Petition for Approval for Transfer of Structured Settlement Payment Rights in New York

What Is a Petition for Approval for Transfer of Structured Settlement Payment Rights?

Background

Title 17 of the General Obligations Law (GOL), also known as Structured Settlement Protection Act (SSPA), requires judicial approval before an injured plaintiff can sell future structured settlements to a third party. (Matter of 321 Henderson Receivables, L.P. v. Martinez, 11 Misc. 3d 892 [Sup. Ct. N.Y. Co. 2006].) This act was intended “to protect the recipients of long-term structured settlements from being victimized by companies aggressively seeking the acquisition of their rights.” (Matter of Settlement Capital Corporation v. Ballos, 1 Misc. 3d 446 [Sup. Ct. Queens Co. 2003].)

How to Structure the Motion

Pursuant Section 5-1706 of GOL, the following standards must be met before judicial approval of the sale and transfer of structured settlement payment rights:

  1. the transfer is in compliance with this title;
  2. the transfer is in the best interest of the payee;
  3. the payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer;
  4. the transfer does not contravene any applicable statute; and
  5. it is written in plain language and in compliance section Section 5-702 of the GOL.

(Gov. Oblig. Law, § 5-1706; 321 Henderson v. Martinez, 11 Misc. 3d 982 [Sup. Ct. N.Y. Cty. 2006].)

Compliance with the requirements set forth in the New York SSPA shall be solely the responsibility of the transferee in any transfer of structured settlement payment rights. (Gen. Oblig. Law, § 5-1708(f).) “‘Transferee’ means a party acquiring or proposed to acquire structured settlement payment rights through a transfer.” (Id.)

The Court’s Decision

In enacting the SSPA, the New York State Legislature did not intend for the courts to be mere rubber stamps for the proposed sale. (321 Henderson v. Martinez, 11 Misc. 3d 982 [Sup. Ct. N.Y. Cty. 2006].) On the contrary, the court must examine the various statutory criteria and exercise its discretion to determine whether the proposed sale will truly serve the best interest of the payee. (Id.)

Section 5-1706(b) provides the framework for the court’s determination of whether or not the proposed transfer is in the payee’s best interest. (Matter of J.G. Wentworth Originations, LLC v. Hartford Life Ins. Co., 2012 N.Y. Slip Op 315110(U) [2012].) “What constitutes the payee’s best interest may only be determined by a thorough examination of the payee’s age, level of maturity, physical and mental capacity, and ability to earn a living and provide for his dependents, the payee’s intended use of the proceeds and need for medical or other professional treatment, whether the payee is suffering from a hardship, whether he obtained independent legal and financial advice and whether he demonstrates an appreciation of the consequences of the transfer.” (In the Matter of the Petition of 321 Henderson Receivables, LLC [Walker], 20 Misc. 3d 1114(A) [Sup. Ct. Kings Co. 2008].)

While considering the best interest of the payee, the court must also exercise its discretion to determine whether the entire transaction, including but not limited to the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, is fair and reasonable. (Gen. Oblig. Law, § 5-1706(b); Matter of Settlement Funding of N.Y. LLC v. Solivan, 8 Misc. 3d 1006[A] [Sup. Ct. Kings. Cty. 2005].)

Timeline

The New York SSPA provides that a disclosure statement must be provided to a payee “not less than ten (10) days prior to the date on which the payee executed the transformer agreement.” (Gen Oblig. Law, § 5-1703.)

Documents

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County

Wayne County, NY

Filed Date

Nov 22, 2022

Case Filed

Sep 27, 2022

Case Status

Pre-RJI

County

Erie County, NY

Filed Date

Sep 27, 2022

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Erie County, NY

Filed Date

Sep 27, 2022

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County

Erie County, NY

Filed Date

Sep 06, 2022

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County

Erie County, NY

Filed Date

Aug 17, 2022

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Wayne County, NY

Filed Date

Jul 05, 2022

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County

Albany County, NY

Filed Date

Jun 09, 2022

County

Steuben County, NY

Filed Date

Jun 06, 2022

County

Kings County, NY

Filed Date

Mar 18, 2022

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