Opinion
No. 12029/2012.
2012-12-21
In the Matter of Petition of WASHINGTON SQUARE FINANCIAL LLC d/b/a Imperial Structured Settlements for the Approval of Transfer of Structured Settlement Payment rights in Accordance with GOL 5–1701 et seq., Petitioner(s) v. Dinangely MEJIA, Allstate Assignment Company and Allstate Life Insurance Company of New York, Respondents.
Adam Zoldessy, P.C., by Adam Zoldessy, Esq., New York, for Petitioner.
CHARLES J. MARKEY, J.
The following papers numbered 1 to 3 read on this petition by petitioner for approval of the transfer of certain structured settlement payment rights to it from Dinangely Mejia (Mejia).
+-----------------------------------------------------------------------------+ ¦Papers ¦Numbered ¦ +------------------------------------------------------------------+----------¦ ¦Order to Show Cause and Supporting Papers ¦1 ¦ +------------------------------------------------------------------+----------¦ ¦Affidavits of Service ¦2 ¦ +------------------------------------------------------------------+----------¦ ¦Letter of Adam Zoldessy, Esq., with original affidavit of ¦3 ¦ ¦Dinangely Mejia ¦ ¦ +-----------------------------------------------------------------------------+
The 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 Mejia.
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 of 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, the 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.
Pursuant to the terms of the structured settlement agreement, Mejia became the recipient of certain structured settlement payment rights which provided for a series of deferred cash payments as follows: 120 monthly payments of $304.81 commencing on or about September 8, 2012, increasing 3% annually every December, and ending on August 8, 2022. In return for selling her right to receive these payments, Mejia will receive immediate compensation in the gross amount of $19,823.00. In this proposed transfer, the aggregate amount of the structured settlement payments to be transferred is $42,875.12. The discounted present value of the payments to be transferred is $39,324.03 (using the applicable federal rate of 1.60%). The net advance amount is $19,283.00, which, according to the New York Disclosure Statement submitted in support of the petition, represents an annual discount rate of 16.66% assuming monthly compounding.
This Court finds that petitioner has failed to meet its burden of establishing that the transaction is in Mejia's best interests ( see, Matter of J.G. Wentworth Originations, LLC v. Ferrer, 2012 WL 1854926, 2012 N.Y. Slip Op 31294(U) [Sup Ct Queens County 2012] [Lane, J.]; Settlement Funding of NY, LLC v. Hartford–Comprehensive Empl. Ben. Serv. Co., 25 Misc.3d 1220(A), 2009 WL 3630802, 2009 N.Y. Slip Op. 52201(U) [Sup Ct Queens County 2009] [decision by the undersigned]; Matter of 321 Henderson Receivables Origination LLC [Logan], 19 Misc.3d 504, 856 N.Y.S.2d 817 [Sup Ct Queens County 2008] [decision by the undersigned] ).
In her affidavit, Mejia, who is 20 years old, single, and has no dependents, stated that, from the lump sum payment she would receive, she intends to use the funds to purchase a home. However, Mejia has not identified the property she intends to purchase, and it is unknown how much Mejia's mortgage payments would be and how she would make those payments.
Although the Court lauds her desire to purchase a home, it is not clear that such a purchase is in the best interests of Mejia. Mejia has not supplied any information about her employment status, education, or skills. Besides the enumerated structured settlement payments, it appears that Mejia does not have any other source of income or assets to financially handle the enormous responsibility of being a homeowner. Under these circumstances, the Court is concerned that Mejia elected not to consult with an independent professional advisor regarding the proposed transfer. Therefore, this Court is not persuaded that Mejia fully appreciates the financial consequences of the transaction.
Furthermore, the petitioner has not demonstrated that the 16.66% discount rate applied against the funds sought to be transferred is fair and reasonable within the meaning of the SSPA ( see, Hanks v. Transamerica Annuity Serv. Corp., 2011 WL 4528672, 2011 N.Y. Slip Op 32512(U) [Sup Ct Nassau County 2011] [19.99% discount rate not accepted as fair and reasonable]; Settlement Funding of NY, LLC, 25 Misc.3d 1220(A), 2009 WL 3630802, 2009 N.Y. 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, 769 N.Y.S.2d 817 [Sup Ct Queens County 2003] [Satterfield, J.] [15.591% discount rate not accepted as fair and reasonable]; In re Petition of Settlement Funding of New York, L.L.C. [Cunningham], 195 Misc.2d 721, 761 N.Y.S.2d 816 [Sup Ct Rensselaer County 2003] [15.46% discount rate not accepted as fair and reasonable] ).
Accordingly, the petition for approval of the transfer of certain structured settlement rights is denied in its entirety. The petition is thus dismissed.
The Clerk shall enter the Judgment dismissing the petition.
The foregoing constitutes the decision, opinion, order, and Judgment of the Court.