As described in posts here and here, a Minnesota trial court recently denied a request for court approval of a proposed transfer of structured settlement payment rights, on the grounds that the transfer was not in the payee's best interests and that the payee had not received independent professional advice.
Either of those grounds – failure to meet the best interest standard, and failure to receive independent professional advice – means that the court must reject the request for court approval, made pursuant to the Minnesota Structured Settlement Protection Act.
The Minnesota SSPA, like SSPAs in other states, provides that a transfer of structured settlement payment rights is not effective without court approval.
In the recent Minnesota case, Teasley v. Velardi, No. 27-CV-93-1473, 2011 WL 6149943 (Minn. Dist. Ct. Dec. 2, 2011), the court also review the history of the payee's structured settlement payments – and that history figured prominently in the court's reasoning.
The court noted that the payee has been involved in three proposed transfers with the same factoring company, J.G. Wentworth. In 2007, a Minnesota court approved a transfer of more than ten years worth of the payee's monthly structured settlement payments. In 2008, a second application, for a transfer of additional payments, was denied. In 2011, J.G. Wentworth filed an application for a transfer of all of the payee's remaining monthly payments, with an aggregate amount of $96,000, in exchange for $25,000.
In rejecting the 2011 transfer application, the court pointed to the prior transfer, saying the following:
- The payee in the 2011 transfer would receive 35% of the value of the transferred payments, "as compared with the 67 cents on the dollar that he received in the 2007 transaction with J.G. Wentworth."
- The payee "already sold 11 years of future payments in the 2007 transaction and now seeks to sell an additional 10 years of future payments" and, if the 2011 transfer were approved, the payee "would no longer have any guaranteed monthly payments . . . ."
- The payee "entered into the 2007 transaction for the stated purpose of 'jump start[ing]' his life, and now, only four years later, he is again looking to sell future payments for essentially the same purpose . . . ."
- In the application papers, "J.G. Wentworth did not make any effort to disclose the 2007 transaction or the 2008 Application."
On The lack of any express disclosure weighs against a finding that the “best interests” requirement has been satisfied.
On that last point – the lack of disclosure to the court of the prior court-approved transfer and the prior transfer attempt – the court said the "lack of express disclosure weighs against a finding that the 'best interests' requirement has been satisfied."