Considering the “totality of the circumstances, and the previously enumerated factors which the Court should take into account in its best interest analysis of the proposed transfer, at least four of the six factors raise red flags against a sale.
1. Purpose of the intended use of the funds – as noted, there is no evidence with regard to a variance for the proposed two-family conversion nor any documentary proof of the likely costs for same. As already set forth, Mr. EV is an ideal candidate for loss mitigation of his mortgage 2. Potential need for future medical treatment – since no evidence has been submitted with regard to the gravity of his injuries sustained in 1996 the court hesitates to allow the use of funds which the payee may very well later need to pay for future medical care. 3. The financial acumen of the payee – Mr. EV, the self-proclaimed professional gambler, has demonstrated a failure of judgement with regard to the priority of his financial responsibilities. 4. The ability to appreciate the financial consequences of this sale – clearly he chose not to obtain any independent legal or financial advise on such an important matter. It is precisely because he fails to appreciate his financial predicament that he now makes the within application.
Although it has been found that hardship, weighs heavily in favor of determining that a transfer of structured settlement rights is in the best interest of the payee. Nonetheless, not all professed claims of desperate financial circumstances result in the approval of transfers. Petitions have been dismissed where there was no unforeseeable need for housing or showing that the payee was incapable of self-support. Nor was the Petition of a disabled payee who lived at home with his mother, seeking to sell his structure to pay off debts, buy a used car and get a job, sufficient proof of desperate circumstances justifying approval of the transaction. Similarly, payees who intended to improve their financial circumstances by: selling their structures to take advantage of low mortgage rates, reduce credit card debts, or even purchase a truck for professional use, were denied their petitions upon their failure to explore or exhaust other options for resolving their financial constraints. These injury courts found that allowing such sales would have promoted future financial hardship, which ultimately was not in the “best interest” of any of the payees.
Additionally the Court in Demallie noted that the payment structure was presumed to be the best compensation for the payee’s injuries at the time of the settlement. To overcome this presumptive validity there must be a showing, by clear and convincing evidence, of an unforeseeable change in circumstances that would justify the sale of rights to future payments.
Indeed, as reflected in the Legislative Memorandum in Support of Laws of 2002 (ch 537) the SSPA was promulgated because:
Structured settlements are well-recognized means of compensating personal injury victims and workers’ compensation claimants. They are negotiated between the injured person s counsel and the other parties to a personal injury action or workers’ compensation claim. The structuring of a settlement enables the settlement recipient to receive secure tax-free income over a course of years or a lifetime to provide for future medical care, housing, education, etc. In this way, the proceeds from an award are not dissipated or lost by individuals unaccustomed to managing large sums.
As such, this Court is not taking a paternalistic approach to this application, but rather, it is strictly guided by the intent of the legislature when it enacted this law.
Even if the court were to find, which is does not, that the instant discount rate were in compliance with the statutory mandate “the fair and reasonable test should not be governed solely by whether the amount offered is within the range of the marketplace, but also weighed against whether the transaction is in the best interest of the payee. Moreover, the payee’s willingness to pay the subject discount rate, is of little significance in the Court’s assessment of the fairness or reasonableness of said rate.
Further is cannot be said that the petitioner has demonstrated any compelling reasons warranting this Court’s approval of this proposed transfer. Such approval would not comport with this Court’s mandate to protect recipients of structured settlement awards from aggressive factoring companies who promise instant cash to the detriment of the long-term security that structures often provide.
Accordingly, the Court finds that the petitioner has failed to meet its burden of establishing that the within transfer is in the best interest of Mr. EV and that the terms are fair and reasonable. Petitioner is free to renew if, and when, Mr. EV has demonstrated that he has sought financial assistance with regard to his credit card debt and engaged in loss mitigation through HUD/FHA approved foreclosure and dog bite counselors and has found such options to be of no avail in the resolution of his current circumstances. The instant petition is denied.