Opinion
14452 2010.
December 7, 2010.
For petitioner: Segal McCambridge Singer Mahoney, Ltd., by Theodore M. Eder, Esq., New York, NY.
Petitioner commenced this special proceeding pursuant to General Obligations Law, Title 17, known as the Structured Settlement Protection Act (SSPA), for approval of the transfer of certain structured settlement payment rights to it from Christlyne B. Point Du Jour (Ms. Point Du Jour).
The SSPA requires that certain procedural and substantive safeguards be followed before a structured settlement payment may be transferred (General Obligations Law § 5-1705). Specifically, the procedure mandates that a copy of a disclosure statement, as required under General Obligations Law section 5-1703, be attached to the petition and that proof of service upon the payee be provided ( id.). Additionally, pursuant to General Obligations Law section 5-1706:
No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction based upon express findings by such court 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 depend[e]nts; 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 other government authority; and
(e) is written in plain language and in compliance with section 5-702 of this article.
In the case at bar, a careful review of the submissions accompanying the petition demonstrates that the application complies with the procedural mandates of General Obligations Law sections 5-1703 and 5-1706(a), (c), (d), and (e). Having satisfied the procedural requirements of the SSPA, this Court must determine, pursuant to General Obligations Law section 5-1706(b), whether the proposed transfer is in the best interests of the payee and whether the transaction is fair and reasonable.
The funds that are the subject of this petition represent a portion of structured settlement payments due to Ms. Point Du Jour in accordance with the settlement of a personal injury action. Pursuant to the terms of the structured settlement agreement, Ms. Point Du Jour became the recipient of certain structured settlement payment rights which provided for a series of deferred cash payments as follows: 360 monthly payments of $706.00, beginning on September 2, 2006, and increasing at a rate of 3% every 12 payments, through and including August 2, 2036, then continuing for life thereafter guaranteed through April 12, 2041.
Ms. Point Du Jour seeks to transfer the following payments: eight monthly payments in the amount of $382.61 each, commencing on January 2, 2011 through and including August 2, 2011, and 171 monthly payments in the amount of $394.09 each, commencing on September 2, 2011, and increasing 3% every 12 payments through and including November 2, 2025. In return for selling her right to receive these payments, Ms. Point Du Jour will receive immediate compensation in the gross amount of $30,396.72. In this proposed transfer, the aggregate amount of the structured settlement payments to be transferred is $85,651.76.
The discounted present value of the payments to be transferred is $64,656.60 (using the applicable federal rate of 3.4 %). The gross advance amount is $30,396.72, which, according to the "New York Transfer Disclosure" submitted in support of the petition, represents an annual discount rate of 14.99% assuming monthly compounding. The net advance amount, less $2,000.00 in legal fees and $200.00 in processing fees, is $28,196.72.
This Court, upon the foregoing papers, finds that petitioner has failed to meet its burden of establishing that the transaction is in Ms. Point Du Jour's best interests (see the decisions of the undersigned in both Settlement Funding of NY, LLC v Hartford-Comprehensive Empl. Ben. Serv. Co., 2009 WL 3630802, 2009 NY Slip Op 52201[U] [Sup Ct Queens County 2009]; Matter of 321 Henderson Receivables Origination LLC [Logan ], 19 Misc 3d 504 [Sup Ct Queens County 2008]).
In her affidavit, Ms. Point Du Jour, who is 21 years old and has no dependents, stated that, from the lump sum payment she would receive, it is her intention to use $28,100 for the outright purchase of a house in Lawrenceville, Georgia, but she did not set forth any other details regarding the transaction. Although Ms. Point Du Jour indicated that she is currently employed by South Nassau County Hospital, she did not explain why her monthly income of $2,083.00 and future annuity payments would be inadequate to help meet her stated goal. Ms. Point Du Jour also did not state if she took any steps to apply for a mortgage which would have terms more beneficial to her. In addition, the letter dated July 20, 2010 from Andrea M. Arrigo, an independent professional advisor with whom Ms. Point Du Jour consulted regarding the proposed transfer, does not indicate whether Ms. Arrigo approved the transaction.
Furthermore, petitioner has not demonstrated that the 14.99% discount rate applied against the funds sought to be transferred is fair and reasonable within the meaning of the SSPA ( see, Settlement Funding of NY, LLC v Hartford-Comprehensive Empl. Ben. Serv. Co., 2009 WL 3630802, 2009 NY Slip Op 52201[U], slip op. at 3, supra [14.99% discount rate not accepted as fair and reasonable]; Matter of Settlement Capital Corp. [Ballos ], 1 Misc 3d 446 [Sup Ct Queens County 2003] [15.591% discount rate not accepted as fair and reasonable]; In re Settlement Funding of NY, LLC, 195 Misc 2d 721 [Sup Ct Rensselaer County 2003] [15.46% discount rate not accepted as fair and reasonable]).
The Court also finds no evidence in the record to support the reasonableness of the proposed legal fees in the amount of $2,000.00 and the processing fee of $200 ( see, Matter of Settlement Funding of New York, LLC [Ciraolo] v. Structured Settlement Trust, 2009 WL 3713136, 2009 NY Slip Op 32553[U] [Sup Ct Nassau County 2009]).
Accordingly, the petition for approval of the transfer of certain structured settlement rights is denied in its entirety.