Advance
Funding LLC, Petitioner, For Judicial Approval of a Transfer Agreement with KELLIE
SCOTT A/K/A KELLY SCOTT In Accordance with New York General Obligations
Law § 5-1701, et seq.,
against
Kellie Scott A/K/A KELLY SCOTT, METROPOLITAN
LIFE INSURANCE COMPANY, and METLIFE TOWER RESOURCES GROUP,
INC., Respondents.
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22193/14E
Petitioner:
David C. Van Leeuwen, Esq.
Rosabianca & Associates, PLLC
40 Wall Street, 31st Floor
New York, NY 10005
(212) 269-7722
Respondent:
Kellie Scott a/k/a Kelly Scott, Pro se
Hunter, J.
The motion by order to show cause for an order approving the transfer of certain
structured settlement payment rights of Kellie Scott a/k/a Kelly Scott ("Scott") to
petitioner was orally denied after argument on July 8, 2014 which was prior to the filing
of a notice of discontinuance. What follows are my findings of fact and conclusions of
law.
Respondent Scott is the beneficiary of a settlement arising from a personal injury
action. Pursuant to a settlement agreement, respondent Scott is entitled to receive
periodic payments from respondent MetLife Tower Resources Group, Inc. The periodic
payments are paid to Scott [*2]through an annuity issued
by respondent Metropolitan Life Insurance Company in the City of New York.
Respondent seeks to transfer to petitioner two-hundred and twenty-one (221)
monthly payments in the initial amount of $1,111.21, commencing on or about April 15,
2015, and the 15th of each month thereafter, through and including August 15, 2033,
increasing at a rate of 3% per annum each September 15, in exchange for the gross
amount of $120,000.00. According to the disclosure statement [FN1]
, the aggregate amount of payments to be transferred to petitioner is $327,143.81. The
discounted present value of the payments to be transferred to petitioner is $258,774.68.
The discount rate applied to this transaction is 2.20% and the annual discount rate,
compounded monthly, used to determine the gross advance amount is 10.605%. The
gross advance amount payable to respondent is $120,000.00.
Petitioner submits an affidavit [FN2]
from Scott in support of the instant application. In her affidavit, Scott asserts that she is
twenty-five years of age and has two dependents. She avers that petitioner has advised
her to seek professional advice regarding the transfer. She maintains that she has
received independent professional advice.[FN3]
She further states that she intends to use the proceeds from petitioner to purchase a house
in Albany, obtain various cosmetic surgeries [FN4]
, purchase a used car, and car insurance. She currently resides with her husband and their
two children in a one bedroom apartment in a large complex on the fourth floor, but she
feels that it would be best for her family to relocate to Albany and purchase a home to
secure their future.
Pursuant to General Obligations Law ("GOL") §5-1706, the court must make
the following findings before a transfer can be effectuated:
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 dependents 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 government authority and e) is written
in plain language and in compliance with section 5-702 of this article"
The two most important components of the Structured Settlement Protection
Act ("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 [*3]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. [Yates], 12 Misc 3d 1208(A) [Sup Ct,
Kings County 2006]. While GOL §5-1706 does not define "best interest,"
legislative intent and case law suggest that the court consider the following factors when
making its determination: 1) the payee's age; 2) the purpose for the transfer; 3) the
potential need for future medical treatment; 4) the payee's maturity level; and 5) the
timing of the application. See, Matter of Stratcap Investments, Inc., v. Feola, 24 Misc 3d
1209(A) [Sup Ct, Bronx County 2009]; Matter of Settlement Capital Corp.
[Yates], 12 Misc 3d 1208(A); Matter of Settlement Funding of NY, LLC [Ocasio], 11 Misc 3d
1061(A) [Sup Ct, Bronx County 2006]; In re Settlement Capital Corp., 1
Misc 3d 446 [Sup Ct, Queens County 2003].
This court finds that petitioner has failed to establish that the transaction is in
respondent Scott's best interest and that the terms of the transaction are fair and
reasonable. Respondent Scott's conclusory affidavit in which she states that the transfer is
in her best interest is wholly insufficient for this court to make its own independent
determination. Respondent Scott does not include an affidavit from a qualified physician
stating that the requested procedures are medically necessary. Though she desires to
purchase a house for her family, Scott fails to supply any information as to her current
employment status or finances aside from listing that she receives Social Security Income
in the amount of $688.00 per month.[FN5]
Moreover, petitioner has failed to provide a persuasive explanation establishing that a
discount rate of 10.605% where the seller would receive 46.37% of the discounted
present value is fair and reasonable within the meaning of the SSPA. See
Matter of 321 Henderson Receivables Origination, LLC, 20 Misc., 3d
1143A [Sup Ct, Bronx County 2008].
Accordingly, the application by petitioner seeking approval of the transfer of certain
structured settlement rights is denied.
A copy of this decision and order shall be attached to any future applications by
respondent Scott to transfer her structured settlement funds.
Movant is directed to serve a copy of this order with notice of entry upon all parties
who shall be served by regular and certified mail, and file proof thereof with the clerk's
office.
This constitutes the decision and order of this court.
Dated:July 18, 2014ENTER:
________________________
J.S.C.
Footnotes
Footnote 1: Petitioner's Exhibit C.
Footnote 2: Petitioner's Exhibit D.
Footnote 3: See Petitioner's
Exhibit E.
Footnote 4: Among the procedures
requested are Abdominoplasty, more commonly referred to as a "tummy tuck,"
Mastopexy, or breast lift, and Liposuction, a procedure that removes unwanted fat
deposits from the body.
Footnote 5: This court notes that,
per Scott's calculations included in Exhibit D, she will have used up the entire
$120,000.00 paid to her by petitioner. She does not address how she will continue to pay
taxes and other expenses on the house, maintain car insurance, and provide necessities
for her two dependent children.