Matter of J.G. Wentworth Originations, LLC v Hartford Life Ins. Co.

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Matter of J.G. Wentworth Originations, LLC v Hartford Life Ins. Co. 2012 NY Slip Op 31510(U) June 1, 2012 Sup Ct, NY County Docket Number: 151205/12 Judge: Cynthia S. Kern Republished from New York State Unified Court System's E-Courts Service. Search E-Courts (http://www.nycourts.gov/ecourts) for any additional information on this case. This opinion is uncorrected and not selected for official publication. [* 1] - NEW YORK PRESENT: COUNTY PART Y MOTION DATE dG~ -v- J The followlng papers, numbered 1 to sm. NO. M m o N cAL. N ; were read on thls motlon to/for Notlcs of Motlord Order to Show Cause Answerlng Affldavlts L MOTION - Affldavttr - Exhlblts ... - Exhlblts Replylng Affldavlta 0 Yes Cross-Motion: r] No Upon the foragolng papers, It I ordered that thls motlon s \ lw s i n accordance with the annexed decision. bh Check one: FINAL DISPOSITION 0 NON-FINAL DISPOSITION Check if appropriate: DO NOT POST 0 REFERENCE 0 SUBMIT ORDER/ JUDG. 0 SETTLE ORDER/ JUDG. ~ [* 2] Index No. 15 1205/12 J.G. WENTWORTH ORIGINATIONS, LLC, for Judicial Approval of Transfer of Structured Settlement Payment Rights with LESLIE MARCANO, Pursuant to Article 5 , Title 17 of New York General Obligations Law, FILED Petitioners, -and- HARTFORD LIFE INSURANCE COMPANY and HARTFORD CEBSCO, As Interested Persons Pursuant to GOL NEW YORK COUNTY CLERK S OFFICE 5 5- 170 1 (c). --__*_______------_rl__________l________---------*----------------------- X HON. CYNTHIA S. KERN, J.S.C. Recitation, as required by CPLR 22 19(a), of the papers considered in the review of this motion for: Papers Notice of Petition, Petition and Affidavits Annexed ...................... Notice of Cross-Motion and Affidavits Annexed ............................. Answering Affidavits.. ................................................................... Replying Affidavits......................................................................... Exhibits ......................................................................................... Other ......................................................................................... Numbered 1 2 3 Petitioner J.G. Wentworth Originations, LLC ( J.G. Wentworth ) commenced this special proceeding seeking approval of the transfer of certain structured settlement payment rights from Leslie Marcano (the payee ) to J.G. Wentworth under a Purchase Agreement. For the reasons set forth below, petitioner s application is denied. The relevant facts are as follows. The payee is forty-one years old, is engaged to be I [* 3] married and has no minor dependents. She is currently unemployed. Pursuant to an underlying settlement agreement, payee is entitled to receive seventy-four monthly payments of $440.00 each, beginning on May 15,2012 and ending on June 15,2008 and several other lump sums to be paid on fiture dates. Ms. Marcano now seeks to transfer her right to receive $440.00 per month beginning on May 15,2012 and ending on lune 15,2018 in exchange for a lump sum of $1 8,750.00. Petitioner has stated that this sum represents 60.30% of the estimated current value of the payments based upon the discounted value using the applicable federal rate. Ms. Marcano states that the purpose of the transfer is as follows: to pay for pre-planned funeraVburia1 expenses for her mother, to pay off her son s student loans, to pay for her son s final year and a half of college, to pay for attorney fees and to remodel her kitchen aiid make small repairs to her home. J.G. Wentworth advised Ms. Marcano in writing to seek independent professional advice regarding this transaction but she has opted not to seek such advice. The Structured Settlement Protection Act, General Obligations Law 6 5- 1701, el seq. (the SSPA ), was enacted as a result of a coiicern that structured settlement payees are especially prone to being victimized and taken advantage of by businesses seeking to acquire their structured settlement rights. Itz re Petition of SettlPmenl Funding uf New Ynrk, L. L. C (Cunningham), 195 Misc.2d 721 (Sup. Ct. N.Y. Co. 2003). The SSPA discourages such transfers by requiring the would-be transferee to commence a special proceeding to obtain judicial approval of such transfers. The SSPA requires that certain procedural and substantive safeguards be followed before structured settlement payments may be transferred. The procedure is set forth in General Obligations Law $ 5-1 705. The statute requires that a copy of a disclosure statement 2 [* 4] L as required under General Obligations Law fj 5- 1703 be attached to the application and that proof of service upon the payee be provided. Before a transfer may be effectuated, court approval must be obtained and express findings must be made by the court pursuant to General Obligations Law 5-1706. Therefore, a case by case analysis of each application is required. Specifically, subdivisions (a), (c),(d) and (e) of 9 5-1706 provide procedural mandates for an application. Section 5-1 706 (b), the most substantive provision, provides that no transfer of structured settlement right shall be effective without an express finding of the court 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. A petition to transfer will be denied where the transfer is found not to be in the individual payee s best interest and the terms of the transaction are not fair and reasonable. GOL 5-1 706(b); In the Mutter of the Petition of 321 Henderson Receivables, L. P. (Lemamki), 13 Misc.3d 526 (Sup. Ct. Erie Co. 2006). A determination of what is fair and reasonable must be based upon what is reasonable in the marketplace, measured against what is in the individual payee s best interest. In the Matter of thc Petition of 321 Henderson Receivuhles, L P. (Lemanski), 13 Misc.3d 526. What constitutes the payee s best interest niay only be determined by a thorough examination of the payee s circumstances, looking at the following factors: the payee s age, level of maturity, physical and mental capacity, and ability to earn a living and provide for his dependants, the payee s intended use of the proceeds and need for medical or other professional treatment, whether the payee is suffering from a hardship, whether he obtained independent legal and financial advice and whether he demonstrates an appreciation of the 3 [* 5] consequences of the transfer. In the Matter of the Petition of 321 Henderson Receivubles, L.L.C. (walker), 20 Misc.3d 11 14 (A) (Sup. Ct. Kings Co. 2008). In almost all of the published cases throughout the state in which the statute had been applied, the court has denied the petition. The court finds that petitioner s submission meets all of the procedural mandates of the SSPA. However, the court is unable to conclude that the proposed transaction is in the payee s best interest under the circumstances. Although the court lauds Ms. Marcano s desire to pay for her son s college tuition and to help him pay his student loans, it is not clear that taking this deep discount on her settlement funds is the only or best option available to fulfill this goal, Payee has also opted to waive petitioner s advice that she seek independent professional advice regarding the transfer. It is not clear that payee appreciates the amount of the discount she would be getting on this transfer. The court is also unable to conclude that the terms of the proposed transaction are fair and reasonable as the value of the payment to payee is only 60.30 % of its present value. The court cannot find this fair and reasonable under the circumstances. Accordingly, petitioner s application for judicial approval of the transfer of ii r s r n LE D Ms. Marcano s structured settlement is denied. JllN 0 7 2012 This constitutes the decision and order of the court. Dated: G YORK COUNTY CLERKS OFFICE ii Enter: J.S.C. 4

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