by Structured Settlement Watchdog
J.G. Wentworth has sued one of its clients, claiming she defaulted on a payment due to them in December 1, 2016 in the amount of $130,000.00.
The lawsuit pits J.G. Wentworth S.S.C. Limited Partnership against Joan L. Singleton of Lakewood, Ohio, in the Philadelphia County Court of Common Pleas for failure to turn over a lump sum. In a November 1996 deal, consummated before the enactment of the Victims of Terrorism Tax Relief Act of 2001, that begat IRC 5891, Singleton entered into a purchase agreement with Wentworth, to purchase from Joan Singleton, the right to receive certain future periodic annuity payments, in exchange for a lump sum cash payment.
Per this purchase agreement, Singleton sold to JG Wentworth the right to receive 15 monthly payments of $2,500.00 each, starting Dec. 15, 1996 and ending on Feb. 15, 1998; a $20,000.00 portion of a $37,500.00 due on June 15, 1998; one lump sum payment of $40,000.00 due on Dec. 1, 2001; one lump sum payment of $45,000.00 due on Dec. 1, 2004; one lump sum payment of $50,000.00 due on Dec. 1, 2007; one lump sum payment of $62,500.00 due on Dec. 1, 2010; one lump sum payment of $85,000.00 due on Dec. 1, 2013 and, a $130,00.00 payment due on Dec. 1, 2016.
Singleton became entitled to the payments after being named the payee of a structured settlement annuity contracts issued by Omaha Life Insurance Company. Singleton agreed to not otherwise interfere with Wentworth’s right to receive and collect the payments, or make any changes in instructions regarding their distribution.
The only payment in default is the December 1, 2016 payment of $130,000 of the total $180,000 she received from Omaha Life Insurance Company.
“Singleton is in default under the purchase agreement by virtue of the fact that she has failed to ensure Wentworth received the payments it purchased, and has wrongfully retained the $130,000.00 portion of the $180,000.00 lump sum payment due on Dec. 1, 2016”
The plaintiff seeks damages of the $130,000, plus interest and costs of suit. Should be a win for JG Wentworth.
The lawsuit is informative both about the history of structured settlement factoring and risks associated with investing in structured settlement derivatives. In those days the buyer had to rely upon the integrity of the seller to turn over payments or change the address for the mailing of payments. Since the VTTRA 2001 was signed into law by George W. Bush in January 2002, a judge must determine if the deal is in the best interest of the seller and any applicable dependents and a "qualified order" must be issued which assuming the integrity of the participants should provide comfort to all sides. Unfortunately the structured settlement secondary market has "barfed up" enough bile over the intervening years to fill cesspools from coast to coast.
Reference: Penn Record February 15, 2017
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