MN court denies approval in transfer of structured settlement payment rights
In Minnesota court case Teasley v. Velardi, No. 27-CV-93-1473, 2011 WL 6149943 (Minn. Dist. Ct. Dec. 2, 2011) Jeremiah Teasley was denied court approval for the transfer of structured settlement payments rights to J.G. Wentworth.
Minnesota’s Structured Settlement Protection Act states that the transfer of such rights requires court approval and will not be effective without an approval.
Teasley was involved in three proposed transfers to J.G. Wentworth. The first transaction, in 2007, the courts approved a transfer of more than ten years worth of monthly structured settlement payments. In 2008, a second application was denied. In 2011, J.G. Wentworth filed an application to transfer all of Mr. Teasley’s remaining payments in exchange for a lump sum payment of $25,000.[1]
The court rejected the 2011 transfer application citing prior transfer history. For example, if the 2011 transfer of Teasley’s structured settlement payments would have occurred, the value received would have been only 35 cents on the dollar compared with the 67 cents on the dollar he received in 2007. When Teasley sold his prior payments his intent was to “jump start” his life which was his stated purposed four years later. This transaction would leave him without any periodic payments to fall back on. Also J.G. Wentworth made no effort to disclose the 2007 transaction or the 2008 application. [2]
In addition to Mr. Teasley’s prior history, the lack of independent professional advice and the transfer was not in the payee's best interest, therefore the transaction was denied.
Appeals court dissolves and reverses temporary injunction
The Houston Business Journal has reported that Texas appeals court has dissolved and reversed a temporary injunction against the RSL Funding LLC which had prevented it from competing for Peachtree Settlement Funding’s U.S. clients.
Peachtree, now JGWPT, aka J.G. Wentworth, had accused the Houston structured settlement factoring company of offering its customers more money for their annuities. RSL admitted they did offer their clients more money therefore the trial judge sided with Peachtree thereby preventing RSL from competing in the secondary marketplace.
The decision was reversed by a Texas appellate court because the ruling was “an unreasonable restraint on trade.” This reversal should help other factoring companies when they compete against industry giant J.G. Wentworth/Peachtree in the future.
While RSL may have won this court case, they still have other pending legal issues. Last week MN District Judge, Robert Blaeser ordered the company to comply with an investigation by the state attorney general’s office into their business practices. Blaeser ruled that RSL has 15 days to respond to the attorney general’s demand for information.
Peachtree Financial merged with J.G. Wentworth in July and had lain off 90% of its Boynton Beach, Florida location. The remaining 10 percent were offered positions at J.G. Wentworth’s Radnor, PA based corporate headquarters.
RSL Funding, LLC is ordered to comply with MN Attorney General Office’s request for information
Hennepin County, MN—A District Judge, Robert Blaeser, has ordered RSL Funding, LLC to comply with an investigation by the state attorney general’s office into their business practices. Blaeser ruled that RSL has 15 days to respond to the attorney general’s demand for information.
The state's attorney general is investigation whether RSL Funding violated Minnesota's Structured Settlement Protection Act requiring court approval on all transfers of structured settlement annuity payments. The investigation involves Tasheeka Griffith, 21 who sold most of her annuity for a fraction of its future value.
The office has accused RSL of not cooperating with its inquiry because they did not responded to 3 separate requests for the identity of its Minnesota customers and the names of the companies it uses for marketing in the state.
A structured settlement is a financial arrangement that allows court-awarded compensation to be paid in regular installments rather than in one lump sum. Typically these payments provide money for a fixed period or lifetime. They may also include some money upfront.
Once a settlement has been reached the only way to alter it is to sell some of the future payments on the secondary market to factoring companies at a discount. Discounting is the process of reversing the value of the future payments back to the present value of the money today. The result is you will have a lump sum of cash at its present value.
In order to protect the rights of the annuitant in these cases, forty-six states and the federal government have enacted additional consumer protection statutes that establish strict conditions for these transactions.
Under the federal law, court oversight and approval is required for individuals who chose to sell payments from a structured settlement to a third-party company. The details of the statues vary by state but the courts approval is necessary to protect the annuitant and to ensure that the annuitant is receiving a fair amount for their payments.
Our Favorite Things – July 15th
Here's what happened this week in the world of money!
1. We're in the News - Our press release has been picked up by a few sources.
2. Alternatives to Netflix - Dear Netflix thanks for the customers. Signed, The Competition!
3. 5 Low-Tech Ways to Save Money - You don't need fancy gadgets to save money.
4. $645 Kitchen Makeover - How to remodel your kitchen on a budget.
5. MN Finally Passes Budget - Shutdown should be ending soon.
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