Petitioners' application to approve a transfer of structured settlement payments from Respondents to NOVATION CAPITAL, LLC illustrates, in a most gut-wrenching manner, the Sisyphian frailties of GOL §5-1701. This is Respondent D.M.C.'s ^[FN1] third request for the relief stated herein, having had the Court's approval of two previous transfers of structured settlement payments. For the aforementioned reasons stated hereinafter, however, this Court finds that a third transfer would not be in her best interests, thusly, Petitioners' request is denied.

Petitioners by its attorneys appeared before the Court on July 27, 2009, seeking approval of a transfer of structured settlement payments pursuant to GOL §5-1701. D.M.C. is the owner of the structured settlement payments, and she also appeared. All were before the court and after being sworn in testified in support of Petitioners' application.

Petitioner NOVATION CAPITAL, LLC states that it is seeking approval of the transfer of certain structured settlement payment rights due under a structured settlement payment agreement in accordance with 26 U.S.C. § 5891 et seq. and GOL § 5-1701 et seq. Namely the sale of the following: monthly payments of Two Hundred Forty Five and No/100 Dollars ($245.00) commencing on August 12, 2009 through and including [*2]November 12, 2014; monthly payments of Five Hundred Thirty Five and No/100 Dollars ($535.00) commencing December 12, 2014 through and including March 12, 2017; monthly payments of One Thousand One Hundred Thirty Five and No/100 Dollars ($1,135.00) commencing April 12, 2017 through and including November 12, 2019; monthly payments of Nine Hundred Sixty One and 22/100 Dollars ($961.22) commencing December 12, 2019 through and including November 12, 2024 ("Assigned Payments"). (Ver. Pet. at ¶ 1.)

The aggregate amount of these Assigned Payments that NOVATION CAPITOL, LLC is seeking to have transferred to it from Respondents amount to $124,653.00. (See Id. at Ex. C). NOVATION CAPITAL, LLC has offered D.M.C. $26,780.00 in exchange for transferring these Assigned Payments. (See id.)

D.M.C. testified in support of Petitioners' application that she had co-signed on a student loan on behalf of a member of her family which is now in default and that the loan company is seeking to obtain payment from her and that she is in arrears in the payment of her water bill and that her water will soon be cut off.

She also submitted documentation in support of Petitioners' application.

A computer print-out of the student loan, showing that the principal outstanding balance of this student loan is $9,012.19, and with accrued interest the total amount outstanding is $10,770.15. The next monthly payment is due on September 28, 2009 in the amount of $119.13, as of August 2009. It does not appear that any late fees or charges have been assessed on the student loan.

A New York City Department of Environmental Protection ("DEP") water bill that showed she is in arrears in the amount of $7,630.48. DEP stated in its communication to D.M.C., however, that, "it is offering payment agreements for customers who qualify. Payment agreements requires:

a 10% - 25% down payment on the total outstanding charges

a plan to make payments on the remaining amount over 1 to 5 years."

A home equity mortgage statement showing an average daily balance of $84,077.58 as of July 6, 2009, with a credit limit of $95,000.00. This home equity mortgage statement listed an annual percentage rate of 3.75%, and the next payment was due on July 21, 2009 in the amount of $289.11.

An American Express Rewards Gold Card Statement of Account, closing date May 24, 2009, showing a balance of $1,709.17, which is due by June 8, 2009.

A Chase VISA Card Account Statement, dated June 6, 2009 to July 5, 2009, with a balance of $6,067.55, with a minimum payment of $297.55 due July 30, 2009.

A Con Edison utility bill, dated July 2, 2009, in the amount of $332.14. [*3]

A Verizon telephone bill, dated July 6, 2009, in the amount of $141.00.

D.M.C. also submitted an Affidavit in support of Petitioners' application, wherein she averred that she does not depend upon the Assigned Payments for the necessities of life, i.e., food, clothing, shelter, medical care and that she wants to transfer her payments to pay two outstanding credit cards, some utility bills and a student loan.

It should be noted that D.M.C. has sought and received two previous applications to approve a transfer of structured settlement payments, which were granted on April 7, 2005, wherein she transferred $43,200.00 in payments for $28,000.00, and December 8, 2005, wherein she transferred $43,200.00 in payments for $15,000.00.

The standard for approval of the above transaction is contained in GOL §5-1706, which states:

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction based upon express findings by such court 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. 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;

GOL §5-1706(b).

