By Order to Show Cause dated June 8, 2007, Petitioners Settlement Funding of New York, LLC and Erica C. Doran seek judicial approval of an assignment of a portion of Petitioner Erica C. Doran's structured settlement annuity with respondents pursuant to General Obligations Law 5-1701, et seq., more commonly known as "The Structured Settlement Protection Act" (SSPA). Respondents have not opposed the relief requested.

The petitioners appeared in Part 6 of this Court for oral argument on July 11, 2007, and decision was reserved.

FACTS AND PROCEDURAL BACKGROUND [*2]

Petitioner Erica C. Doran is the payee of a structured settlement annuity issued by respondents and dated February 25, 2002.^[FN1] According to the petition and affidavit in support of Ms. Doran, she is entitled to receive the following guaranteed annuity payments from respondents: a lump sum payment of $25,000.00 on September 17, 2009; a lump sum payment of $30,000.00 on September 17, 2014; and a lump sum payment of $86,680.32 on September 17, 2019. Additionally, Ms. Doran received a lump sum payment of $10,000.00 on June 1, 2006 and has been receiving the sum of $200.00 per month since July 1, 2006 and shall continue to receive this sum per month until June 1, 2012.

Ms. Doran states that she is presently 22 years of age and has supported herself for the past four years. She presently resides with her parents rent free and is unemployed, pregnant and receives $100.00 per month in food stamps. Ms. Doran further states that due to her situation, she requires immediate cash to prepare for the birth of her baby (approximately $10,000.00), obtain a new automobile so that she may seek employment (approximately $20,000.00), and create an "emergency cash fund" (approximately $2,000.00).

In order to obtain this immediate cash infusion, Ms. Doran entered into an assignment agreement with petitioner Settlement Funding of New York, LLC, on the following terms and conditions: from the lump sum payment of $25,000.00 on September 17, 2009, $21,000.00 would be assigned; from the lump sum payment of $30,000.00 on September 17, 2014, $26,000.00 would be assigned; and from the lump sum payment of $86,680.32 on September 17, 2019, $66,680.32 would be assigned. The total of the three assignments is $113,680.32.

LAW AND APPLICATION

The primary purpose of the SSPA is to protect the recipients of long-term structured settlements from being victimized by companies aggressively seeking the acquisition of their rights to guaranteed structured settlement payments. See 321 Henderson v. Martinez, 11 Misc 3d 892, 816 N.Y.S.2d 298 (Sup Ct NY Cty 2006); In Re Settlement Capital Corp. (Ballos),1 Misc 3d 446, 769 N.Y.S.2d 817 (Sup Ct Qns Cty 2003). To effectuate this purpose, the Legislature created procedural requirements that potential structured settlement transferees must follow before courts review the substantive merits of the proposed assignment. See GOL§ 5-1703; In the matter of Settlement Capital Corp. ("Y"), 194 Misc 2d 711, 756 N.Y.S.2d 728 (Rensselaer Cty). Once the procedural requirements are met, the court shall substantively review the application and make express findings in accordance with GOL § 5-1706.

A review of the application indicates that it has been served timely pursuant to GOL § 5-1705 ( c ), and that all "interested parties" as defined by GOL § 5-1701(f) appear to have been served. Further, it appears that all required disclosure pursuant to GOL §5-1703 has been provided to Ms. Doran at least ten days prior to the date she signed the transfer agreement. Copies of these documents have been annexed to the application in accordance with GOL §1705(d). Further and pursuant to GOL § 5-1706 ( c ) (d) and (e) the following has occurred: (1) Ms. Doran has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has waived such advice in writing, (2) the transfer does not contravene any applicable statute or order of any court or other government authority, [*3]and (3) it is written in plain language and is in literal compliance with GOL § 5-702. Therefore, the application is procedurally correct under the statute. See GOL § 5-1706(a).

The court is required to make express findings that "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." GOL § 5-1706(b). However there is no requirement that the court find that an applicant is suffering from a hardship to approve the transfer of structured settlement payments. This is a two pronged test to be applied in evaluating the parties' agreement. See In Re Settlement Corp. (Ballos), supra at 461.

The best interests determination involves a broad consideration of the facts and the circumstances of the payee, in light of the payee's age, mental capacity, maturity level, ability to show sufficient income that is independent of the payments sought for transfer, capacity to provide for the payee's dependents, and the stated purposes for the transfer request. See In Re Settlement Corp. (Ballos), supra at 454-55.

In this case, the payee is 22 years of age, with minimal income other than the structured settlement. The petition does not indicate or reference payee's mental capacity or maturity level. However, the petition indicates that payee received last year the sum of $10,000.00 pursuant to the structured settlement, and since the payee does not claim an interest stream from said money, the court infers that it has been spent. The payee has no dependents, but is expecting one in the near future. No information has been provided concerning the putative father or his ability to provide support pursuant to Family Law § 413 which is income that would be independent of the payment sought for transfer and an alternative source to provide for the payee's dependent.

Lastly while the cost of raising a child is substantial these costs grow along with the child. In the future, the greater needs of the child may be deprived if the payee is allowed to sell today a substantial benefit for a fraction of its value. Further, payee's request for a $20,000.00 car to find a job is not persuasive.^[FN2] Considering the "paternalistic" purpose of the statute, the court finds that it will not be in the best interests of payee (or her future dependent) to permit this transaction. See Mtr. of 321 Henderson, 13 Misc 3d 526, 531, 819 N.Y.S.2d 826 (Erie Coun. 2006).

Apart from the foregoing and turning to the "fair and reasonable" prong Settlement Funding of New York, LLC proposes to purchase a portion of payee's structured settlement that is presently worth $69,487.10 for the sum of $32,454.86, or 46.7% of its present discounted value (and 28.55% of the aggregate amount of the payments of $113,680.32 to be transferred). Although payee is not being charged legal fees, she is being charged $700.00 in expenses.^[FN3] No persuasive explanation is offered for a reduction of $37,032.24, an arrangement overall that this [*4]court deems inappropriate given the guaranteed nature of the annuity payout and the minimal risk involved for petitioner Settlement Funding of New York, LLC. See In Re Settlement Funding of NY (Cunningham), 195 Misc 2d 721, 761 N.Y.S.2d 816 (Rensselaer Coun. 2003).

CONCLUSION

In light of the above, the proposed transfer does not meet either the "best interests" requirement or the "fair and reasonable" requirement under the statute. Therefore, the motion is denied and the petition dismissed. This constitutes the decision and order of the court.

Petitioner is directed to settle Order on notice.

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J. S. C.