Petitioner, Lump Sum Capital, LLC, moves for judicial approval of the proposed transfer of certain future payment rights of Brian K. Ciemielewski under a structured settlement agreement in exchange for the present payment of a discounted lump sum (General Obligations Law § 5-1701 et seq.).

Mr. Ciemielewski, currently age 41, obtained a structured settlement arising out of a workplace injury action that occurred in 1986 receiving $35,215 cash at the time of the settlement and monthly payments of $800 for life (guaranteed for 40 years), together with a structured settlement as follows:

5-17-1994$5,000 lump sum payment

5-17-1999$10,000 lump sum payment

5-17-2004$25,000 lump sum payment

5-17-2009$25,000 lump sum payment subject of Petition No.1

5-17-2014$50,000 lump sum payment subject of Petition #2

5-17-2019$50,000 lump sum payment Petition #3 - all $50,000

5-17-2024$100,000 lump sum payment Petition #3 - ½ or $50,000

5-17-2029$150,000 lump sum payment

Past Applications

This is not Mr. Ciemielewski's first request to sell a portion of the above-referenced personal injury settlement. Before addressing the terms of the proposed current transfer, the court will review Mr. Ciemielewski's two prior petitions.

Petition #1

In 2005, a petition was filed on Mr. Ciemielewski's behalf by 321 Henderson Receivables, L.P., requesting permission to sell a $25,000 lump sum payment due on May 17, 2009 at an annual discount rate of 15.73% with a net payment to Mr. Ciemielewski of $13,600.00 (Broome Index No. 2005-0726).^[FN1] As part of said 2005 petition, Mr. Ciemielewski averred that he sought to pay the balance on his car loan ($9,000) and pay his divorce attorney ($5,000). Mr. Ciemielewski further represented that he was a bus driver for Laidlaw earning approximately $14,000 and had no other income. This court granted the petition by way of an Order dated August 16, 2005.

Petition #2

In January 2007, a second petition was filed on Mr. Ciemielewski's behalf by Symetra Assigned Benefits Service Company seeking approval for payment of $22,080.95 in exchange for the $50,000 payment due on May 17, 2014 (Broome Index No. 2007-0018). Mr. [*2]Ciemielewski averred that the funds would be used to pay off a credit card debt of approximately $20,000; $1,200 to be paid to his divorce attorney; and the remaining funds to purchase pellets for heating of his home. This court granted the petition by way of an Order dated January 26, 2007.

Current Petition #3

Now, not even a year after the second petition, this third petition is filed on Mr. Ciemielewski's behalf by Lump Sum Capital, LLC seeking permission to sell $100,000 worth of future payments, namely the $50,000 payment due on May 17, 2019 and $50,000 due on May 17, 2024 (the amount of the 2024 payment due is $100,000 of which only $50,000 is sought to be transferred in this proposal). Mr. Ciemielewski would be paid the princely sum of $10,000 in exchange for his future right to receive said $100,000.

General Obligations Law § 5-1701 et seq., also known as the "Structured Settlement Protection Act" or "SSPA", was enacted in 2002 due to the concern that structured settlement payees, such as Mr. Ciemielewski, are particularly prone to being victimized and quickly dissipating their assets and to protect them from the growing number of companies using "'[a]ggressive 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' (Mem. in Support, NY State Assembly, 2002 McKinney's Session Laws of NY, at 2036)" (Singer Asset Finance Co., LLC v Melvin, 33 AD3d 355 [2006]). This legislation "[d]iscourages such transfers by requiring would-be transferees to commence special proceedings for the purpose of seeking judicial approval of the transfer [citations omitted]" (Settlement Funding of New York, LLC [Cunningham], 195 Misc 2d 721, 722 [Rensselaer County 2003]). "The SSPA clearly reflects the Legislature's dissatisfaction with the structured settlement transfer market rates, and its conclusion that payees cannot protect their best interest and thus require judicial supervision" (Settlement Funding [Cunningham], 195 Misc 2d at 724). "Clearly, the New York State Legislature in enacting [the] SSPA and in empowering the courts with the discretion to determine whether the terms of a proposed transfer of future payments are fair and reasonable did not intend for the courts to be mere rubber stamps" (Settlement Capital Corp. [Ballos], 1 Misc 3d 446, 461 [Queens County 2003]).

As such, this court's judicial function under the SSPA requires an evaluation of a variety of factors, but particularly: (1) whether the transaction is fair and reasonable, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount; and (2) whether the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents, if any.

As noted, in determining whether the transaction is fair and reasonable, the court should examine the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount. Here, petitioner determined the gross advance [*3]amount of $10,000 by applying an annual discount rate of 18.680%. No legal fees and expenses are being deducted from the gross advance amount, so the net advance amount is also $10,000. Quite frankly, this purported "deal" speaks for itself. This court will not approve a payment of $10,000 in exchange for ten times that amount in future payments of $100,000. Based on the foregoing, the court finds said transaction is not fair and reasonable.

The next consideration is whether the proposed transfer is in Mr. Ciemielewski "best interest." Mr. Ciemielewski represents that he intends to use the proceeds from this transfer to renovate and improve the kitchen and bathroom in his home and to finish the bathroom and garage, as well to again fuel the stove this winter. Mr. Ciemielewski projects that his home repair costs will approximate $21,000 and that heating his home this winter will cost $1,500, although no supporting documentation is provided as to either item (Ciemielewski Affidavit, ¶ 6).

Mr. Ciemielewski represents that he is divorced with no children. No information is provided regarding Mr. Ciemielewski's current work status, although he represented in Petition #2 that he was a truck driver. In any event, Mr. Ciemielewski does not provide any information regarding his current income from whatever other sources. Nor does Mr. Ciemielewski account for the monthly payments of $800 he receives or any of the prior lump sum payments he should have received under his settlement ($5,000 in 1994; $10,000 in 1999; $25,000 in 2004). Additionally, Mr. Ciemielewski makes no mention of the $13,600 he received from Petition #1 or the $22,080.95 in funds he received from Petition #2. In other words, in the past ten years, Mr. Ciemielewski has received approximately $75,000 in lump sum payments for which he does not account. Based on this record, the court finds that there has been no showing that there would be a real advantage or gain to Mr. Ciemielewski in receiving $10,000 in exchange for $100,000 of future payments. Quite simply, this court finds the proposed transaction is not in Mr. Ciemielewski's best interest.

In sum, the court finds that petitioner has failed to demonstrate to the court's satisfaction that the transaction is fair and reasonable and that the transfer is in Mr. Ciemielewski's best interest (GOL § 5-1706 [b]). Consequently, the Petition is denied.

Dated:January 22, 2008

Binghamton, New Yorks/ Ferris D. Lebous

Hon. Ferris D. Lebous

Justice, Supreme Court