Advance Funding LLC v Scott

[*1] Advance Funding LLC v Scott 2014 NY Slip Op 51105(U) Decided on July 18, 2014 Supreme Court, Bronx County Hunter, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on July 18, 2014
Supreme Court, Bronx County

Advance Funding LLC, Petitioner, For Judicial Approval of a Transfer Agreement with KELLIE SCOTT A/K/A KELLY SCOTT In Accordance with New York General Obligations Law § 5-1701, et seq.,

against

Kellie Scott A/K/A KELLY SCOTT, METROPOLITAN LIFE INSURANCE COMPANY, and METLIFE TOWER RESOURCES GROUP, INC., Respondents.



22193/14E



Petitioner:

David C. Van Leeuwen, Esq.

Rosabianca & Associates, PLLC

40 Wall Street, 31st Floor

New York, NY 10005

(212) 269-7722

Respondent:

Kellie Scott a/k/a Kelly Scott, Pro se
Hunter, J.

The motion by order to show cause for an order approving the transfer of certain structured settlement payment rights of Kellie Scott a/k/a Kelly Scott ("Scott") to petitioner was orally denied after argument on July 8, 2014 which was prior to the filing of a notice of discontinuance. What follows are my findings of fact and conclusions of law.

Respondent Scott is the beneficiary of a settlement arising from a personal injury action. Pursuant to a settlement agreement, respondent Scott is entitled to receive periodic payments from respondent MetLife Tower Resources Group, Inc. The periodic payments are paid to Scott [*2]through an annuity issued by respondent Metropolitan Life Insurance Company in the City of New York.

Respondent seeks to transfer to petitioner two-hundred and twenty-one (221) monthly payments in the initial amount of $1,111.21, commencing on or about April 15, 2015, and the 15th of each month thereafter, through and including August 15, 2033, increasing at a rate of 3% per annum each September 15, in exchange for the gross amount of $120,000.00. According to the disclosure statement [FN1] , the aggregate amount of payments to be transferred to petitioner is $327,143.81. The discounted present value of the payments to be transferred to petitioner is $258,774.68. The discount rate applied to this transaction is 2.20% and the annual discount rate, compounded monthly, used to determine the gross advance amount is 10.605%. The gross advance amount payable to respondent is $120,000.00.

Petitioner submits an affidavit [FN2] from Scott in support of the instant application. In her affidavit, Scott asserts that she is twenty-five years of age and has two dependents. She avers that petitioner has advised her to seek professional advice regarding the transfer. She maintains that she has received independent professional advice.[FN3] She further states that she intends to use the proceeds from petitioner to purchase a house in Albany, obtain various cosmetic surgeries [FN4] , purchase a used car, and car insurance. She currently resides with her husband and their two children in a one bedroom apartment in a large complex on the fourth floor, but she feels that it would be best for her family to relocate to Albany and purchase a home to secure their future.

Pursuant to General Obligations Law ("GOL") §5-1706, the court must make the following findings before a transfer can be effectuated:

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 dependents 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 government authority and e) is written in plain language and in compliance with section 5-702 of this article"

The two most important components of the Structured Settlement Protection Act ("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 [*3]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. [Yates], 12 Misc 3d 1208(A) [Sup Ct, Kings County 2006]. While GOL §5-1706 does not define "best interest," legislative intent and case law suggest that the court consider the following factors when making its determination: 1) the payee's age; 2) the purpose for the transfer; 3) the potential need for future medical treatment; 4) the payee's maturity level; and 5) the timing of the application. See, Matter of Stratcap Investments, Inc., v. Feola, 24 Misc 3d 1209(A) [Sup Ct, Bronx County 2009]; Matter of Settlement Capital Corp. [Yates], 12 Misc 3d 1208(A); Matter of Settlement Funding of NY, LLC [Ocasio], 11 Misc 3d 1061(A) [Sup Ct, Bronx County 2006]; In re Settlement Capital Corp., 1 Misc 3d 446 [Sup Ct, Queens County 2003].

This court finds that petitioner has failed to establish that the transaction is in respondent Scott's best interest and that the terms of the transaction are fair and reasonable. Respondent Scott's conclusory affidavit in which she states that the transfer is in her best interest is wholly insufficient for this court to make its own independent determination. Respondent Scott does not include an affidavit from a qualified physician stating that the requested procedures are medically necessary. Though she desires to purchase a house for her family, Scott fails to supply any information as to her current employment status or finances aside from listing that she receives Social Security Income in the amount of $688.00 per month.[FN5] Moreover, petitioner has failed to provide a persuasive explanation establishing that a discount rate of 10.605% where the seller would receive 46.37% of the discounted present value is fair and reasonable within the meaning of the SSPA. See Matter of 321 Henderson Receivables Origination, LLC, 20 Misc., 3d 1143A [Sup Ct, Bronx County 2008].

Accordingly, the application by petitioner seeking approval of the transfer of certain structured settlement rights is denied.

A copy of this decision and order shall be attached to any future applications by respondent Scott to transfer her structured settlement funds.

Movant is directed to serve a copy of this order with notice of entry upon all parties who shall be served by regular and certified mail, and file proof thereof with the clerk's office.

This constitutes the decision and order of this court.

Dated:July 18, 2014ENTER:

________________________

J.S.C. Footnotes

Footnote 1: Petitioner's Exhibit C.

Footnote 2: Petitioner's Exhibit D.

Footnote 3: See Petitioner's Exhibit E.

Footnote 4: Among the procedures requested are Abdominoplasty, more commonly referred to as a "tummy tuck," Mastopexy, or breast lift, and Liposuction, a procedure that removes unwanted fat deposits from the body.

Footnote 5: This court notes that, per Scott's calculations included in Exhibit D, she will have used up the entire $120,000.00 paid to her by petitioner. She does not address how she will continue to pay taxes and other expenses on the house, maintain car insurance, and provide necessities for her two dependent children.