by Structured Settlement Watchdog
Are Structured Settlement Transfer Orders Final and Non-Appealable? Maybe. Maybe not. When?
Structured settlement transfer orders may be final and non-appealable, depending on the jurisdiction and specific circumstances of the case. For instance, under Pennsylvania’s Structured Settlement Protection Act, a transfer order can be vacated, as seen in the case of SuttonPark Structured Settlements LLC. However, generally, a transfer is only effective if authorized in advance by a final order of a court of competent jurisdiction.
In October 2023, a Pennsylvania Appellate Court affirmed a lower court's vacated structured settlement transfer in favor of the selling annuitant and does not allow a transferee's assignee to benefit when the factoring company does not deliver the money to the seller. The transferee in the Jones case described herein, was the infamous Advance Funding and the assignee SuttonParkStructured Settlements, LLC. The Jones case, is one of the small but growing number of victories for a vulnerable class of individuals with structured settlements against well funded adversaries.
PA Superior Court Affirms Luzerne County Court of Common Pleas Vacating Prior Structure Transfer Approval
The Luzerne County PA Court of Common Pleas initially approved a structured settlement transfer order but later vacated it, a decision which was subsequently affirmed.
In re Jones, 2023 Pa. Super. 204, 305 A.3d 28 (Pa. Super. Ct. 2023) (October 13, 2023) (Stevens, P.J.E.) SuttonPark Structured Settlements LLC (“SuttonPark”) appealed from the order entered in the Court of Common Pleas of Luzerne County, which GRANTED the petition of Frank Jones (“Jones”) to vacate a transfer order entered under Pennsylvania’s Structured Settlement Protection Act (“SSPA”), 40 P.S. §§ 4001-4009. After a careful review, the Pennsylvania Superior Court affirmed.
The court had originally approved the transfer of assets but after 30 days had run revoked its decision based upon very serious violations of what had been represented to the court. The court had the right to modify its order more than 30 days after entry thereof. The agreement for assignment was never actually carried out and the court, as guardian, was protecting the interests of the innocent injured party.
Advance Funding Factored deal with pro se Annuitant at the Heart of the Matter with Assignee SuttonPark
Frank Jones experienced a personal injury some time ago, which led to litigation and a subsequent settlement. This settlement included a structured settlement, funded with an annuity from Metropolitan Life Insurance Company. As per the agreement, Jones was to receive 72 monthly payments of $2,598.56, spanning from November 28, 2021, to October 28, 2027. Payments increased at 3% annually each November 28th.
Jones entered into a purchase agreement with Advance Funding LLC ("Advance Funding") to transfer his rights to the future structured settlement payments to Advance Funding in exchange for a lump sum purchase price of $75,000.00.
On November 22, 2016, Jones, who was pro se, and Advance Funding, who was represented by counsel, jointly filed a "Petition to Transfer Structured Settlement Pursuant to 40 P.S. § 4001 et seq." Therein, Jones and Advance Funding requested the trial court approve their purchase agreement as described supra regarding "the sale of the structured settlement payment stream." Petition, filed 11/22/16, at 2. They indicated Advance Funding had provided Jones with a Disclosure Statement pursuant to 40 P.S. § 4003, and it would be in Jones' best interest for the trial court to approve the purchase agreement since Jones desired to purchase a home, an automobile, and automobile insurance. Moreover, the parties noted Advance Funding would be transferring its interests to a designated assignee. The trial court order was filed 1/25/2017.
THEN, on July 7, 2022, Jones filed a counseled "Petition for an Order Striking the Judgment and Vacating the Order of [the trial] court [entered on] January 25, 2017." Therein, Jones relevantly averred:
"3.[Advance Funding] did not pay the purchase price to Jones as required by paragraph 6 of the [trial court's January 25, 2017,] transfer order.
4.Because [Advance Funding] did not pay the purchase price to Jones, the transfer violated the Pennsylvania Structured Settlement Protection Act[.]
