The Petitioner commenced this special proceeding pursuant to CPLR Article 4 by Order To Show Cause dated March 8, 2006 and made returnable April 12, 2006. The Petition thereunto appended seeks approval of an agreement to transfer certain structured settlement rights to the Petitioner from the Respondent. More specifically, the Respondent proposes to transfer unto the Petitioner a payment he is due to receive, in the amount of $ 100,910.00 payable on April 4, 2019 with a discounted present value of $ 49,942.01 for which the Petitioner [*2]proposes to pay $ 8,049.21 (19.9% of discounted present value, 7.977% of full value).

Subsequent to the filing of the Petition, the Petitioner submitted an Affidavit with three exhibits dated March 21, 2006 and made by Andrew S. Hillman Esq. of the Pennsylvania Bar, an Admission of Service and Consent, in affidavit form, made by the Respondent dated March 31, 2006 and an Affirmation dated April 6, 2006 by John S. Pokalsky Esq., Petitioner's counsel.

The Court has carefully examined and digested all of the submissions herein. In addition, the Court has reviewed and analyzed the Structured Settlement Protection Act ["SSPA] which is codified in Title 17of the New York General Obligations Law, §§ 5-1701 et. seq. (L. 2002, C. 537) which is the controlling statutory scheme herein.

The Respondent is the beneficiary (and hence, the payee) under a certain structured settlement agreement dated as of July 1, 1997. The same was originally evidenced by an annuity contract issued by CU Life Insurance Company of New York which is presently held by Aviva Life Insurance Company. The agreement provides for the following periodic payments to the Respondent, viz.: $ 15,000.00 on April 4, 2004, $ 15,000.00 on April 4, 2006, $ 15,000.00 on April 4, 2009, $ 15,000.00 on April 4, 2011, $ 25,000.00 on April 4, 2014 and a final payment of $ 100,910.00 on April 4, 2019. An Assignment Agreement is attached to the Petition as Exhibit "B" which reflects the Respondent's consent to assign the final installment in the amount of $ 100,910.00 for consideration of $ 8,049.21. In addition, under the Agreement, the Respondent will be liable to the Petitioner for a processing fee of $ 200.00 and a legal fee of $ 1,000.00, both of which would be deducted from the gross sum, resulting in a net payment to him of $ 6,849.21. Stated another way, the Petitioner proposes to accept $ 100,910.00 in thirteen years in exchange for $ 6,849.21 today. Appended to the Petition as Exhibit "D" is the Respondent's Affidavit which appears to comport with the statutory scheme.

In an effort to buttress the proposed transaction (and, by extension, to obtain judicial approval thereof), the Affidavit of Andrew S. Hillman Esq. has been filed herein. That Affidavit consists of fourteen pages of rather complex explanations regarding the difference between loans and structured settlement transfers including an analysis of the market for the same, comparative rates of interest, credit ratings of payees and annuity payors, terms, costs, etc. The Affidavit also alludes to questionable solvency of both the Respondent and the obligor upon the annuity though such lofty allusions are not supported by anything sub judice and hence are mere surplusage. While the Affidavit is highly informative and certainly makes for some intellectual reading, its content is not at all persuasive to this Court. In addition, the Affirmation of John S. Pokalsky Esq. asserts that the SSPA presumes that the Respondent, unless he has been adjudicated to be incompetent, can make his own determination as to whether or not the transfer would be in his best interest, seemingly vitiating the need for the SSPA. Obviously, if the Court were to follow Mr. Pokalsky's line of reasoning, there would be no need to seek judicial approval of such a transfer absent an order adjudicating the Respondent to be an incapacitated person. This Court will not stretch to such lengths, especially in light of the clear intent of the SSPA.

