Florida Court Vacates Transfer Order and Nullifies Factoring Company’s Attempts to Circumvent Structured Settlement Protection Act Through Arbitrations
On December 18, 2013, the Circuit Court of Sumter County, Florida (the Court) issued an order rendering void ab initio an April 2011 order approving the transfer of structured settlement payment rights from a payee to RSL Funding, LLC (RSL).
In matter of In Re: Approval for Transfer of Structured Settlement Payment Rights u/a/b RSL Funding, LLC and Jerry M. Green, No. 2011-CA-321, 2013 WL 6697803 (Fla. Cir. Ct. Dec. 18, 2013), Jerry Green was the recipient of certain structured settlement payments (Periodic Payments) as a result of the settlement of a personal injury claim. Pursuant to a qualified assignment agreement, Transamerica Annuity Service Corporation (TASC) assumed the obligation to make the Periodic Payments to Mr. Green. In order to fund its obligation to make the Periodic Payments, TASC purchased an annuity from Transamerica Life Insurance Company (collectively, Transamerica).
In or about April 2011, RSL filed an application (Application) to transfer to RSL certain life-contingent payments due to Mr. Green (Transferred Payments). The Court granted RSL’s Application in an order dated April 26, 2011 (Transfer Order). However, subsequent to the entry of the Transfer Order, RSL commenced its attempts to alter the terms of the court-approved transfer through the arbitration process, alleging that Mr. Green had misrepresented certain health conditions in his application to RSL and that, as a result, the Transferred Payments were worth less than the court-approved amount. Mr. Green, originally appearing pro se, resisted such attempts, resulting in several conflicting orders being issued by the Court regarding to whom the Transferred Payments should be directed.
Transamerica, faced with conflicting orders and aware of RSL’s attempts to alter the court-approved terms of the transfer, became involved, resulting in two years of litigation and repeated arbitration demands from RSL. The centerpiece of the litigation involved RSL’s attempts to confirm its arbitration awards, which awards had the effect not only of purporting to alter the court-approved terms of the transfer, but also of purporting to bind Transamerica to large damage awards against Mr. Green.
Transamerica opposed RSL’s efforts to confirm its arbitration awards and moved the Court to enforce the statutory protections afforded by the Structured Settlement Protection Act (SSPA), which mandates that the terms of a proposed transfer of structured settlement payment rights be approved by a court of competent jurisdiction. In the end, despite RSL’s attempt to voluntarily dismiss its motion to confirm its arbitration awards, the Court granted Transamerica’s Motion to Vacate Transfer Order.
In its order, the Court specifically found that RSL had failed to include with its Application a copy of Mr. Green’s underlying settlement agreement, which included unambiguous anti-assignment language. Accordingly, the Court found that the April 2011 was voidab initio, and the resulting arbitration awards were “impotent and without substance.” The Court further found that “the aggressive attempts of [RSL] to force arbitration have resulted in a legal nullity,” because RSL’s arbitration awards, which cannot circumvent the requirements of the SSPA, resulted in “an absurd result [which did] not yield a net payment amount payable to Respondent that is fair, just, and reasonable under the circumstances.” Thus, the Court stated that “had [RSL] not dismissed this case, or the [Transfer Order] not been otherwise void, the Court would not have confirmed the arbitration.”