[*1]
Matter of Genworth Life Ins. Co. of N.Y.
2013 NY Slip Op 50832(U) [39 Misc 3d 1231(A)]
Decided on April 18, 2013
Supreme Court, Broome County
Lebous, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and will not be published in the printed Official Reports.


Decided on April 18, 2013
Supreme Court, Broome County


In the Matter of the Transfer of Structured Settlement Proceeds Owed or Owing by Genworth Life Insurance Company of New York and MAYFLOWER ASSIGNMENT CORPORATION to STEPHANIA STARKS, Pursuant to General Obligations Law Sections 5-1705 and 5-1706, Petitioners.




2013-0517



COUNSEL FOR PETITIONERS:

MELVIN & MELVIN, PLLC

BY:LOUIS LEVINE, ESQ., OF COUNSEL

217 SOUTH SALINA STREET

SEVENTH FLOOR

SYRACUSE, NY 13202-1390

STEPHANIA STARKS, PRO SE

826 OAKDALE ROAD

JOHNSON CITY, NY 13790

Ferris D. Lebous, J.



This is the second petition involving this structured settlement. The current petition seeks judicial approval of the proposed transfer of the remaining future payment due Stephania Starks under a structured settlement agreement in exchange for the present payment of a discounted lump sum (General Obligations Law § 5-1701 et seq.).

BACKGROUNDStephania Starks is the beneficiary of a 1999 Release and Settlement Agreement whereby she received a settlement including an additional up-front payment,[FN1] together with the following periodic payments:


$10,000 on October 23, 2006

$10,000 on October 23, 2007

$10,000 on October 23, 2008

$10,000 on October 23, 2009

$37,750 on October 23, 2013 (Transferred by prior Court Order)

$37,750 due on October 23, 2018.

By way of this current petition, Ms. Starks seeks to transfer the last lump sum payment due of $37,750 payable on October 23, 2018 in exchange for a present payment of $16,500.

Before proceeding to a review of this petition, the court will set forth the details of Ms. Starks' prior application made to this court under Broome Index No. 2011-1044. By Order signed June 28, 2011, this court authorized Ms. Starks' transfer of a lump sum payment of $37,750 due on October 23, 2013 in exchange for $24,242. At that time, Ms. Starks represented that she was 23 years old, single, with two minor children and earning approximately $2,000.[FN2] Further, Ms. Starks averred that she planned to use the $24,242 for the following purposes: $21,000 for a down payment on a house; $1,500 to purchase a used vehicle; and to put $1,700 into a savings account for emergency use (Starks Affidavit, ¶ 6; Index No. 2011-1044 [emphasis added]). As noted, this court approved said petition by Order signed June 28, 2011.

DISCUSSION


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 Ms. Starks, 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 [*2]

Support, NY State Assembly, 2002 McKinney's Session Laws of NY, at 2036)" (Singer Asset

Fin. Co., LLC v Melvin, 33 AD3d 355 [1st Dept 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]" (Matter of Settlement Funding of NY, 195 Misc 2d 721, 722 [Sup Ct, 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"

(Id at 724).

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; 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.

Here, the transfer amount was calculated by applying an annual discount rate of 15.63%. The court notes that similar rates have been deemed unreasonable (Matter of Settlement Funding of NY, 195 Misc 2d 721 [Sup Ct, Rensselaer County 2003] [15.46% discount rate not accepted as fair and reasonable]; Settlement Funding of NY, LLC v Hartford—Comprehensive Empl. Ben. Svc. Co., 25 Misc 3d 1220 [A][Sup Ct, Queens County 2009] [14.99% discount rate not accepted as fair and reasonable]; Matter of Settlement Capital Corp. [Ballos], 1 Misc 3d 446 [Sup Ct, Queens County 2003] [15.591% discount rate not accepted as fair and reasonable]). The court finds the discount rate here of 15.63% is not fair and reasonable.

Next, the court must also consider whether the proposed transfer is in Ms. Starks' best interest. This court is simply unable to reach that conclusion based upon obvious inconsistencies between the prior petition and the current petition. More specifically, in connection with this current petition, Ms. Starks avers that she seeks to use the money as follows:

$16,500 for a down payment on a home. I've looked at a number of different places in the area. I plan to put this large down payment down on a home to shrink the amount of mortgage payment I will have to make a month. With a smaller monthly mortgage I will be able to live more comfortably with my two children.

(Starks' Affidavit, ¶ 11 [Index No. 2013-0517]; emphasis added).

This statement by Ms. Starks raises obvious concerns. First and foremost, the court now questions the veracity of Ms. Starks' prior statement that she intended to use the money for a down payment on a house. Did she really intend to use the money from the first petition for a down payment on a house? If she did not use the amount of $21,000 from the first petition for a down payment on a house, what did she use it for and why? If she had a legitimate reason for using that sum for a different purpose other than as represented to this court, why not offer an explanation instead of leaving the court to speculate. [*3]

Separate and apart from Ms. Starks' total failure to explain her prior expenditures and prior representations to this court, she also fails to offer any information regarding the proposed home purchase or her current income other than a vague statement that she will be starting work at McDonald's soon. While the desire to purchase a home is certainly an admirable goal, Ms. Starks simply has not supplied adequately detailed information about her employment status, education, or skills from which to compare the financial obligation she desires to undertake. Besides the past enumerated structured settlement payments, Ms. Starks' fails to identify any other sources of income or assets to financially handle the enormous responsibility of being a homeowner

(Matter of Washington Square Financial LLC v Mejia, 38 Misc 3d 1204[A] [Sup Ct, Queens County 2012]). In view of the foregoing and the lack of information, the court finds that the proposed transfer is not in Ms. Starks' best interest (Whitney v LM Prop. & Cas. Ins. Co., 32 Misc 3d 1212 [A] [Sup Ct, Westchester County 2011]).

CONCLUSION

Based on the foregoing, the Petition is denied.

Dated:April 18, 2013

Binghamton, New York

s/ Ferris D. Lebous

Hon. Ferris D. Lebous

Justice, Supreme Court

OCA e-submission: no Judge E-Mail

Footnotes


Footnote 1:The up-front payment at the time of settlement included $27,500 and $15,000 for attorney's fees.

Footnote 2:Presumably per month.