law-structured-settlements-transfer

law-structured-settlements-transfer | assignment of right to future payments for lump sum payment

ASSIGNMENT / TRANSFER OF STRUCTURED SETTLEMENT PAYMENTS

The SSPA provides in relevant part as follows:

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured
settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any
transferee of structured settlement payment rights unless the transfer has been approved in advance in a
final court order based on express findings by the court that:

(1) the transfer is in the best interest of the payee, taking into account the welfare and support of the
payee's dependents . . . .

Tex. Civ. Prac. & Rem. Code § 141.004.

In short, the SSPA requires that any transfer of structured settlement payments be preapproved by a court.
Id. Rapid acknowledges that no court has approved the transfer of Patterson's structured settlement
payments to Rapid. Consequently, Symetra argues that we should reverse the trial court's confirmation of
the arbitration award and order the award vacated because the arbitrator violated the public policy set forth
in the SSPA. As explained more fully below, we agree.
Symetra National Lif Ins. Co. v Rapid Settlements, Ltd. (Tex.App.- Houston [14th Dist.] Apr. 21,
2009)(Hedges) (arbitration award vacated as violation of public policy, transfer of structured settlement
payments)
REVERSED AND RENDERED: Opinion by Chief Justice Hedges
Before Chief Justice Hedges, Justices Anderson and Seymore
14-07-00880-CV Symetra National Life Insurance Company and Symetra Life Insurance Company v. Rapid
Settlements, LTD
Appeal from County Civil Court at Law No 1 of Harris County
Trial Court Judge: R. Jack Cagle

SSPA

Tort claimants with structured settlement agreements sometimes sell their future payment rights to
companies in exchange for a present lump sum. Symetra Life Ins. Co. v. Rapid Settlements, Ltd., 599
F.Supp.2d 809, 814 (S.D. Tex. 2008). Texas, as well as 42 other states, enacted the SSPA to protect unwary
tort claimants from potential abuse in their transactions with these companies. Id. at 814-15. In order to
accomplish this, the SSPA requires a court to approve a proposed transfer agreement before a transfer of
structured settlement rights to a factoring company occurs. See Tex. Civ. Prac. & Rem. Code Ann. § 141.004
(Vernon 2005). The court must expressly find that the transfer is in the payee's best interest, the payee has
been advised in writing to seek independent professional advice, and the transfer does not conflict with any
applicable statute or court order. See id.

Meaning of "Transfer" Under SSPA

In its second issue, Rapid asserts the arbitrator's award is not a "transfer" under the SSPA. Rapid instead
characterizes the garnishment of Green's structured settlement payments as damages for breach of
contract, which does not require court approval under the SSPA.

The SSPA defines "transfer" as "any sale, assignment, pledge, hypothecation, or other alienation or
encumbrance of structured settlement payment rights made by a payee for consideration." Tex. Civ. Prac. &
Rem. Code Ann. § 141.002(18). Based on this definition, Rapid asserts that a transfer must be voluntary,
whereas the transfer of structured settlement payments in this case was involuntary because the arbitrator
awarded the payments as damages. However, Green did voluntarily agree to sell his structured settlement
payments for consideration. By signing the arbitrator's award, Green agreed to garnishment of 275
structured settlement payments in exchange for $9000 in cash. See Symetra, 2009 WL 1057339, at *4
(citing Harris v. Balderas, 27 S.W.3d 71, 80 (Tex. App.--San Antonio 2000, pet. denied) (holding
consideration is fundamental element of settlement agreement)). "The fact that Rapid has obtained
such a transfer by an arbitration award purporting to award 'lost profits' or 'damages' for a breach of the
agreement does not change the fact that it is a transfer under the [SSPA]." Symetra, 599 F.Supp.2d at 830;
see also Symetra, 2009 WL 1057339, at *4; Rapid Settlements, 234 S.W.3d at 800-01.
Rapid Settlements, Ltd v. Green (Tex.App.- Houston [1st Dist.] Jun. 18, 2009)(Op. By Alcala) (transfer of structured settlement
rights, grounds for v acature of arbitration award entered under the Federal Arbitration Act (FAA), applicability of FAA, does the
FAA preempt the TAA?, nonexistence of arbitration agreement between the parties, when are nonsignatories bound to by
arbitration agreement? nonparties to the agreement, nonsignatories)(arbitrator exceeded his authority in issuing the award.
See 9 U.S.C.S. § 10(a)(4).
AFFIRM TC JUDGMENT DENYING CONFIRMATION OF ARB AWARD: Opinion by Justice Alcala
Before Justices Jennings, Alcala and Higley
01-08-00109-CV Rapid Settlements, Ltd. v. Jerry M. Green
Appeal from County Civil Court at Law No 3 of Harris County
Trial Court Judge: Hon. Linda Storey
We hold the arbitrator's award did constitute a transfer under the SSPA. We overrule Rapid's second issue.

Attorney's Fees

In its third issue, Rapid contends the trial court erred by awarding attorney's fees to Transamerica pursuant
to section 141.005 of the SSPA.

Section 141.005 of the SSPA states:

Following a transfer of structured settlement payment rights under this chapter:
. . . .
(2) the transferee shall be liable to the structured settlement obligor and the annuity issuer:
. . . .
(B) for any other liabilities or costs, including reasonable costs and attorney's fees, . . . arising as a
consequence of the transferee's failure to comply with this chapter . . . .

Tex. Civ. Prac. & Rem. Code Ann. § 141.005. Rapid asserts Transamerica cannot recover attorney's fees
under this section because there has not been a "transfer of structured settlement payment rights." See id.
We have already held that the arbitrator's award did constitute a transfer under the SSPA. We therefore hold
the trial court did not err by awarding Transamerica its attorney's fees. We overrule Rapid's third issue.

TransAmerica Occidental Life Insurance Company v. Rapid Settlements (Tex.App.- Houston [1st Dist.] July 3,
2008)(Bland) (restricted appeal, order confirming arbitration award)
REVERSE TC JUDGMENT AND RENDER JUDGMENT: Opinion by Justice Bland
Before Chief Justice Radack, Justices Jennings and Bland
01-07-00195-CV Transamerica Occidental Life Insurance Company and Transamerica Annuity Service
Corporation v. Rapid Settlements, Ltd.
Appeal from County Civil Court at Law No 2 [?] of Harris County
Trial Court Judge: Hon. Jack Cagle