Matter of J.G. Wentworth Originations LLC (McMichael)
Annotate this CaseDecided on August 2, 2017
Surrogate's Court, Queens County
In the Matter of the Petition of J.G. Wentworth Originations, LLC and Nigel Criss, sole distributee of the Estate of Shanetha Dejetta McMichael, Deceased, pursuant to Article 5 Title 17 of the New York General Obligations Law.
2000-59/A
For petitioner J.G. Wentworth: Law Office of Michael F. Nestor, LLC
Nigel Criss was self-represented.
Peter J. Kelly, J.
In this proceeding petitioners, J.G. Wentworth Originations, LLC ("J.G. Wentworth") and Nigel Criss ("Nigel"), seek approval of the transfer of certain structured settlement payments from Nigel to J.G. Wentworth.
The structured settlement payments to which Nigel is entitled amount to $429,780.32. The discounted present value of the payments is $351,203.10. Under the proposed purchase agreement, Nigel intends to sell the payments for the net amount of $245,000.00.
As a preliminary matter, the New York Structured Settlement Protection Act ("SSPA") originated in response to concerns that certain structured settlement payees are vulnerable to both financial exploitation and the rapid dissipation of their awards (see General Obligations Law § 5-1701 et seq; In re Settlement Funding of NY L.L.C.,195 Misc 2d 721, 722 [Sup Ct, Rensselaer County 2003]). Accordingly, institutions seeking to acquire a payee's structured settlement rights are required to commence a special proceeding seeking judicial approval, irrespective of the payee's willingness to go forward with the transaction (see id; General Obligations Law § 5-1705]).
To pass muster, the proposed transfer must be in the best interest of the payee, the transaction must be fair and reasonable, and the payee must be advised in writing to seek independent professional advice regarding the transfer and has either received such advice or waived such advice in writing (see Matter of J.G. Wentworth Originations, LLC v Maurello, 2012 NY Slip Op 30373[U], 2012 NY Misc LEXIS 678 [Sup Ct, Nassau County 2012]).
Determination as to whether the transfer is in the best interests of the payee warrants a fact-sensitive and oftentimes paternalistic analysis, taking into consideration the payee's age, [*2]maturity level, income sources independent of the structured payments, whether the payee has any dependents, the stated purpose of the transfer, the extent to which the payee appears to understand the financial consequences of the transaction, and whether the payee has received independent advice (see Matter of Benes v American Gen. Annuity Serv. Corp., 2011 NY Misc LEXIS 6174 [Sup Ct, Nassau County 2011]).
According to his affidavit, the payee, Nigel, is 18 years of age, single, with no dependents, and is currently a full time student. He seeks a lump sum payment of $245,000.00 for the purpose of purchasing a home in Allentown, Pennsylvania at a cost of $210,000.00. The remaining monies are to be used for home improvements, the purchase of a vehicle, and covering day-to-day expenses. According to Nigel, he plans on attending a "Barbering Program" to obtain his license. No supporting documents have been submitted by Nigel in support of the petition.
It seems that at the still-tender age of 18, Nigel intends to spend the entirety of the lump sum payment immediately, in lieu of receiving payments over time that are designed to provide for his long-term financial security. Significantly, the court observes that Nigel, upon recently reaching the age of majority, has already accessed the monies in his guardianship account which amount to approximately $186,000.00. Nigel's unfettered use of those funds is not described in the petition or his affidavit. If the funds have not been spent, they can certainly assist Nigel with the purposes set forth in his affidavit. If, on the other hand, they have already been spent, the court must presume that Nigel has little to show for it. Either way, both scenarios militate against granting the requested relief (see Matter of 321 Henderson Receivables Origination LLC v Lugo, 23 Misc 3d 1138[A] [Sup Ct, Kings County 2009]).
In the court's view, Nigel, who has waived receiving any independent advice regarding the transaction, does not fully appreciate the long-term financial consequences of selling his payments. The court cannot sanction an impulsive transfer for which there is no real urgency, particularly when it is diametrically opposed to the very purpose of the SSPA (see e.g. In re Settlement Funding of NY L.L.C., 195 Misc 2d 721 [Sup Ct, Rensselaer County 2003]).
As the court has determined that the transfer is not in Nigel's best interests, the court need not consider whether the terms of the transaction itself are fair and reasonable. The petition is denied.
This is the decision and decree of the court.
Dated: August 2, 2017
Hon. Peter J. Kelly
SURROGATE
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