This court's previous decision and order dated April 16, 2007 is hereby sua sponte recalled and vacated. The motion by petitioner, for an order pursuant to General Obligations Law (GOL) §5-1706, approving the transfer of structured settlement payment rights of Liana Roman to petitioner, is denied.

This court previously granted the motion by petitioner approving the transfer of structured settlement payment rights of Liana Roman to the petitioner. The structured settlement that was the subject of petitioner's application was obtained as the result of an action for personal injuries filed on her behalf, by her mother, against Columbia Presbyterian Hospital. Under the terms of the structured settlement, Ms. Roman was the recipient of several annual payments beginning on April 1, 1991 up to April 1, 2002 and thereafter, the sum of $3,775 per month for life, guaranteed for twenty years beginning April 1, 2003 and monthly thereafter, increasing at a rate of 3% compounded annually with the last guaranteed payment being March 1, 2023.

Ms. Roman sought to transfer 192 monthly payments, each in the amount of $1,100 and increasing at 3% every twelve months, commencing on April 1, 2007 and ending on March 1, 2023, for a gross amount of $92,000. After payment of a compliance and administrative fee in the amount of $635, the net amount payable to Ms. Roman was $91,365. [*2]

This court, viewing the totality of the circumstances in this matter, determined that the proposed transaction was fair and reasonable and granted petitioner's application. Petitioner was directed to submit an order to this court. An order was submitted by the petitioner on or about April 23, 2007 and forwarded to this court on or about May 3, 2007. In that order, the petitioner, for the first time, made reference to the fact that there were two prior transfers of structured settlement funds from Ms. Roman to the petitioner. Specifically, the order, in a footnote, indicates that two prior transfers were approved by a Supreme Court Judge in two separate orders dated July 2005 and August 2006.

In the instant application, petitioner never disclosed to this court that Ms. Roman made two prior transfers of her structured settlement payments. This information is pertinent and should have been provided to this court, particularly since this court noted that because Ms. Roman was only transferring $1,100 of her monthly structured settlement payments, she would still be receiving a portion of the more than $3,075 she was guaranteed under the terms of the structured settlement. However, since she made two prior transfers of her funds, as recently as nine (9) months ago, the amounts of which were never disclosed to this court, it is unclear whether or not she will be receiving any additional money from the structured settlement if the current transfer is approved.

In her affidavit in support of the petition, Ms. Roman states that she is twenty-six (26) years of age, she is single and has no children. She works for Cardinal McCloskey Service as a caseworker and earns $31,500 per year. Ms. Roman states that she intends to use the total amount of the payments transferred as follows: $10,000 to pay off student loans; $50,000 for a down payment on a house; $23,000 for car payments; $4,000 to pay her brother's tuition; $4,165 for home furnishings. Ms. Roman states that she has no further assets or credit resources to finance the aforementioned needs. However, if she received funds from two prior transfers, she should have had some resources to finance those needs.

According to the Disclosure Statement that was signed by Ms. Roman, which is annexed to petitioner's motion as Exhibit A, the discounted present value of the aggregate payments to be transferred is $166,885.26. The annual discount rate for this transaction is 15.65%. The discounted present value is calculated by using the applicable federal rate of 5.80%.

The Structured Settlement Protection Act (SSPA) codified under General Obligations Law , Title 17, was enacted in July of 2002 because of the concern that "...a growing number of factoring companies have used aggressive advertising, plus the allure of quick and easy cash, to induce settlement recipients to cash out future payments, often at substantial discounts, depriving victims and their families of the long-term financial security their structured settlements were designed to provide. Although transfers of structured settlements payments are generally prohibited by contract...factoring companies have built a rapidly expanding business around circumventing these prohibitions." (NY Spons. Memo., 2002 Ch. 537). A determination would be made by a Supreme Court judge as to whether the transfer is "in compliance with applicable law, that key terms have been disclosed, that the transfer meets a hardship standard, and that [*3]independent professional advice has been obtained." (NY Bill Jacket, 2002 A.B. 6936, Ch. 537). In 2004, the SSPA was amended in that the hardship requirement was"eliminated as a precondition to transfers and the requirement that disclosures be made at the front end' was added." (NY Spons. Memo., 2004 Ch. 480).

The procedural requirements that must be met for approval of a transfer are found under General Obligations Law §5-1705. The requirements are that a copy of the notice of petition and petition by order to show cause be served upon all interested parties at least twenty days before the time at which the petition is noticed to be heard, the petition must include a copy of the transfer agreement, a copy of the disclosure statement and proof of notice of that statement as well as a listing of each of the payee's dependents along with the dependents' age. Procedurally, the petitioner herein has met all of the aforementioned requirements.

Pursuant to General Obligations Law §5-1706, the court must make the following findings before a transfer can be effectuated. These are 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 dependants; 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 or 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, Ms. Roman was advised in writing to seek independent professional advice, which she sought from an attorney by the name of Stephen Chesley, Esq. A letter from Mr. Chesley addressed to the petitioner states that he explained the terms of the transaction to Ms. Roman and that she understands the terms and is willingly entering into said transaction. (Exhibit B). There was no indication in Mr. Chesley's letter that he was aware of the two prior transactions.

The two most important components of the SSPA are whether or not the transaction, including the discount rate and the amount of fees and expenses, is fair and reasonable and whether the transaction is in the best interest of the payee. The trial courts have ruled on what is determined to be fair and reasonable and whether the transfer is in the best interest of the payee on a case by case basis viewing the totality of the circumstances. Matter of Settlement Capital Corp. v. Yates, 12 Misc 3d 1198(A) [2006].

Ms. Roman has already made two previous transfers of her structured settlement funds in the past two years and the facts surrounding said transfers and the amounts transferred were not [*4]disclosed to this court. Moreover, the petitioner and Ms. Roman did not disclose what Ms. Roman did with the funds from those two prior transfers. Therefore, this court does not find that the transaction herein is fair and reasonable taking into account the best interest of the payee.

Accordingly, the petition is denied.

The failure of both the petitioner and Ms. Roman to disclose the two prior transfers to this court was misleading and dishonest and will not be tolerated. Failure to make such disclosures in the future may be sanctionable.

A copy of this decision and order shall be attached to any future applications by Ms. Roman to transfer her structured settlement funds.

This constitutes the decision and order of this court.

Dated May 14, 2007