Matter of Fortress Funding NY LLC v Knox
Annotate this CaseDecided on January 22, 2013
Supreme Court, Bronx County
In the Matter of the Petition of Fortress Funding NY, LLC, Petitioner,
against
Dorothy Knox, New York Life Insurance and Annuity Corporation and New York Life Insurance Company, Respondents.
20674/12E
Petitioner's counsel:
Matthew B. Kogan, Esq., Law Offices of Matthew B. Kogan, P.C.
Counsel to Administrator Norman Dunston:
Anthony J. Lamberti, Esq., Anthony J. Lamberti Attorney at Law
Alexander W. Hunter Jr., J.
The motion by order to show cause for an order approving the transfer of certain structured settlement payment rights of Dorothy Knox to petitioner is denied.
Respondent Dorothy Knox is the beneficiary of a settlement arising from a personal injury action. Settlement proceeds were used to purchase an annuity with respondent New York Life Insurance Company ("New York Life").
Respondent seeks to transfer to petitioner her right to receive three monthly payments in the amount of $2,000.00 commencing April 15, 2004 through and including June 15, 2014 and one hundred eleven monthly payments in the amount of $2,000.00 with a 3% increase every twelve months commencing July 15, 2014 through and including September 15, 2023.
According to the disclosure statement, the aggregate amount of payments to be transferred to petitioner is $257,647.17. The discounted present value of the payments to be transferred to petitioner is $233,997.47. The discount rate applied to this transaction is 1.40% and the annual discount rate, compounded monthly, used to determine the gross advance amount is 14.99%. The gross advance amount payable to respondent is $104,586.73. [*2]
Pursuant to GOL §5-1706, the court must make the following findings before a transfer can be effectuated. These are that: "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 dependants; and whether the transaction, including the discount rate uses 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 for 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 statue 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 are whether or not the transaction, including the discount rate and he amount of fees and expenses, is fair and reasonable and whether the transaction is in the best interest of the 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 suggests 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].
Respondent submits an affidavit wherein she asserts that she previously transferred certain structured settlement payment rights. Most recently, In the Matter of the Petition of Settlement Funding of New York, LLC, index number: 260695/11, respondent transferred 115 monthly payments each in the amount of $1,571.00 commencing on January 15, 2012 through and including July 15, 2021 and 25 monthly payments each in the amount of $4,007.00 commencing on August 15, 2012 through and including September 15, 2023. In exchange, she received $107,400.00 to purchase a house in Georgia. She currently owes $698,392.82 on her mortgage. She intends to use all of the funds from the transfer along with the remaining funds from her previous transfer, approximately $103,000.00 to pay down her mortgage. Without approval of this transfer, respondent avers that she will face foreclosure of her home and possibly personal bankruptcy.
In opposition, counsel for Norman Dunston, Administrator of the Estate of Norman Knox argues that this petition should be denied because it would violate a previous order issued by Surrogate Lee Holzman which restrained and enjoined respondent from using more than her [*3]intestate share of her late husband's estate. By order dated April 28, 2010, Surrogate Holzman directed Ms. Knox to turn over all of the funds in her possession and control which were derived from the medical malpractice action as well as the annuity derived from that action to Norman Dunston, Administrator of the Estate of Norman Knox, Deceased. Ms. Knox has failed to comply with this order.
Thereafter, Mr. Dunston moved by order to show cause to compel New York Life to turn over to the estate all annuity payments payable to the decedent's spouse, Dorothy Knox. In his decision, dated December 21, 2012, Surrogate Holzman denied New York Life's motion to dismiss based on lack of subject matter jurisdiction and failure to join a necessary party.
The fact that neither petitioner nor respondent Dorothy Knox disclosed to this court that the annuity is and has been the subject of a proceeding in Surrogate's Court, Bronx County since 2005 is highly unsettling. Neither party has proffered any sort of explanation as to why each neglected to inform this court about the proceeding in Surrogate's Court. In light of the pending action in Surrogate's Court, Bronx County and Surrogate Holzman's previous orders, petitioner's application is denied.
Accordingly, the application by petitioner seeking approval of the transfer of certain structured settlement payment rights is denied.
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:January 22, 2013
ENTER:
________________________
J.S.C.
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