by Structured Settlement Watchdog
What Does Canadian Law Say About Structured Settlements?
Canadian tax law expressly requires that all structured settlements must:
• Arise in respect of a claim for damages related to personal injury or death;
• Be funded by a single premium annuity that is non-assignable, non-commutable, nontransferable; and
• Payments must be irrevocably directed to the payee of the annuity. (See Hunks v. Hunks, 2017 ONCA 247, at paras. 51-53, also Canada Revenue Agency Interpretive Bulletin 365R2)
The Raymond Anderson Canadian Structured Settlement and An Attempt To Factor It in the State of Florida
Raymond Anderson's structured settlement was established under Canadian law in 2012. The structured settlement annuity was placed by a Canadian structured settlement broker with Sun Life Assurance Company of Canada with a cost of C$2,081,821.14. Anderson signed the annuity application on July 20, 2012 in Ontario Canada which he certified and agreed that the annuity is non-commutable, non-assignable and non-transferable. Anderson now lives in Jacksonville Florida and in October 2020, a structured settlement transfer petition was submitted by Greenwood Funding, LLC to acquire certain structured settlement payment rights according to Court filings in the Circuit Court of the Fourth Judicial District in Duval County Florida Case: 16-2020-CA-006179. The Court issued a final order on December 15, 2020. The Court's Order pits Canada law against Florida law. And, for a little intrigue and irony, the Assignee for Greenwood Funding LLC, as set forth in the transfer petition, is Stratcap Investments, a company based in Toronto Canada. Greenwood Funding, LLC is a Delaware entity, with its principal office in Boca Raton Florida.
Sun Life Makes Motion for Relief From and To Vacate Final Order by Duval County
On January 14, 2021, Sun Life Assurance Company of Canada (the annuity issuer) and Sun Life Insurance (Canada) Limited (obligor), jointly referred to as Sun Life, pursuant to Florida Rule of Civil Procedure l .540(b ), filed a motion for relief from and to vacate the final order of this Court dated December 15, 2020, and titled Final Order Approving Transfer. Sun Life alleges that the final order is void and of no effect on Sun Life because Greenwood failed to perfect service of process on Sun Life, and therefore this Court had and has no jurisdiction over either entity. Moreover, the final order is rife with errors of law and fact, largely due to Greenwood and Mr. Anderson's failure to fully advise the Court, and is in violation of the law governing ( and the terms of) the structured settlement annuity.
Sun Life claims in its motion:
- It was never served with process, such as a summons, or otherwise joined as a party.
- Sun Life had no knowledge of this matter until receipt of a letter dated November 6, 2020 but not received until November 12, 2020, from Greenwood's counsel, Richard Rilling. The letter enclosed a copy of the petition Greenwood filed seeking approval of a transfer of structured settlement payment rights and a notice of the hearing set on this petition.
- Sun Life, through its legal counsel Mr. David Babin who is employed in Ontario, Canada, promptly wrote to Mr. Rilling and to Mr. Anderson on December 1, 2020, expressing Sun Life's objections to the proposed transfer pursuant to Canadian law and the terms of the structured settlement annuity.
- The final order makes clear that neither Greenwood or Mr. Rilling, or Mr. Anderson, advised the Court that Sun Life objected to the transfer. They also apparently did not advise the Court that 1) Canadian law governing the structured settlement annuity at issue prohibits transfers, assignments, or altering of payment directions; (2) that the structured settlement annuity itself also precludes transfers, assignments, or altering of payment directions; and (3) that Mr. Anderson has no ownership or property rights in the annuity.
- Greenwood claimed in its petition that it would "serve" a copy of the petition and certain other information on all interested parties. But Greenwood did not serve Sun Life; Mr. Rilling simply sent documents by mail. Sun Life was not served with process and was not made a party to the proceeding, therefore the Court's order purporting to require the Sun Life entities to take certain actions is "absolutely null and void" as it pertains to Sun Life because the Court has no jurisdiction over or power to direct the actions of a non-party.
Sun Life states that Florida courts routinely deny transfer petitions under Section 626.99296 based on contractual anti-assignment provisions similar to the language at issue here. See, e.g, Rapid Settlements, Ltd. v. Dickerson, 941 So. 2d 1275 (Fla. 4th DCA 2006) ("[w]here the contract prohibits assignment of payments, it will be enforced"); First Providian, LLC v. Evans, 852 So. 2d 908 (Fla. 4th DCA 2003) ( denying petition to transfer structured settlement payment rights because it would "contravene" the terms of the settlement).
Notwithstanding what Sun Life claims in its motion, at 14.55%, the discount rate that Greenwood Funding was charging Anderson for the disputed transfer was utter crap!
This is an important case to follow. Stay tuned.