No Need To File Under Seal, Judge Tells Factoring Company

No Need To File Under Seal, Judge Tells Factoring Company

A Minnesota court recently denied a request for court approval, under the Minnesota Structured Settlement Protection Act, of a proposed transfer of structured settlement payment rights.

As described in posts here and here and here, the court concluded that the transfer was not in the payee's best interests and that the payee had not received independent professional advice – and that the factoring company did not expressly disclose to the court the fact that there had been a prior, court-approved transfer of another portion of the payee's payments, as well as a prior, court-rejected request for a second transfer.

The Minnesota court in Teasley v. Velardi, No. 27-CV-93-1473, 2011 WL 6149943 (Minn. Dist. Ct. Dec. 2, 2011), also commented on the practice of factoring company J.G. Wentworth – the same company involved in all three transfer attempts by this payee – of filing certain documents under seal.

"When applying for court approval of these transfers, counsel for J.G. Wentworth has repeatedly filed several of the documents under seal, including (1) the purchase agreement; (2) the application to J.G. Wentworth; (3) the disclosure statement required by Minn. Stat. § 549.31, subd. l(b); and (4) the documentary evidence that the transferor has received independent professional advice."  While the court said that the attorney for J.G. Wentworth was invoking a Minnesota rule that requires a party to file "financial source documents" under seal. the scope of the rule does not encompass structured settlement factoring documents, such as the purchase agreement, disclosure statement, and evidence of independent professional advice.  "Accordingly, J.G. Wentworth and counsel for J.G. Wentworth shall cease their practice of filing those documents under seal."

One reason this is significant, according to the judge, is the repeated use of the same independent professional adviser – not just in these three cases, but with other structured settlement payees:

"In some instances, the same attorney has provided 'independent professional advice' to different clients even though there is no apparent connection between the clients and the attorney has no special expertise in the relevant law.  Given J.G. Wentworth's practice of filing these documents under seal, only the presiding District Court Judge would have any awareness of the repeat service of certain attorneys."

Additionally, the court pointed out that the adviser in this case has been the subject of a disbarment proceeding, begun in August, 2011.

The Teasley judge also noted that the order of denial would be circulated among the other judges in the district.

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