Texas Appeals Courts Says Transfer Should Not Have Been Approved, Concludes There Was Insufficient Evidence for ‘Best Interest’ Finding

Texas Appeals Courts Says Transfer Should Not Have Been Approved, Concludes There Was Insufficient Evidence for ‘Best Interest’ Finding

An appeals courts in Texas recently issued an opinion rejecting arguments set forth by structured settlement factoring companies, and reversing a trial court’s decision to approve a transfer.

In re Rains, No. 07-14-00132-CV, 2015 Tex. App. LEXIS 8219, 2015 WL 4647779 (Tex. Ct. App. Aug. 5, 2015), is the opinion issued by the Texas Court of Appeals that reversed a trial court’s decision to approve a transfer of structured settlement payment rights under the Texas Structured Settlement Protection Act.

The court held that the lack of evidence about the payee’s household income, education, and business acumen meant that there was an insufficient evidentiary foundation to conclude that the proposed transfer was in the payee’s best interest.  Such “minimal evidence” that was before the court “denied the trial court opportunity to adequately exercise its ‘paternalistic’ role and assess whether 1) the ‘transfer . . . [was] in the best interest of the payee, taking into account the welfare and support of the payee’s dependents’ and 2) the payee fell victim to the abuse or exploitation of a factor[ing company].”

The appeals court also determined that the trial court acted outside its authority in connection with the splitting of payments requirement of the Texas SSPA when the trial court essentially ordered the annuity issuer to send full payments to the factoring company under a servicing arrangement.

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