In making a determination herein, the Court is required to examine the submissions to opine as to whether the statutory mandates of the SSPA have been met. A careful review reveals that, at least procedurally and facially, the application herein comports with GOL § 5-1706(a), (c), (d) and (e). Once the Court has determined that such procedural compliance is evident, it is required to find that

"...the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents; and whether the transaction, including the discount [*3]rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable." GOL § 5-1706(b).

Therefore, in order to satisfy both the spirit and the intent of the statute (that is, to ensure that the payee of such an award does not become victimized and thereby fritter away his entitlement) the Court is required to venture into two additional areas before approving a proposed transfer of rights under a structured settlement. First, it must consider and determine whether the transaction is in the best interests of the beneficiary. Second, it must consider and determine whether the transaction, when viewed as a whole, is both fair and reasonable in all respects, Matter of Settlement Funding of New York LLC [Cunningham] 195 Misc 2d 721 (Sup. Ct. Rensselaer County, 2003).

The statute, regrettably, is quite silent as to what constitutes the best interests of the beneficiary. However, a review of both the SSPA and case law seems to suggest that such a "best interests" inquiry should include, at a minimum, consideration of the following factors, viz.: (a) physical age, level of maturity, physical and mental capacity of the beneficiary; (b) the beneficiary's ability to earn a living and to support his or her dependents; ( c) the beneficiary's intended usage of the proceeds; (d) the beneficiary's present financial situation and whether he or she is laboring under such a hardship as to be in dire and immediate need of the proceeds; (e) whether the beneficiary has obtained independent counsel regarding the financial consequences of the proposed transfer; (f) the level of financial sophistication, or lack thereof, of the beneficiary; and (g) the timing of the application vis-a-vis any other scheduled payments.

The Court will endeavor to consider each of the enumerated "best interests" factors individually. First, the Respondent avers that he is 21 years of age and is both self-employed and self-supporting. The Court is unable to determine the Respondent's level of maturity or physical or mental capacity but, based upon the foregoing, presumes that he must be of at least average intelligence and have some level of physical capacity. Second, the stated intended use of the proceeds is to retain counsel in order to effect a return of chattels that are the subject of a probate proceeding. The Respondent claims that if he is unable to obtain these funds, he is in danger of possibly losing his business due to an inability to service his clientele. However, he does state that he has an unspecified alternate source of income. In addition, the Respondent was to receive some $ 15,000.00 on April 4, 2006 (more than twice the amount of the proposed net payment) though the Petitioner has not seen fit to highlight this decidedly important factor. The Court is hard-pressed to find severe hardship in this matter based upon the submissions herein. Third, although the Court is unable to assess the Respondent's level of financial sophistication, he is presumed to have some degree of pecuniary understanding and business acumen inasmuch as he is operating his own enterprise. Fourth, the Respondent appears to have obtained a modicum of general and unspecified legal and financial advice as evidenced by the letter of Barry Guberman Esq. of the firm of Guberman & Stern in Lincroft, New Jersey. Mr. Guberman's letter, addressed by facsimile to someone called Georgia at an undisclosed location, states, in pertinent part, that he had discussed the transaction, had rendered legal, financial and tax advice, had discussed other methods to obtain money and had encouraged him to look for alternative means of obtaining funds. However, the Court seriously questions why the Respondent felt compelled to seek advice from an attorney at law in New Jersey, who maintains his office more than 100 miles distant from the Respondent's residence in Suffolk County, New York and indeed what factors brought him to be referred to and acquainted with such New Jersey counsel to the [*4]extent that he consulted with him on such an important matter. Moreover, counsel's letter clearly indicates that he is not representing the Respondent in this transaction which, on its face, appears to have some element of over-reaching, thus increasing the Court's apprehension. Fifth, the timing of the transaction is, in this Court's view, highly questionable. Here, the Petition was filed on March 3, 2006 with a scheduled return date of April 12, 2006. Although the Petition seemed to declare an urgent need for the cash payment by the Respondent (amounting to all of $ 6,849.21), the Petition is wholly silent as to the impending payment of an additional $ 15,000.00 to the Respondent on April 4, 2006, eight days before the submission date of the matter. Indeed, the Respondent's Affidavit dated February 22, 2006, specifically states, in pertinent part, in paragraph 11 thereof, that "I have never assigned, sold or pledged any of the structured settlement payments..." though it is silent as to any of the other payments. Also, the Respondent is clearly not represented by counsel and this matter proceeds upon a Petition and other documents all of which have been prepared by the Petitioner or its counsel. This seems to put the Respondent at a distinct disadvantage in this transaction.

