Matter of J.G. Wentworth Originations LLC (Aiken)
Annotate this CaseDecided on July 9, 2019
Supreme Court, Erie County
In the Matter of the Petition of J.G. Wentworth Originations, LLC, Petitioner, and Akeem Aiken, ALLSTATE ASSIGNMENT COMPANY, and ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK, as interested parties pursuant to G. O. L. Sec. 5-1701, et. seq.
2019-807258
APPEARANCES:
YANKWITT LLP
Dina L. Hamerman, Esq., Of Counsel
Attorneys for Petitioner
AKEEM R. AIKEN
Appearing pro se
Timothy J. Walker, J.
Petitioner has applied, pursuant to the Structured Settlement Protection Act (the "Act"), General Obligations Law ("GOL") § 5-1701 et seq., for approval of the transfer of the rights to certain structured settlement payments due under a structured settlement agreement.
The terms of the proposed transfer are unclear in the record. According to the Petition, Akeem R. Aiken seeks to transfer a total of $45,535, consisting of:
• one (1) payment in the amount of $20,000, due and payable on March 20, 2023; and• one (1) payment in the amount of $25,535, out of a total payment of $48,535, due and payable on March 20, 2027 (Petition, ¶2).However, the New York Disclosure Statement (attached as Exhibit E to the Petition) shows that Mr. Aiken seeks to transfer a total of $43,535, consisting of: • one (1) payment in the amount of $20,000, due and payable on March 20, 2023; and• one payment in the amount of $23,535, out of a total payment of $48,535, due and payable on March 20, 2027 (Petition, ¶2).
The information contained in the Disclosure Statement (e.g., discounted present value, etc.) is based on a total transfer of $43,535. Accordingly, the Court shall treat the reference to $25,535 in the Petition as a typographical error.
The remaining (uncontroverted) terms of the proposed transfer, are as follows:
• Mr. Aiken would receive a lump sum payment of $22,064.41, in exchange for selling the future right to receive $43,535 over time; • The interest rate is 12.52%; and• The current value of the proposed payments to be transferred, using a 2.80% federal discount rate, is $36,947,98, meaning that the net amount payable to Mr. Aiken represents approximately 59.71% of the estimated current value of the payments intended to be transferred.As a result of the structured settlement arising out of Mr. Aiken's prior personal injury claims, he became entitled to receive the following periodic cash payments:
• one (1) lump sum payment in the amount of $15,000, due and payable on March 20, 2016;• one (1) lump sum payment in the amount of $15,000, due and payable on March 20, 2019; • one (1) lump sum payment in the amount of $20,000, due and payable on March 20, 2023; and• one (1) lump sum payment in the amount of $48,535, due and payable on March 20, 2027.The Act was enacted out of concern that structured settlement "payees," such as Mr. Aiken, are especially prone to being victimized, resulting in the quick dissipation of their awards (Matter of Settlement Funding of NY, 195 Misc 2d 721 [Sup. Ct. Rensselaer County 2003]). The Act protects payees from being taken advantage of by businesses seeking to acquire their structured settlement payment rights. The Act discourages such transfers by requiring would-be transferees to commence special proceedings for the purpose of seeking judicial approval of the transfer (GOL §§ 5-1705, 5-1706). Transferees bear the attendant filing fees and costs and may not recoup them if the application is denied (GOL§ 5-1704 [c]). Any purported transfer entered into after July 1, 2002 without court approval is unenforceable (GOL § 5-1706) and payees may not waive their rights under the Act (GOL§ 5-1708 [a]). Transferees are barred from incorporating certain provisions in the transfer agreements (GOL§ 5-1704) and required to inform the payee of the terms of the proposed transfer (GOL§ 5-1703).
The Act also requires that the transferee must advise the payee "in writing" "to seek independent professional advice regarding the transfer" and the payee must either seek such advice or sign a written waiver of the opportunity to seek independent advice and that he or she declined to seek it (GOL § 5-1706[c]).
Finally, in evaluating a petition made pursuant to the Act, the Court must make a two-prong inquiry as to whether the "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" (GOL § 5-1706[b]).
