Does a structured settlement purchasing company's rights under a structured settlement annuity sale and assignment agreement trump a structured settlement annuity issuer's right to service its own annuitants (and offer them a better and possibly less costly deal?) A structured settlement purchasing company called Bearberry Square Funding, LLC apparently thinks so and sued the annuity issuer.
In the complaint of BEARBERRY SQUARE FUNDING, LLC, Plaintiff, v BERKSHIRE HATHAWAY LIFE INSURANCE COMPANY OF NEBRASKA, a Nebraska Corporation, and Does 1 through 10, Inclusive, Defendants.2012 WL 872312 (2012) Superior Court of California. Los Angeles County, Plaintiff alleges that
"On September 17, 2011, Plaintiff entered into Structured Settlement Annuity Sale and Assignment Agreement with Kristen Lucas (“Assignment Agreement”). Under the Assignment Agreement, Mrs. Lucas agreed to sell or transfer to Plaintiff her remaining payments under an annuity contract with Defendant BERKSHIRE HATHAWAY LIFE INSURANCE COMPANY OF NEBRASKA in the amount of $163,000 in exchange for a lump sum purchase price of $67,428.00
Upon receiving notice of the Assignment Agreement, Defendant BERKSHIRE HATHAWAY LIFE INSURANCE COMPANY OF NEBRASKA, through its representatives, contacted Mrs. Lucas and offered to “accelerate” the payments due under the annuity contract and thereby unlawfully and tortiously induced Mrs. Lucas to rescind the Assignment Agreement...
Plaintiff is informed and believes and thereupon alleges that Defendant BERKSHIRE HATHAWAY LIFE INSURANCE COMPANY OF NEBRASKA intentionally acted to disrupt the relationship between Plaintiffs and Lucas by, including other things, offering to Mrs. Lucas to accelerate the payments under the annuity contract. Said interference was made so that the Defendants, and each of them, would gain a financial benefit at the exclusion of and to the detriment of Plaintiffs. And, in fact, as a result of said interference, Mrs. Lucas did timely rescind the Assignment Agreement (emphasis ours)"
Comments and Questions
- I am not a lawyer but offer my observations and opinions as a structured settlement expert who has a keen interest in this area of the law.
- With a California structured settlement factoring transaction, is a deal "a done deal" BEFORE, in compliance with the California Structured Settlement Protection Act, a judge approves the transaction as being in the best interest of the structured settlement annuitant, taking into account their dependents?
- Notwithstanding the discount rate 8.98% that Bearberry offered the annuitant, the Sale and Assignment Agreement, which this author obtained from the California Superior Court states. at 5.10,that the seller should obtain independent professional advice.
- Does Bearberry Square Funding, LLC, or any other company entering into similar agreements, have a duty to inform the structured settlement annuitant that they can and should get a competing quote from the annuity issuer, if it is known to the purchaser, or common knowledge that the annuity issuer makes such offers?
- For example, I have personally received calls from structured settlement annuitants with contracts from Allstate Life Insurance Company or Allstate Life insurance Company of New York, who were not informed of their rights under Allstate's Advanced funding Exchange Notice by the settlement purchaser, who proceeded to offer the annuitant a rate that exceeded the AFEN discount rate. As an aside that rate is now 8%.
- That Berkshire Hathaway Life Insurance Company of Nebraska would take steps to assist its own structured settlement annuitants is not without precedent [See IN RE: RAPID SETTLEMENTS, LTD. and Rapid Management Corp. Rapid Settlements, Ltd. and Rapid Management Corp., Appellants, v. BHG Structured Settlements, Inc., Berkshire Hathaway Life Insurance Company of Nebraska and Bryan Cory Steele, Appellees Texas Court of Appeals Nos. 09-06-057 CV, 09-06-155 CV September 14, 2006. Copy of opinion here.
- It's hard to tell on the face of it who the heck Bearberry Square Funding, LLC is, because the company has no website. According to records on file with the State of Delaware, the company was incorporated June 29, 2011. A review of the Sales and Assignment agreement shows a buyer's representative as Robert Shapiro, who is known to be the founder of Woodbridge. West Virginia Records show an address consistent with Woodbridge's California office.
- In its complaint Bearberry concedes that Lucas "did timely rescind the Assignment Agreement"'. Per California Insurance Code which states, in pertinent part, 'At any time before the date on which a court enters a final order approving the transfer agreement pursuant to Section 10139.5, the payee may cancel the transfer agreement, without cost or further obligation, by providing written notice of cancellation to the transferee"