5. Jones has attempted to contact [Advance Funding] on many occasions and [Advance Funding] has failed to respond.
6.Upon information and belief, [Advance Funding] is no longer in business. Several default judgments have been entered against [Advance Funding] in New York.
7.Further, the principal of [Advance Funding], Dan Cevallos, is a convicted felon, and was barred from acting as a broker by the Financial Industry Regulatory Authority ("FINRA").
8.[Advance Funding's] "assignee"…is SuttonPark[.]
9. Upon information and belief, SuttonPark is receiving periodic payments from the annuity issuer (Metropolitan Life) in the amount of $2,598.56 per month, and has to date, received these monthly payments since November 28, 2021.***
12. Upon information and belief, both the annuity issuer (Metropolitan Life) and the obligor (Metropolitan Tower Resources Group, Inc.) received notice of the 2017 transfer petition and the transfer order, as required by 40 [P.S.] § 4004.***
14. In a case in New Jersey with a similar fact pattern, the transfer order was recently vacated. In re Tavarez, 2021 N.J.Super. Unpub. Lexis 1062 (Superior Court of New Jersey, Law Division,Bergen County, Docket No. BER-L-4041-16). That case also involved Advance Funding, SuttonPark, and Metropolitan Life[.]
15. Court approval of the transfer petition was specifically premised upon Jones' receipt of $75,000.00. Jones did not receive the $75,000.00[.]Jones' Petition, filed 7/7/22, at 1-3 (citations to record omitted)".
Jones requested the trial court vacate the January 25, 2017, transfer order, strike any judgment, and restore the periodic structured payments to Jones, as if the transfer order had never been issued
Specifically, Jones requested the trial court direct Metropolitan Life to resume making monthly payments to Jones and direct SuttonPark to return to Jones each payment it had received from Metropolitan Life with regard to this matter. In essence, Jones requested the trial court restore him to his original position as if the January 25, 2017, transfer order had never been issued.
SuttonPark Paid Factoring Company But Factoring Company Didn't Pay Seller
On September 9, 2022, SuttonPark filed a response in opposition to Jones' petition. Therein, SuttonPark acknowledged that, after the trial court entered the January 25, 2017, transfer order, Advance Funding "assigned to [SuttonPark] its right, title, and interest in and to the Annuity Payments." SuttonPark's Response, filed 9/9/22, at 1.
Moreover, regarding the trial court's January 25, 2017, transfer order, SuttonPark averred the trial court lacked jurisdiction to vacate the transfer order. In this regard, SuttonPark reasoned that the January 25, 2017, transfer order was a final order, and pursuant to 42 Pa.C.S.A. § 5505, the trial court lost jurisdiction to modify or rescind the January 25, 2017, transfer order thirty days after which it was entered. SuttonPark averred that, if Advance Funding failed to comply with the January 25, 2017, transfer order, Jones' only recourse was to file a petition to enforce the terms of the January 25, 2017, transfer order, yet Jones did not request such relief from the trial court.
SuttonPark also averred the trial court did not enter a judgment on January 25, 2017, and thus, to the extent Jones requested the striking of a judgment, there was no basis for the request.
Court Vacates January 25, 2017 Transfer Order, Orders MetLife to Resume Making Payments to Jones
On September 12, 2022, the matter proceeded to a hearing, and by order entered on that same date, the trial court vacated the January 25, 2017, transfer order, struck any judgment that had been entered on January 25, 2017, ordered Metropolitan Life to resume making the periodic payments under the annuity contract to Jones, and directed SuttonPark to return to Jones all periodic payments it had received in this matter. The trial court specifically indicated its order was intended to "restore the parties to their original positions as though the transfer order [entered on] January 25, 2017, had never been issued." Trial Court Order, filed 9/12/22, at 1.
SuttonPark Structured Settlements Appealed October 5, 2022
On October 5, 2022, SuttonPark filed a notice of appeal. On October 20, 2022, the trial court directed SuttonPark to file a Pa.R.A.P. 1925(b) statement, SuttonPark timely complied, and on December 14, 2022, the trial court filed a Pa.R.A.P. 1925(a) opinion.
