As described in this post, a Minnesota trial court recently rejected a request for court approval of a transfer of structured settlement payment rights. The court in Teasley v. Velardi, No. 27-CV-93-1473, 2011 WL 6149943 (Minn. Dist. Ct. Dec. 2, 2011), rejected a proposed transfer by payee Jeremiah Teasley to factoring company J.G. Wentworth Originations, L.L.C., for two reasons: the payee had not received independent professional advice, and the transfer was not in the payee's best interest.
As is the typical standard under state structured settlement protection acts, under the Minnesota Structured Settlement Protection Act, a court cannot approve a transfer of structured settlement payment rights from a payee to a factoring company unless the transfer is in the payee's best interests.
The court in Teasleynoted that while the Minnesota SSPA does not define the term "best interests", a Minnesota appeals court had provided some guidance about the meaning of the phrase, stating that it "entails a 'global consideration' of all the circumstances" such as the payee’s age, mental capacity, maturity level, and stated purpose for the transfer.
The Teasley court said that there were a number of considerations that led it to conclude that the proposed transfer would not be in the payee's best interests, including the following:
- The payee would receive "a mere 35 cents on the dollar . . .";
- The payee was scheduled to receive a $15,000 lump sum payment in September, 2010, but "barely a year later, he is attempting to sell periodic payments for another lump sum payment, partly 'to pay off debts' . . ."; and
- The payee stated that he wanted the up-front money "to advance his education" but there was nothing to indicate that the payee "has sought financing for his education through a more traditional, cost-effective sources (i.e., student loans) . . .";
Accordingly, the court determined that it could not make a finding that the transfer was in the payee's best interests.