Carrie R. Muldoon entered into a structured settlement with the United States in 1982. The United States purchased and is the owner of an annuity contract with National Investors Life Insurance Company, an annuity issuer subequently acquired by Metropolitan Life (MetLife). Beginning March 1, 1982 the annuity initially paid Muldoon $833.33 per month with 6% annual compound increases through February 1, 2042 (60 years).
Muldoon later agreed to assign and transfer all her "rights, title and interest to her right to receive certain payments (under the structured settlement release entered into in 1982) to Settlement Funding (Peachtree) as part of a Chapter 7 bankruptcy Settlement. In January 2006 the Johnson County, Kansas District Court in Carrie R. Muldoon, a/k/a Carrie R. Ruddy and Settlement Funding, LLC d/b/a Peachtree Settlement Funding, Plaintiffs
v. United States of America Torts Branch, Civil Division and Metropolitan Life Insurance Company,
ordered the United States to deliver annuity payments to (1) deliver assigned annuity payments to Settlement Funding (Peachtree) (2) prohibited both the United States or MetLife from making any change of the address to which payments are sent.
The United States continues to oppose attempts to factor structured settlements funded with annuities which it owns and there is considerable precedent of decisions favoring the U.S.
The issue before the court in this case and in many similar cases is whether the annuitant had any rights to transfer or designate the payee under the annuity contract, not the Release. The Court considers this a critical distinction. A sampling of cases cited in the Memorandum and Order:
- "It is axiomatic that one may not sell, assign, hypothecate that which one does not own" 4th Circuit 1989
- " When an annuitant is not the owner of the annuity, he or she has no legal rights under the annuity to assign" 6th Circuit 2007
- "the annuitant had rights under his settlement agreement with the United States, but no rights under the annuity purchased by the United States from a third-party to fund the settlement" Garcia, 533 F Supp 2d at 691-94
- Redesignating the payee is a ministerial exception to sovereign immunity stating “a ministerial action is one that the official has a legal duty to perform, as opposed to one he has discretion to perform or not.”). No party has identified a legal duty requiring the United States to change the payee.
- That Congress expressly waived the United States’s sovereign immunity from suit for these types of proceedings by enacting 26 U.S.C. § 5891.
Copy of Memorandum and Order in Metropolitan Life Insurance Company v Carrie R. Muldoon, et al. Civil Action 06--2026-CM. Download SUMMARY JUDGMENT District Court Kansas Muldoon 3102009