Matter of Settlement Funding of NY LLC v Transamerica Annuity Serv. Corp.
Annotate this CaseDecided on April 16, 2009
Supreme Court, Kings County
In the Matter of the Petition of Settlement Funding of New York, LLC, for Judicial Approval of Absolute Assignment and UCC Article 9 Security Agreement with Shaquana M. Parnell, pursuant to New York General Obligations Law, Art. 5, Title 7, Petitioner,
against
Transamerica Annuity Service Corporation ("Settlement Obligor") and Transamerica Financial Life Insurance Company ("Annuity Issuer"), Respondents.
34086/2008
APPEARANCES OF COUNSEL
For the Petitioner(s): Settlement Funding of New York, LLC
THE LAW OFFICES OF IAN M. CHAIKEN, PLLC
17 State Street, Suite 2000
New York, New York 10004
For the Respondent(s):
NO APPEARANCE
James G. Starkey, J.
By Notice of Petition dated December 18, 2008, Petitioners Settlement Funding of New York, LLC and Shaquana M. Parnell seek judicial approval of an assignment of a portion of Petitioner Shaquana M. Parnell's structured settlement annuity with respondents pursuant to General Obligations Law 5-1701, et seq., more commonly known as "The Structured Settlement Protection Act" (SSPA). Respondents have not opposed the relief requested. [*2]
The petitioners appeared in Part 6 of this Court in
support of the petition on March 18, 2009, and decision was reserved.
FACTS AND PROCEDURAL BACKGROUND
Petitioner Shaquana M. Parnell is the payee of a structured settlement annuity issued by respondents and dated June 17, 1996.[FN1] According to the schedule of annuity benefits (Exhibit "A" annexed to the petition) Ms. Parnell is entitled to receive the following guaranteed annuity payments from respondents: beginning on September 7, 2003, $10,000.00 per year for four years, and beginning on September 7, 2003, the sum of $1,114.25 per month for one hundred and eighty consecutive months. According to the petition and affidavit of Ms. Parnell, effective March 7, 2009 and subject to court approval, she desires to assign a portion of the monthly payment in the amount of $514.25 per month to Petitioner.
Ms. Parnell states that she is presently 33 years of age and unemployed. She has two
children, ages five and three, and receives $400.00 per month in government assistance.
Ms. Parnell discloses no other source of income, and further states that due to her
situation, she requires immediate cash to retain legal services for a pending matter
(approximately $20,000.00), and to obtain an automobile (approximately $8,500.00) as she is
without means of reliable transportation.
In order to obtain this immediate cash infusion, Ms. Parnell entered into an assignment
agreement with Petitioner Settlement Funding of New York, LLC, on the following terms and
conditions: in exchange for an immediate gross payment of thirty one thousand two hundred and
twelve dollars and thirty six cents ($31,212.36), commencing on March 7, 2009 Ms. Parnell
would assigning a portion of her monthly payments in the amount of $514.25 through August 7,
2018. The total of this assignment is $58,624.50.
LAW AND APPLICATION
The primary purpose of the SSPA is to protect the recipients of long-term structured settlements from being victimized by companies aggressively seeking the acquisition of their rights to guaranteed structured settlement payments. See 321 Henderson v. Martinez, 11 Misc 3d 892, 816 N.Y.S.2d 298 (Sup Ct NY Cty 2006); In Re Settlement Capital Corp. (Ballos),1 Misc 3d 446, 769 N.Y.S.2d 817 (Sup Ct Qns Cty 2003). To effectuate this purpose, the Legislature created procedural requirements that potential structured settlement transferees must follow before courts review the substantive merits of the proposed assignment. See GOL§ 5-1703; In the matter of Settlement Capital Corp. ("Y"), 194 Misc 2d 711, 756 N.Y.S.2d 728 (Rensselaer Cty). Once the procedural requirements are met, the court shall substantively review the application and make express findings in accordance with GOL § 5-1706.
A review of the application indicates that it has been served timely pursuant to GOL § 5-1705 ( c ), and that all "interested parties" as defined by GOL § 5-1701(f) appear to have been served. Further, it appears that all required disclosure pursuant to GOL §5-1703 has been provided to Ms. Parnell at least ten days prior to the date she signed the transfer agreement. Copies of these documents have been annexed to the application in accordance with GOL §1705(d). Further and pursuant to GOL § 5-1706 ( c ) (d) and (e) the following has occurred: [*3](1) Ms. Parnell has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has waived such advice in writing, (2) the transfer does not contravene any applicable statute or order of any court or other government authority, and (3) it is written in plain language and is in literal compliance with GOL § 5-702. Therefore, the application is procedurally correct under the statute. See GOL § 5-1706(a).
The court is required to make express findings that "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." GOL § 5-1706(b). However there is no requirement that the court find that an applicant is suffering from a hardship to approve the transfer of structured settlement payments. This is a two pronged test to be applied in evaluating the parties' agreement. See In Re Settlement Corp. (Ballos), supra at 461.
The best interests determination involves a broad consideration of the facts and the circumstances of the payee, in light of the payee's age, mental capacity, maturity level, ability to show sufficient income that is independent of the payments sought for transfer, capacity to provide for the payee's dependents, and the stated purposes for the transfer request. See In Re Settlement Corp. (Ballos), supra at 454-55.
In this case, the payee is 33 years of age, with minimal income other than the structured settlement. The petition does not indicate or reference payee's mental capacity or maturity level. The payee has two young dependents, however no information has been provided concerning the father or his ability to provide support pursuant to Family Law § 413 which is income that would be independent of the payment sought for transfer and an alternative source of support for the payee's dependents.
Considering the "paternalistic" purpose of the statute, the court finds that it will not be in the best interests of payee or her dependents to permit this transaction. See Mtr. of 321 Henderson, 13 Misc 3d 526, 531, 819 N.Y.S.2d 826 (Erie Coun. 2006). Specifically, Ms. Parnell's retainer agreement with counsel of her choosing signed prior to the instant application and submitted in camera for the court's review requests payment of $10,000.00 for the contemplated legal services although Ms. Parnell is asking for twice that amount, without any explanation. Further, Ms. Parnell's request for approximately $8,500.00 to obtain an automobile lacks foundational and evidentiary support in the petition.
Apart from the foregoing and turning to the "fair and reasonable" prong Settlement
Funding of New York, LLC proposes to purchase a portion of payee's structured settlement that
is presently worth $49,783.03 for the sum of $31,212.36, or 62.69% of its present discounted
value.[FN2] Payee is being
charged legal fees of $2,000.00, and $950.00 in processing fees.[FN3] The net advance is therefore $29,012.36. No
persuasive explanation is offered for a reduction of $20,770.67, an arrangement overall that this
court deems inappropriate given the guaranteed [*4]nature of the
annuity payout and the minimal risk involved for petitioner Settlement Funding of New York,
LLC. See In Re Settlement Funding of NY (Cunningham), 195 Misc 2d 721, 761 N.Y.S.2d 816 (Rensselaer Coun. 2003).
CONCLUSION
In light of the above, the proposed transfer does not meet either the "best interests" requirement or the "fair and reasonable" requirement under the statute. Therefore, the motion is denied and the petition dismissed. This constitutes the decision and order of the court.
Petitioner is directed to settle Order on notice.
____________________________
J. S. C.
Footnotes
Footnote 1: The moving papers do not
explain the circumstances of Ms. Doran's entitlement to the structured settlement annuity.
Footnote 2: The aggregate amount of
structured settlement payments requested to be assigned is $58,624.50.
Footnote 3: $200.00 by Settlement Funding
as a processing fee as well as $750.00 by respondents for their processing fee.
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