SuttonPark's "Statement of Questions Involved":
A. Did the trial court err as a matter of law when it granted the petition because the trial court lacked jurisdiction to vacate the January 25, 2017, Order ("the 2017 Order")?
B. Did the trial court err as a matter of law when it granted the petition because Jones failed to allege any legally recognized grounds for vacating the 2017 Order, including, without limitation, Jones' misplaced reliance on the Structured Settlement Protection Act ("the SSPA"), 40 P.S. §§ 4001 et seq., In re Tavarez, No. BER-L-4041-16, 2021 N.J.Super. Unpub. LEXIS 1062 (N.J.Super. Ct., Bergen County, April 16, 2021), and inapplicable principles of equity?
C. Did the trial court err as a matter of law when it granted the petition because Jones failed to create any evidentiary record from which the trial court could determine that the 2017 Order should be vacated?
D.Did the trial court err as a matter of law when it granted the petition because the petition sought to "strike a judgment" and the 2017 Order did not contain a "judgment"?
E. Did the trial court err as a matter of law when it granted the petition because Jones failed to file a brief in support of his petition as required by Luzerne County Local Rules of Civil Procedure?
F. Did the trial court err as a matter of law when it concluded that SuttonPark lacked standing to contest the petition?SuttonPark's Brief at 6 (suggested answers and footnote omitted)."
SuttonPark Contested Juridiction
In its first issue, SuttonPark contended the trial court did not have jurisdiction to vacate the January 25, 2017, transfer order. Specifically, SuttonPark averred the January 25, 2017, transfer order was a final order, and thus, under 42 Pa.C.S.A. § 5505, the trial court lost its jurisdiction to vacate the transfer order thirty days after its entry. Accordingly, SuttonPark argued that, when Jones filed his petition to vacate on July 7, 2022, the trial court no longer had jurisdiction to vacate the order under 42 Pa.C.S.A. § 5505.
Jones Argued Juridiction Based on Extraordinary Cause and/or Extrinsic Fraud
Jones argued the trial court had the authority to vacate the January 25, 2017, transfer order based on "extraordinary cause" and/or extrinsic fraud.
Whether the trial court had the authority to vacate the transfer order is a matter of law. See Manufacturers and Traders Trust Co. v. Greenville Gastroenterology, SC, 108 A.3d 913, 917 (Pa.Super. 2015). "For questions of law, our standard of review is de novo, and our scope of review is plenary." Id.
The trial court suggested it had the authority to vacate the January 25, 2017, transfer order based on "extraordinary cause." Relevantly, the trial court acknowledged the SSPA places the trial court in the "position of a guardian who stands in the place of the payee" where "companies persuade recipients who have little or no skills in handling money to trade some or all of their future payments." Trial Court Opinion, filed 12/14/22, at 3-4. Since the transferee "lures" a payee "into assigning future payments for far less than their actual value," trial courts are tasked with ensuring the best interest of the payee is being met. Id. at 4.
The Court recognized:
"Requiring a judge to serve as guardian to protect the interests places the judge in unfamiliar territory. Generally, the petition to transfer payment is unopposed with plaintiff-payee wanting to transfer payments so that it can receive payments for what he or she considers in its best interests, whether it is or not, and the factoring company wanting it approved so it can make the most money. That requires the trial judge to make an independent determination of whether the sale is in the best interests of the…payee based on economic factors that it is not within its ken and with parties who are not that forthcoming. Moreover, this determination is made even more difficult because the proceedings are non-adversarial, with no factual development and competing positions to inform its judgment as would be the usual.It depends on the forthrightness and good faith of counsel to provide all the information available for the judge to make an informed decision on what is in the best interests of the…payee to avoid fraud on the court. Barber v. Stanko, 258 A.3d 438, 442 (Pa.Super. 2021)".
