Opinion
2006-22193.
Decided September 15, 2006.
Brian W. Keatts Esq., McElroy Deutsch Mulvaney Carpenter LLP, Attorneys For Petitioner, New York NY.
Heather McGuire, Transferor Pro Se, Bay Shore NY, Symetra Assigned Benefits Service Company Petitioner, Seattle WA.
The Petitioner commenced this special proceeding pursuant to CPLR Article 4 by Order To Show Cause dated August 14, 2006 and made returnable September 12, 2006. The Petition thereunto appended seeks approval of an agreement to transfer certain structured settlement rights to the Petitioner from the Transferor. More specifically, the Transferor proposes to transfer unto the Petitioner payments that she is due to receive in the aggregate amount of $21,395.00 for which the Petitioner proposes to pay her the sum of $16,045.15 (75% of the value thereof). The Petitioner proposes to pay the same as a net sum without any deduction for counsel fees, processing charges nor any other costs. The same is memorialized in a written agreement dated July 18, 2006, which is appended to the moving papers as Exhibit "D."
The Court has carefully examined and digested all of the Petitioner's submissions in this matter. In addition, the Court has reviewed and analyzed the Structured Settlement Protection Act ["SSPA"] which is codified in Title 17 of the New York General Obligations Law, §§ 5-1701 et. seq. (L. 2002, C. 537) which is the controlling statutory scheme applicable to transactions such as the one at bar herein. For all of the reasons set forth in this decision, the application is granted in its entirety.
The Transferor is the beneficiary (and hence, the payee) under a certain structured settlement agreement dated as of July 6, 1998, a copy of which was annexed as Exhibit A to the petition. The agreement resulted from a civil action in the Suffolk Superior Court in the Commonwealth of Massachusetts under docket no. 96-0207. The original annuity contract was issued by Trust Insurance Company and is presently held by the Petitioner, the current obligor thereon. The structured settlement agreement provides for the following periodic payments to the Transferor, viz.: $400.00 per month commencing on September 9, 1998, increased to $600.00 per month commencing on September 9, 2002, again increased to $989.00 per month commencing on September 9, 2006 and continuing until August 9, 2016. A Purchase Sale Agreement is attached to the Petition as Exhibit "D" which reflects the Transferor's consent to assign to the Petitioner 55 monthly payments of $389.00 commencing September 9, 2006 and continuing through March 9, 2011. The aggregate of the transferred payments is $21,395.00 and the Petitioner proposes to pay a net sum of $16,045.15 as consideration therefor. The Transferor would retain 55 monthly payments of $600.00 during that period. In addition, under the Agreement, the Respondent will not be liable to the Petitioner for any fees, costs or disbursements in connection with the proposed transaction . Appended to the Petition as Exhibit "E" is a Disclosure Statement which appears to comport with the statutory scheme.
In making a determination herein, the Court is required to examine the submissions to opine as to whether the statutory mandates of the SSPA have been met. A careful review reveals that both procedurally and facially, the application herein comports with GOL § 5-1706(a), (c), (d) and (e). Once the Court has determined that such procedural compliance is evident, it is required to find that
". . . 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." GOL § 5-1706(b).
Therefore, in order to satisfy both the spirit and the intent of the statute (that is, to ensure that the recipient of such a settlement does not become victimized by the proposed transferee and thereby fritter away his or her entitlement) the Court is required to venture into two additional areas before approving a proposed transfer of rights under a structured settlement. First, it must consider and determine whether the transaction is in the best interests of the beneficiary. Second, it must consider and determine whether the transaction, when viewed as a whole, is both fair and reasonable in all respects, Matter of Settlement Funding of New York LLC [Cunningham] 195 Misc 2d 721 (Sup.Ct. Rensselaer County, 2003).
The statute, regrettably, is wholly silent as to what constitutes the best interests of the beneficiary. However, a review of both the SSPA and case law seems to suggest that such a "best interests" inquiry should include, at a minimum, consideration of the following factors, viz.: (a) physical age, level of maturity, physical and mental capacity of the beneficiary; (b) the beneficiary's ability to earn a living and to support his or her dependents; (c) the beneficiary's intended usage of the proceeds; (d) the beneficiary's present financial situation and whether he or she is laboring under such a hardship as to be in dire and immediate need of the proceeds; (e) whether the beneficiary has obtained independent counsel regarding the financial consequences of the proposed transfer; (f) the level of financial sophistication, or lack thereof, of the beneficiary; and (g) the timing of the application vis-a-vis any other scheduled payments.