"It is assumed, therefore, that the payee's decision, even if freely entered into, is not always one a reasonable person might make, and the court is in effect asked to protect an individual from himself or herself." 321 Henderson Receivables Ltd. P'ship v. DeMallie, 2 Misc 3d 463 . As such,

the court is required to conduct two distinct inquiries before a transfer of a structured settlement can be approved. The fairness and reasonableness of the transaction is to be weighed from the perspective of the overall market in loans, taking into account prevailing interest rates and the possibilities of alternative financing. The best interest standard, in contrast, considers the financial condition and needs of the specific payee who is proposing to sell his or her income stream.

This Court agrees, however, with the increasingly ubiquitous maxim "that all of these transactions are economically unwise, [thus], it would make no sense for any court to undertake a subjective analysis whether these transactions strike a particular judge as fair and reasonable' according to his or her own economic predisposition." Matter of 321 Henderson Receivables L.P.,13 Misc 3d 526 . Ergo, regardless of whether the proposed transfer rate is within the range of the marketplace, "[t]he fair and reasonable test should . . . also [be] weighed against whether the transaction is in the best interest of the payee." Id. at 832-33.

The best interest standard under New York's Structured Settlement Protection Act requires a case-by-case analysis to determine whether the proposed transfer of structured settlement payments, which were designed to preserve the injured person's long-term financial security, will provide needed financial rescue without jeopardizing or irreparably impairing the financial security afforded to the payee and dependents by the periodic payments. The best interest prong should give specific consideration to such factors as the payee's age; mental and physical capacity; maturity level; ability to show sufficient income that is independent of the payments sought for transfer; capacity to provide for the welfare and support of the payee's dependants; the need for medical treatment; the stated purpose for the transfer; and the demonstrated ability to appreciate the financial terms and consequences of the proposed transfer based upon truly independent legal and financial advice. Hardship is only one factor to be considered, based upon well-documented evidence that the payee or a payee's dependent is confronted with such economic hardship, desperate or dire straits or unanticipated family emergency that, in the absence of the proposed transfer, the payee would be subject to dire consequences, such as imminent loss of life, loss of a home or the financial collapse of the family.

In re Settlement Capital Corp., 1 Misc 3d 446

Under the facts both adduced and omitted, the Court finds that the proposed transfer is not in D.M.C.'s best interest. As the record shows, she has already "jeopardized [and] irreparable impaired" her "long-term financial security" by transferring $86,400.00 in future benefit for $43,000.00 in present relief. Given her spending habits, evidenced by the charges appearing in her American Express statement, the Court feels it would be unwise to allow this most recent "financial rescue" to further deplete her "financial security" at the rate offered.

Additionally, although she may be gainfully employed, she has failed to provide evidence of "income that is independent of the payments sought for transfer." This is a weighty factor given our increasingly treacherous economy and deserved lack of confidence in continued employment. In these trying times, her remaining settlement payments take on a more valuable aspect in need of prudent preservation. [*4]

At the risk of sounding unsympathetic, the Court is unmoved by the purpose of D.M.C.'s request—to pay a student loan she co-signed on and to pay off credit card bills and some utility bills. The majority of the bills submitted—the student loan, the home equity loan, the VISA card and telephone bill—are subject to monthly payment schedules, which she can maintain given the rate, frequency and amount of her current settlement payments, plus any additional income derived from her usual employment. The largest bill, the DEP water bill, may also be negotiated and paid over a course of time. It is this aspect of the matter—the manifest disincentive to patiently monitor, manage and maintain financial affairs—that troubles the Court, and indicts D.M.C.'s "ability to appreciate the financial terms and consequences of the proposed transfer based upon truly independent legal and financial advice."

Finally, the Court finds that her stated purpose for the transfer does not amount to "such economic hardship, desperate or dire straits or unanticipated family emergency that, in the absence of the proposed transfer, [she] would be subject to dire consequences, such as imminent loss of life, loss of a home or the financial collapse of the family." Indeed, she has shown nothing more than the usual economic liabilities borne by the majority of productive society, which could be resolved by fiscal restraint and financial planning.

The foregoing shall constitute the decision and order of this Court.

Dated: _________________

J.S.C.

APPEARANCES:

ADAM ZOLDESSY, P.C.

Attorney for Petitioners

227 West 11th Street, No.3

New York, New York 10014

(212) 673-9394 (p)

(212) 673-7934 (f)

D.M.C.

Respondent, Pro Se

3706 Harper Avenue

Bronx, New York 10466-5909