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SIDE BAR
See my blog coverage of the Barber case Structured Settlement Investors' Bad Hair Day in Barber Case as PA Superior Court Quashes Appeal - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews
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"In the case sub judice, the trial court suggested that, since it stood as a guardian for the payee (Jones) in determining whether to approve the initial transfer agreement, it did so as well after the transfer agreement was approved. Trial Court Opinion, filed 12/14/22, at 3-4.
Further, recognizing the above excerpt from Barber, supra, the trial court determined that, in the instant case, although it was not clear at the time the court approved the transfer agreement, the pro se payee (Jones) was "taken advantage of" by the transferee (Advance Funding).
Appellate Court Found No Error of Law
Specifically, the trial court noted that, after the approval of the transfer agreement, Advance Funding received monies from assigning the future payments to a third party (SuttonPark) without turning the promised monies over to the payee (Jones). Advance Funding then ignored Jones' inquiries about the $75,000.00 payment.
The trial court noted it relied on the representations of Advance Funding's counsel when it approved the transfer agreement on January 25, 2017, and given the lack of forthrightness, which became apparent after the court approved the transfer agreement, the trial court had extraordinary cause justifying its intervention more than thirty days after the entry of the order approving the transfer agreement. We agree and find no error of law. See Stockton, supra.
Further, we note the trial court suggested "extraordinary cause" exists because the January 25, 2017, transfer order was "confusing" as to whether it was the final order or whether a subsequent order was going to be entered. The transfer order provided that "[t]he Payee shall receive from the Transferee, as soon as is practicable following receipt of a non-appealable final order the amount of $75,000.00[.]" Trial Court Order Trial Court Opinion, filed 12/14/22, at 8. Although the January 25, 2017, transfer order appears to have resolved all claims and all parties, , filed 1/25/17, at 2 (emphasis added). The Appelate Court said "We agree with the trial court that the transfer order is "confusing" in that it fails to provide notice to Jones (the pro se payee) whether the January 25, 2017, transfer order was the final order or whether Jones should await the entry of a subsequent order. This confusion also provides "extraordinary cause" justifying the trial court's intervention. See Manufacturers & Traders Trust Co., supra (holding that extraordinary cause exists where a party does not have notice of a final order or there is an oversight or action on the part of the court or judicial process operating to deny a party of knowledge of the entry or understanding of a final order)".
Next, we address SuttonPark's second and third issues, which are intertwined. Specifically, in its second issue, SuttonPark avers the trial court erred in vacating the January 25, 2017, transfer order since Jones did not prove any legal grounds for doing so. In its third issue, SuttonPark avers Jones failed to create any evidentiary record supporting the trial court's vacating of the transfer order.
Initially, regarding SuttonPark's claim that there is no evidentiary record, we note that, on September 12, 2022, the trial court held a hearing regarding Jones' July 7, 2022, petition to vacate the January 25, 2017, transfer order. During the September 12, 2022, hearing, Jones and SuttonPark were represented by separate counsel.
Moreover, during the hearing, and as otherwise clear from the record, there was no dispute that Jones entered into the transfer agreement with Advance Funding whereby Advance Funding was to pay Jones a lump sum of $75,000.00, and, in exchange, Advance Funding had the right to receive the periodic payments from the structured settlement with Metropolitan Life. N.T., 9/12/22, at 7. The parties stipulated that Advance Funding assigned its right to receive the periodic payments under the transfer agreement to SuttonPark. Id. at 7-10.
Further, .there was no dispute that Jones never received the lump sum of $75,000.00 from either Advance Funding or SuttonPark, despite the fact SuttonPark was receiving from Metropolitan Life the periodic payments from the structured settlement. Id. at 4, 8. It is clear from the record the parties did not dispute the material facts in this matter; but rather, they disputed the application of the law to the facts
Additionally, Jones attached eight exhibits to his July 7, 2022, petition, including Jones' sworn and notarized affidavit; copies of six default judgments entered against Advance Funding in six separate cases; a report from the Financial Industry Regulatory revealing that the principal of Advance Funding, Dan Cevallos, is a convicted felon who is barred from acting as a broker by FINRA; and caselaw upon which Jones relied.