The Court will endeavor to consider each of the enumerated "best interests" factors individually. First, the Heather McGuire is 26 years of age and is both gainfully employed as a typist for a land title company and self-supporting. Her husband, aged 27, is gainfully employed as a steamfitter and is likewise self-supporting (his Affidavit is annexed as Exhibit F). The Court is unable to determine her level of maturity or physical or mental capacity but, based upon the foregoing as well as an assessment of the totality of submissions in this matter, presumes that she is of at least average or above average intelligence and capacity. Second, the stated intended use of the proceeds is to liquidate all unsecured debt in order to obtain greater use of current income, improve credit rating scores and lower the debt to income ration so as to enable her to purchase a residence. She does not intend to utilize any of said funds to meet daily and recurring living expenses. Third, although the Court is unable to assess her level of financial sophistication, the Affidavit of the Transferor (annexed as Exhibit G) leads the Court to the conclusion that she has some degree of pecuniary understanding and financial sophistication. The Affidavit also indicates that she has given a great deal of thought to this proposed transaction. Fourth, the Transferor, as evidenced by her Affidavit (annexed as Exhibit F), avers that she has sought and obtained professional advice relative hereto from Arnold Simon, Esq. Fifth, an examination of the submissions before the Court does not reveal any other transfers under the contract at issue. Under these circumstances, this Court feels that the Transferor has clearly considered this transaction and that the granting of this application would not impose any future economic hardship upon the Transferor.
Viewing the matter in toto, this Court finds the confluence of all of the enumerated factors to be persuasive and therefore to be favoring the granting of this application.
Turning to the issue of whether or not the transaction is fair and reasonable, the Court again finds the Petition to be greatly persuasive, especially when it is considered in light of other such applications that have been brought before the Courts of this state. Here, the Transferor is proposing to transfer payments aggregating $21,395.00 in exchange for an immediate lump sum of $16,045.15. The proposed transfer would net the Transferor an amount equal to 75% of the payments that she proposes to transfer. In addition, the Transferor would still retain two thirds of each such payment, intending only to transfer approximately one third of each installment to which she is entitled. Moreover, unlike other applications that have been presented to this Court, the Petitioner does not propose to exact any fees (legal fees, application fees, processing fees, etc.) from the Transferor as part and parcel of the transaction. This appears on its face to be fair and reasonable and, to this Court, indicates that the Transferor is both highly thoughtful and fiscally responsible.
The proposed transfer herein is in stark contrast to a number of other similar applications presented for judicial approval. In Matter of Settlement Funding of New York LLC [Cunningham] 195 Misc 2d 721 (Sup.Ct. Rensselaer County, 2003), the Court declined to approve the proposed transfer of a payment of $151,701.75 for the sum of $75,000.00, finding, inter alia, that the combination of high interest and high costs of transfer were not fair and reasonable. In Matter of 321 Henderson Receivables LP [D'Amore] 2005 NY Slip Op 51479 U, 9 Misc 3d 1110A, 806 NYS2d 449 (Sup.Ct. Kings County, 2005), the Court declined to approve a transfer of a payment of $137,350.00, with a discounted present value of $59,297.87 in exchange for $10,000.00, finding the same as not fair and reasonable. Once again, in Matter of Settlement Capital Corporation [Ballos] 1 Misc 3d 446 (Sup.Ct. Queens County 2003) the Court declined to approve a transfer of the right to receive a payment of $125,000.00 in exchange for the gross sum of $39,000.00. In the matter of Settlement Funding of New York LLC v. Christopher Brown, 2006 NY Slip Op 50286 U, 11 Misc 3d 1059A, 815 NYS2d 496 the Court disallowed the proposed transfer, finding that the transaction was both unfair and unreasonable. Indeed, in Matter of Settlement Funding of New York LLC v. Kiezel 2006 NY Slip Op 50900(U), 12 Misc 3d 1155 A, 819 NYS2d 213 (Sup. Ct, Suffolk County, 2006), the undersigned disallowed the transaction as not fair and reasonable where the proposal was to pay the transferor $6,849.21 in exchange for payments valued at $100,910.00 and where the transferor was required to bear the legal costs as well.
This Court is compelled to conclude, after an exhaustive review of all of the submissions, that this application has been filed in good faith. It is obvious that the Transferor has given great thought to this matter and that the transaction is prima facie fair and reasonable. The Court also wishes to note that the submissions by Brian W. Keatts Esq., counsel for the Petitioner are concise, coherent and devoid of surplusage.
It is, therefore ORDERED that the within application is granted in its entirety. Petitioner's counsel is directed to submit, on ten days' notice to the Transferor, an appropriate Order in conformity with this decision.