by John Darer CLU ChFC MSSC CeFT RSP CLTC
On March 14, 2023, the New York Court of Appeals heard oral arguments in the Matter of Lujerio Cordero v Transamerica Annuity Service Corporation et al. The United States Court of Appeals for the 11th Circuit asked the New York Court of Appeals for guidance on whether implied contractual duties of the annuity issuer/qualified assignee exist with respect to Cordero's structured settlement factoring transactions.
Rather than suing the factoring companies directly, Cordero sued Defendants-appellees Transamerica Annuity Service Corporation and Transamerica Life Insurance Company (collectively, “Transamerica”), the companies that issued and funded his periodic payments before he assigned them to the factoring companies.
All six of the structured settlement factoring transactions were concluded in Florida courts, four of them in Sumter County, the notorious county courthouse where there is a long history of structured settlements "going to die". Factoring companies feasting for years on the manna delivered in Judge Michelle Morley's courtroom. [ For background on the notoriety of Sumter County and factoring see my March 3, 2014 post The Sumter County Florida Structured Settlements Three Ring Circus - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)]
It should be noted by readers that Lujerio Cordero's mother was involved in the first of the six structured settlement factoring transactions/
While a decision from the New York Court of Appeals is not due for another 30 to 60 days, oral arguments didn't appear to go so well for plaintiff Lujerio Cordero whose lawyers elected NOT to sue the structured settlement factoring companies that profited from 6 structured settlement factoring deals and unconvincingly, went after structured settlement annuity issuers and their qualified assignment companies on the theory that structured settlement annuity issuers and qualified assignment companies had a implied duty to interevene in structured settlement factoring transactions.
1. New York Court of Appeals judges hammered Plaintiff's counsel, from prestigious Freshfields, on why there was no suit against the factoring companies who solicited Lujerio Cordero
Plaintiff's defense was that the belief that the factoring companies were "fly by night" played a role in their strategy.
Think about this readers, in referring to the subject factoring companies as "fly by night" doesn't doesn't this add more tinder to the fire of of the two decade long strategic failure of state legislatures to establish a standard of licensing and business conduct for factoinrg companies and sales people, so that predators actually have consequences for their actions? How do you justify the status quo?
2. New York Court of Appeals judges asked Plaintiff counsel why plaintiffs did not try to undo Cordero's approved transfer orders.
3. New York Court of Appeals Judges wanted to know what the Plaintiff's standard was? Plaintiff's counsel was not able to articulate a cogent legal argument against the structure annuity issuer and qualified assignment company owner.
Plaintiff's "Comme-ci comme ça" is Easily Rubbished
As part of Plaintiff's 15 minutes of oral argument, Plaintiff's counsel from prestigious Freshfields, supposed/alleged that Berkshire Hathaway, Independent Life and MetLife were examples of companies that had programs to contest transfers. So how is that rubbish?
1. Transamerica stopped writing structured settlement annuities in 2003.
2. I re-confirmed with MetLife today that on March 14, 2023, the date of oral argument was presented to the New York Court of Appeals, that neither MetLife nor its assignment company have such a program and they still didn't at the time of posting.
3. Berkshire Hathaway has a Hardship Exchange program.
4. Independent Life is the only company that has an official "Payee Protection Program. But how can plaintiff counsel use Independent Life as a standard in the Cordero case when Independent Life has only been in operation for 5 years. When did the six Cordero structured settlement factoring tranactions occur? Oh...
That being said, according to its website Independent Life engages the professionals who designed the plan so that the payee does not have to undertake this process alone. Independent Life is also committed to fighting back against unfair pricing practices, predatory practices, and forum shopping which sometimes occur with these proposed transfers.
Independent Life created the first Payee Protection Policy in the structured settlement industry to offer SECURITY for its payees. It says "we take the extra steps to re-engage the professionals that established the payment plan to secure it or weigh in on the wisdom of changing it. Independent Life will attempt to protect its payees from any and all proposed transfer petitions we view as unfair to our payees.
5. Arguably the United States government also has a longstanding "Payee Protection Program" See my December 2, 2009 post Factoring Companies Keep Trying But Can't Breach Uncle Sam's Structured Settlements - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com)
United States Owned Structured Settlements | Structured Settlement Transfers, 5th Circuit Rejects "Peachtree Dish" - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com) January 27, 2009
New York Judges Among the Most Astute and Alert on Structured Settlement Factoring
Time and time again New York judges have shown themselves to be among the most astute on the subject of structured settlement factoring. Were it not for New York judges doing their job in New York over the last 15 -20 years, structured settlement factoring companies might not have decided to make judicious use of Judge Michelle Morley's courtroom in Sumter County Florida and other Florida counties inveigling unsophisticated annuitants in "fraud for cash now" forum shopping schemes.
Prior Effort to Sue a Structured Settlement Annuity Issuer and a Qualified Assignee (in an Unrelated New York Case) Was Dismissed
See LOUISE AND PHILLIP TAYLOR, Plaintiffs, v. NEW YORK LIFE INSURANCE COMPANY AND NEW YORK LIFE INSURANCE AND ANNUITY CORPORATION, Defendants. United States District Court, S.D. New York.No. 19 Civ. 6830 (VM). February 9, 2021. Ironically, the Taylor case cited Cordero v Transamerica and asserted a similar argument against New York Life concerning anti-assignment language.
Watch the entire Court of Appeals Oral Argument in Cordero v Transamerica