Viewing the matter in toto, this Court finds the confluence of all of the enumerated factors to be greatly troubling, most especially the attorney's letter submitted to the Petitioner by Mr. Guberman. The Supreme Court, Bronx County, in the matter of Settlement Funding of New York LLC v. Christopher Brown, 2006 NY Slip Op 50286U, 11 Misc 3d 1059A had occasion to address a remarkably similar situation involving both the same Petitioner and a similar letter from Mr. Guberman. Like the case at bar, the Brown matter also found the Petitioner utilizing a 19.99% discount rate in its proposal to purchase the Respondent's future payment. Justice Ruiz, dismissed the Petition therein.

Turning to the issue of whether or not the transaction is fair and reasonable, the Court again finds the Petition to be severely wanting. The Respondent is entitled to receive a payment of $ 100,910.00 on April 4, 2019. The discounted present value of that payment stands at $ 49,942.01. The Petitioner offers to pay to the Respondent the gross amount of $ 8,049.21 for the payment, representing but 19.99% of the discounted present value and, incredibly, only 7.977% of the full value of the payment. This, on its face and without more, seems unconscionable and, lacking any further illumination because it is, perhaps, unjustifiable.

The Affidavit of Andrew S. Hillman Esq., supra, attempts to justify the "fairness" of this transaction by generically referring to the Respondent's presumably poor credit, the allegedly questionable rating and solvency of the obligor as well as sweeping but wholly unsubstantiated assertions that, assuming arguendo that the Respondent could obtain credit, he would likely be charged a rate of interest of somewhere between 21% and 30%. In short, the Court finds these arguments to be wholly unpersuasive.

In Matter of Settlement Funding of New York LLC [Cunningham] 195 Misc 2d 721 (Sup. Ct. Rensselaer County, 2003), Mr. Justice Canfield declined to approve the proposed transfer of a payment of $ 151,701.75 for the sum of $ 75,000.00. That Court also found that the combination of high interest and high costs of transfer were not fair and reasonable. In Matter of 321 Henderson Receivables LP [D'Amore] 2005 NY Slip Op 51479U, 9 Misc 3d 1110A (Sup. Ct. Kings County, 2005), the Court declined to approve a transfer of a payment of $ 137,350.00, with a discounted present value of $ 59,297.87 in exchange for $ 10,000.00, finding the same as not fair and reasonable. Once again, in Matter of Settlement Capital Corporation [Ballos] 1 Misc 3d 446 (Sup. Ct. Queens County 2003) the Court declined to approve a transfer of the right to receive a payment of $ 125,000.00 in exchange for the gross sum of $ 39,000.00. [*5]

This Court is compelled to conclude, after an exhaustive review of all of the submissions, that the Petitioner's application is motivated primarily by cupidity. The Petition and attendant papers are replete with indications of conduct and motivation which leave a highly questionable and greatly disturbing impression. In short, the submissions portray what appears to be an illusion of good faith and fair dealing in this proposed transaction.

Based upon all of the foregoing factors, this Court is driven to the inescapable conclusion that the proposed transfer herein is neither in the Respondent's best interests nor is it fair and reasonable. Accordingly, the Petition is denied and this proceeding is dismissed.

It is, therefore,

ORDERED that the within Petition is denied and this proceeding is dismissed in its entirety.

Dated May 17, 2006E N T E R:

Riverhead, New York______________________________