In making such evaluation, the Court is mindful that,
[t]he payment structure in all of these cases was determined by either judicial process, subject to articles 50-a and 50-b of the CPLR, or by negotiations in which the payee's interests were represented. As such, it was presumed to be the best compensation for the payee's injuries at the time of the verdict or settlement. To overcome this presumptive [*2]validity, . . . there must be a showing, by clear and convincing evidence, of an unforeseeable change in circumstances that would justify the sale of rights to future payments (Matter of Henderson Receivables Limited Partnership (DeMallie), 2 Misc 2d 463, 468 [Sup Ct Monroe County 2003]).Turning to the Petition in the instant matter, Mr. Aiken is twenty-one (21) years old, single, and has two dependents, consisting of children, ages six months and nine months (Affidavit of Aiken, sworn to on June 7, 2019, ¶10). Mr. Aiken is currently unemployed, but seeking full-time employment, and currently has no annual income (Id.). He intends to use the proceeds received from Petitioner, as follows:
My grandmother recently passed away and her house will be going up for foreclosure. I am currently renting an apartment and living with my girlfriend and baby. I would like to use all proceeds of this transfer to pay off my grandmother's home so that we can keep the house within the family, and no longer have rent payments (Id., at ¶11).It is unclear from the Record whether Mr. Aiken lives with both of his children and whether his girlfriend (with whom he lives) is the mother of one, both, or neither of his children. Nor does the record reflect how Mr. Aiken supports his two (2) children and himself, with respect to all facets of support (e.g., inter alia, food, rent, medical), in light of his being unemployed.
Since March 20, 2019, Mr. Aiken has received lump sum payments in the total amount of $30,000, consisting of payments of $15,000 on each of March 20, 2016 and as recently as March 20, 2019. Having so recently received such funds, the Court is concerned that Mr. Aiken deems it necessary to invade his annuity at this time.
Similarly, the application lacks numerous important details about Mr. Aiken's intended use of the funds, such as, inter alia: what is the address of the grandmother's house and what is its condition?; will Mr. Aiken obtain title to the home?; does Mr. Aiken receive public assistance, such as, inter alia, food stamps and/or welfare, and, if so, would owning a home jeopardize his entitlement to continue to receive such assistance?; as a homeowner without employment, how would Mr. Aiken pay the home's real estate taxes and utilities and otherwise maintain the home?; in light of the pending foreclosure proceedings, what is the amount of arrears owed to the lender and are back taxes owed (and, if so, in what amount); and is Mr. Aiken current on his child support obligations?
The application sets forth nothing more than a wish list, without a concrete plan as to how Mr. Aiken would be capable of financially supporting himself, his minor children and a home, the moment after he received funds from Petitioner.
In light of the foregoing, Mr. Aiken has failed to meet his burden of "showing, by clear and convincing evidence, . . . an unforeseeable change in circumstances that would justify the sale of rights to future payments" (Matter of Henderson Receivables Limited Partnership (DeMallie), 2 Misc 2d 463, 468; see also GOL § 5-1706[b]). Nor has Mr. Aiken shown that the proposed transfer would be in his best interests (Id.)
In addition, the interest rate (12.52%) is overly excessive and unfair to Mr. Aiken, as demonstrated by the insignificant amount he would receive as a lump sum payment ($22,064.41), as compared to the substantially higher amount he would forfeit over time ($43,535). The excessiveness of the interest rate is further illustrated by the fact that the proposed net amount [*3]payable to Mr. Aiken ($22,064.41) represents less than 60% of the estimated current value of the payments to be transferred ($36,947.98).
Moreover, the Court takes judicial notice that the current market interest rate for a thirty (30) year fixed mortgage averages approximately 3.94%. Petitioner's rate of 12.52% is approximately 318% higher, despite that it would assume virtually no risk in the event the Petition were granted.
In light of the foregoing, it is hereby
ORDERED, that the application is denied and the Petition is dismissed.
This constitutes the Decision and Order of this Court. Submission of an order by the parties is not necessary. The delivery of a copy of this Decision and Order by this Court shall not constitute notice of entry.
Dated: July 9, 2019
Buffalo, New York
___________________________
HON. TIMOTHY J. WALKER, J.C.C.
Acting Supreme Court Justice
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