According to the petition, Mr. Washington was the payee of "certain structured settlement payment(s)," although the petition did not mention the type of personal injury action, an index number, the court in which it was settled, or the terms of any "structured settlement."

At a hearing, Wentworth's counsel called Mr. Washington to testify. His testimony established that he was a reasonable and prudent person, that he was employed, and that he had a well planned use for the $160,000 that he hoped to receive from Wentworth in exchange for his assignment of "structured settlement payment rights" of $218,244 he was to receive pursuant to his "structured settlement agreement" on January 11, 2023.

Mr. Washington, however, told the court that he had not been involved in any personal injury action or settlement but, rather, that payments he had already received and future payments, including the one that he wished to assign to Wentworth, were the result of a "life insurance policy" his father had before his death in the tragedy of September 11, 2001.

The Court's Decision

The court denied Wentworth's petition.

In its decision, the court explained that, to approve the transfer of "structured settlement payment rights" under GOL § 5-1706, the agreement had to meet the definition of "structured settlement payments rights" under GOL § 5-1701(o).

The court found that the payee, Mr. Washington, was domiciled in New York, which fulfilled the requirement of GOL § 5-1701(o)(i).

However, the court ruled, the additional requirement of compliance with either GOL § 5-1701(o)(ii) (requiring that the settlement agreement had been approved by a New York court) or GOL § 5-1701(o)(iii) (that the "structured settlement agreement" expressly was governed by New York law) had not been met.

The court pointed out that the award to Mr. Washington had not been approved by a court but, rather, had been approved and made by the special master of the September 11th Victim Compensation Fund, appointed pursuant to Title IV of the Air Transportation Safety and System Stabilization Act ("ATSSSA"), 49 U.S.C. § 40101. The court observed that, under ATSSSA § 405(3)(B), by accepting the option of proceeding before the special master, a claimant waived the right to file a civil action.

Accordingly, the court found, there was "no action filed in any court, whether state or federal, in New York relating to the award." The court ruled that because the award had not been approved by any New York court, the requirement of GOL § 5-1701(o)(ii) had not been met.

The court reached the same conclusion with respect to GOL § 5-1701(o)(iii). The court reasoned that not only was there no explicit reference in the award that the laws of New York governed, but that applicable case law recognized that the ATSSSA preempted state law on issues involving the 9/11 attacks.

Without meeting either GOL § 5-1701(o)(ii) or GOL § 5-1701(o)(iii), the court ruled, the award to Mr. Washington failed to meet the definition of "structured settlement payments rights" under GOL § 5-1701(o).

Accordingly, the court concluded, because the award to Mr. Washington did not meet the definition of "structured settlement payment rights" set forth in GOL § 5-1701(o), the award was not a structured settlement payment right that could be approved for transfer pursuant to the provisions of GOL §5-1706 and the court had to deny Wentworth's petition.

(The court also pointed out that the award to Mr. Washington appeared to prohibit him from transferring or assigning the periodic payments under the award; thus, the court said, even if the award had been determined to be a "structured settlement payment right" under GOL § 5-1701(o), it could not be transferred by Mr. Washington to Wentworth.)

The case is Matter of J.G. Wentworth Originations, LLC, No. 612122-2019 (N.Y. Sup. Ct. Suffolk Co. Oct. 29, 2019). Attorneys involved include: For Petitioner: YANKWITT LLP, White Plains, NY.

Editor's Note: Steven Meyerowitz is the former Editor of the Insurance Coverage Law Center.