Michigan Courts Join Those From Other States In Awarding Attorneys’ Fees Based on Failure of Factoring Company to Comply with Structured Settlement Protection Act

Michigan Courts Join Those From Other States In Awarding Attorneys’ Fees Based on Failure of Factoring Company to Comply with Structured Settlement Protection Act

The opinion of the Michigan Court of Appeals in J.G. Wentworth S.S.C. v. Morris, No. 333413, 2018 Mich. App. LEXIS 347 (Mich. Ct. App. Feb. 22, 2018) (here), is the latest judicial opinion where courts had to consider a request for attorneys’ fees under a state structured settlement protection act.

In Morris, the Michigan appellate court affirmed the state trial court’s decision to award such fees to the annuity issuer and the structured settlement obligor.  The appeals court said that the Michigan Structured Settlement Protection Act “provides a statutory basis for a fee award.”  In particular, the court said, “MCL 691.1305(b) provides in pertinent part: The transferee is liable to the structured settlement obligor and the annuity issuer for both of the following: . . . (ii) Other liabilities or costs, including reasonable costs and attorney fees, arising from the structured settlement obligor’s and the annuity issuer’s compliance with the order of the court or from the transferee’s failure to comply with this act.”  The court pointed out that the annuity issuer and the structured settlement obligor notes that the factoring company, RSL Funding, obtained a court order directing the annuity issuer to send a payment to RSL Funding’s re-assignee, “despite the fact that the right to receive those same funds had previously been assigned to” another factoring company, J.G. Wentworth.  Thus, continued the court, the costs and attorney fees incurred by the annuity issuer and the structured settlement obligor arose “out of both their attempts to lawfully comply with the trial court’s previous orders and from RSL’s failure to abide by the notice requirements of the” Michigan SSPA.  “Accordingly, the trial court had the discretion to award [the annuity issuer and structured settlement obligor] . . . their costs and fees in this matter under MCL 691.1305(b)(ii).”

There are 49 state structured settlement protection acts (SSPAs), and most have the same or similar language providing that a transferee is liable to a structured settlement obligor and an annuity issuer for costs and attorney fees arising from the transferee’s failure to comply with the SSPA.  In the Morris opinion, the Michigan appeals court reached the same conclusion as state appeals courts in Texas and Washington did in the previous appellate opinions reaching the issue, all of which affirmed trial court attorneys’ fees awards granted pursuant to such provisions in the Texas and Washington SSPAs, respectively.  See, e.g., Rapid Settlements v. Symetra Life Ins., 139 P.3d 411 (Wash. App. Ct. 2006) (affirming award of attorneys’ fees under the Washington SSPA); RSL Funding, LLC v. Aegon Structured Settlements, Inc., 384 S.W.3d 405 (Tex. App. Ct. 2012) (affirming award of attorneys’ fees under the Texas SSPA).  In addition to the decisions by state appellate courts, trial courts in other states also have granted attorneys’ fees awards based on such SSPA provisions.  See, e.g., In re Gutierrez, 2015 WL 11216029 (N.M. Dist. Ct. Dec. 14, 2015) (granting award under New Mexico SSPA); In Re: Advance Funding, LLC (Lozano), 2016 N.Y. LEXIS 1533 (N.Y. Sup. Ct. Apr. 26, 2016) (granting attorneys’ fee award under the New York SSPA).

For more about the Morris opinion, see this prior Secondary Insurance Market Blog post here.

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