CYNTHIA S. KERN
DECISION/ORDER
HON. CYNTHIA S. KERN, J.S.C.
Recitation, as required by CPLR 2219(a), of the papers considered in the review of this motion for:
+--------------------------------------------------------------+ ¦Papers ¦Numbered ¦ +---------------------------------------------------+----------¦ ¦Notice of Petition, Petition and Affidavits Annexed¦1 ¦ +---------------------------------------------------+----------¦ ¦Notice of Cross-Motion and Affidavits Annexed ¦ ¦ +---------------------------------------------------+----------¦ ¦Answering Affidavits ¦ ¦ +---------------------------------------------------+----------¦ ¦Replying Affidavits ¦ ¦ +---------------------------------------------------+----------¦ ¦Exhibits ¦2 ¦ +---------------------------------------------------+----------¦ ¦Other ¦3 ¦ +--------------------------------------------------------------+
Petitioner Imperial Structured Settlements ("Imperial") commenced this special proceeding seeking approval of the transfer of certain structured settlement payment rights from Dinangely Mejia, the payee, to Imperial under an Absolute Sale and Security Agreement. For the reasons set forth below, petitioner's application is denied.
The relevant facts are as follows. The payee is twenty years old, unmarried and has no dependents. Payee has not provided any information regarding her education, skills, employment history or job search. Under the settlement agreement of the underlying lawsuit, the payee is entitled to $900.00 per month for her lifetime, guaranteed for 30 years commencing December 2002, compounding annually at 3% commencing on December 8, 2009. Payee was also guaranteed a payment of $40,000 on December 8, 2009 and is guaranteed $70,000 on December 8, 2021.
Under the contract at issue here, the payee would be transferring a portion of her settlement payments - 120 monthly payments of $283.00 commencing on or about May 8, 2012, increasing 3.00% annually every December, and ending on or about April 8, 2022. The current value of the payments is $36,571.21 as calculated using the federal government's discount rate. The payee would be accepting a payment of $18,018.37, which is only 49.4 % of the current value of the amount due to her. The stated purpose of the transfer is to use the funds as a down payment on the purchase of a duplex building.
The "Structured Settlement Protection Act," General Obligations Law § 5-1701, et seq. (the "SSPA"), was enacted as a result of a concern that structured settlement payees are especially prone to being victimized and taken advantage of by businesses seeking to acquire their structured settlement rights. In re Petition of Settlement Funding of New York, L.L.C. (Cunningham), 195 Misc.2d 721 (Sup. Ct. N.Y. Co. 2003). The SSPA discourages such transfers by requiring the would-be transferee to commence a special proceeding to obtain judicial approval of such transfers. The SSPA requires that certain procedural and substantive safeguards be followed before structured settlement payments may be transferred. The procedure is set forth in General Obligations Law § 5-1705. The statute requires that a copy of a disclosure statement as required under General Obligations Law § 5-1703 be attached to the application and that proof (Walker), 20 Misc.3d 1114 (A) (Sup. Ct. Kings Co. 2008). In almost all of the published cases throughout the state in which the statute had been applied, the court has denied the petition.
The court finds that petitioner's submission meets all of the procedural mandates of the SSPA. However, the court is unable to conclude that the proposed transaction is in the payee's best interest under the circumstances. First, the court has very little information regarding Ms. Mejia's current situation or expenses. As stated above, the court does not know whether Ms. Mejia is employed or even able to work. Very little is known about Ms. Mejia's current life situation apart from her age and the fact that she does not have dependents. Moreover, Ms. Mejia does not identify the property she intends to buy with the money nor does she identify the general location where she intends to buy. It is also unclear how much Ms. Mejia's mortgage payments would be and how she would make the payments. Although she states that she would make her mortgage payments with the proceeds made from renting out a portion of the property, this is speculative as she has yet to identify the property she intends to buy and has not provided any information about the rental market the area where she intends to buy the property. In addition, she also waived any professional advice regarding this transaction. The court is also unable to conclude that the terms of the proposed transaction are fair and reasonable. The value of the payment to payee is only 49.4 % of its present value. The court cannot find this fair and reasonable under the circumstances.
Accordingly, petitioner's application for judicial approval of the transfer of interest in Ms. Mejia's structured settlement is denied.
This constitutes the decision and order of the court.
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J.S.C.