and order, then petitioner is directed to submit an order that conforms with this decision. The proposed long form order submitted by the petitioner for this court's consideration contains information which does not require the approval of this court.
This constitutes the decision and order of this court.
Dated December 21, 2006
J.S.C.
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