Matter of Peachtree Settlement Funding, LLC v Salazar

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Matter of Peachtree Settlement Funding, LLC v Salazar 2012 NY Slip Op 32352(U) September 10, 2012 Supreme Court, New York County Docket Number: 103075/12 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. ANNED ON 911212012 [* 1] SUPREME COURT OF THE STATE OF NEW YORK - NEW YORK COUNTY PART PRESENT: Justice MOTION SEQ. NO. 1 MOTION CAL. NO. The following papers, numbered 1 to Notlce of Motion/ Order to Show Cause .. - Cross-Motion: - Affldavlts - Exhlbtts ... Anowerlng Affldavlts - Exhlblts 3 were read on thls motion tolfor E 0 flE Replylng Aff ldavlts 0 Yes 0 No Upon the foregolng papers, it is ordered that this motion b (b m a accocddarrewith the annixed decision. 0 NON-FINAL DISPOSITION Check if appropriate: 0 DO NOT POST 0 REFERENCE 0 SETTLE ORDER/ JUDG. 0 SUBMIT ORDER/ JUDG. Check one: FINAL DISPOSITION [* 2] Index No. 103075/12 DECISION/OF&DER -and- KIRBY SALAZAR, GEICO and METROPOLITAN LIFE INSURANCE COMPANY, as Interested Persons pursuant to GOL 5-1 701(c), 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 Peachtree Settlement Funding, LLC ( Peachtree ) commenced this special proceeding seeking approval of the transfer of certain structured settlement payment rights from Kirby Salazar, the payee, to Peachtree under a purchase contract. For the reasons set forth below, petitioner s application is denied. I The relevant facts are a follows. The payee is twenty years old, unmarried, and has one dependent child. He is currently unemployed but looking for employment. Pursuant to a prior settlement agreement the payee is entitled to receive thirteen (1 3) semiannual payments of [* 3] $4,840.00 each, beginning on April 4,2013 and ending on April 4,2019. Mr. Sal- now seeks to transfer his right to receive each of the aforementioned payments, totaling $62,920.00, in exchange for a lump sum of $37,320.00. Peachtree states that this amount represents 62.70% of the estimated current value of the payments using applicable federal rates. The stated purpose of the transfer is to pay for rent and expenses for a new apartment, to furnish said apartment, to buy clothes and to pay for child care expenses. Peachtree advised Mr. Salazar in writing to seek independent professional advice regarding this transaction but he has waived such advice. Mr. Salazar has once before sought to exchange his right to receive certain future amounts for immediate lump sums.On March 15,2012, his application to transfer his rights to certain of these structured settlement payments w s denied by Justice Roger McDonough. a The Structured Settlement Protection Act, General Obligations Law 6 5- 1701, et seq. (the SSPA ), was enacted as a result of a concern that structured settlement payees are especially prone to being victimized and taken advantage of by businesses seeking to acquire their structured settlement rights, I n re Petition of Settlement Funding of New York, L.L.C. (Cunningham), 195 Misc.2d 721 (Sup. Ct. N.Y. 2003). The SSPA discourages such transfers Co. 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 0 5-1705. The statute requires that a copy of a disclosure statement as required under General Obligations Law 0 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 n ~ s t be obtained and express findings must be made by the court pursuant to General Obligation3 Law 2 [* 4] 4 5- 1706. Therefore, a case by case analysis of each application is required. Specifically, 9ubdivisions (a), (c), (d) and (e) of 8 5-1 706 provide procedural mandates for an application. Section 5- 1706 (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- 1706(b); In the Matter of the Petition o 321 Henderson Receivables, L.P.(LemansM), 13 f 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 the Petition o 321 Henderson Receivables, L.P. f (Lernanski), 13 Misc.3d 526. What constitutes the payee s best interest may 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 f o a hardship, whether he obtained rm independent legal and financial advice and whether he demonstrates an appreciation of the consequences of the transfer. In the Matter of the Petition of 321 Henderson Receivables, L.L.C. (Walker), 20 Misc.3d 1 114 (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 pttition. 3 [* 5] 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. The payee is unemployed and has not supplied any information about his education, skills or job search. Despite the fact that the court lauds payee s intentions to get his own apartment and help with child care expenses, it is not clear that this is the best way to achieve such a goal. Payee has waived any professional advice regarding this transaction. It is not clear that payee appreciates the amount of the discount he would be getting on this transfer. The court is also unable to conclude that the terms of the proposed transaction art fair and reasonable, The value of the payment to payee is only 62.70% 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 interest in Mr. Salazar s structured settlement is denied. This constitutes the decision and order of the court. Enter: 4 L e% J.3.t.

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