Regarding the application of the law, as the trial court determined, and as contemplated by the initial November 22, 2016, petition to transfer, as well as the January 25, 2017, transfer order, Advance Funding assigned its rights under the transfer order to SuttonPark.
"An assignment is a transfer of property or a right from one person [or entity] to another; unless qualified, it extinguishes the assignor's right to performance by the obligor and transfers that right to the assignee." Legal Capital, LLC. v. Medical Professional Liability Catastrophe Loss Fund, 561 Pa. 336, 750 A.2d 299, 302 (2000). "Under the law of assignments, the assignee stands in the same shoes as the assignor. An assignment does not confer on the assignee any greater rights than those possessed by the assignor." Etter v. Industrial Valley Bank & Trust Co., 515 A.2d 6, 9 (Pa.Super. 1986) (citations, quotation marks, and quotation omitted).
As the trial court determined in the case sub judice:
Advance Funding executed an assignment of Advance Funding's rights as outlined in the structured settlement [transfer] order to SuttonPark[.] There is no doubt that Sutton Park paid monies to Advance Funding. [However,] Jones was never paid his full consideration. There isn't any dispute that Jones wasn't paid and the assignment by Advance Funding of its right(s) to payment is predicated by Jones being paid.
As assignment of a contract right grants the assignee no greater rights than the assignor possesses
See Smith v. Cumberland Group Limited, 687 A.2d 1167 (Pa.Super. 1997). Since Jones wasn't paid [under the transfer of the structured settlement], the assignment by Advance Funding to SuttonPark is void.
SuttonPark's right to payment is no greater than Advance Funding, whose failure to pay Jones negates the assignment by Advance Funding to SuttonPark. See Smith, supra.Trial Court Opinion, filed 12/14/22, at 8.
We agree with the trial court's sound reasoning.
SuttonPark's assignor, Advance Funding, did not pay Jones, and, therefore, failed to perform under the January 25, 2017, transfer order. Consequently, under the applicable law regarding assignments, if Advance Funding is not entitled to the future stream of periodic payments because of its failure to perform, its assignee, SuttonPark, is also not entitled to the future stream since the "assignee stands in the same shoes as the assignor." Etter, 515 A.2d at 9. Accordingly, given Advance Funding's non-performance, and the trial court's role as a "guardian" under the SSPA, we conclude the trial court did not err in vacating the January 25, 2017, transfer order.
Advance Funding and Dan Cevallos Prior Blog Coverage
Investors in New York, Massachusetts, Oregon and Oklahoma, among others, have been victimized by alleged frauds perpetuated by Advanced Funding and Dan Cevallos.
ADVANCE FUNDING LLC, Petitioner, For Judicial Approval of a Transfer Agreement with JEREMY ALCANTARA. In accordance with New York General Obligations Law § 5-1701 et seq., v JEREMY ALCANTARA, METROPOLITAN LIFE INSURANCE GROUP, and METLIFE TOWER RESOURCES GROUP, INC. Index 20842/2014E Orders Vacated in Bronx Structured Settlement Cash Now Scam by Convicted Felon | Bad News For Investors
MELISSA DIEGO Plaintiff, v. ADVANCE FUNDING LLC, ALLSTATE SETTLEMENT CORPORATION, ALLSTATE LIFE INSURANCE COMPANY
OF NEW YORK, and HABITUS FUNDING 808043/2022E Filed May 26, 2022 Download 2022.05.26 1 Diego v Advance Funding Summons and Complaint 808043_2022E[originally plead as Melissa Diego, Plaintiff v Advance Funding LLC, Defendant New York State Supreme Court, Bronx County Index 25376/2020E] Advance Funding was described in the Complaint as a "Madoff like Ponzi scheme".
Advance Funding LLC Structure Advance Program a Madoff Like Ponzi Scheme Says New Complaint - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews June 10, 2020
Bronx Structured Settlement Cash Now Scam by Convicted Felon | Bad News For Investors - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews May 23, 2020
How is Recidivist Dan Cevallos of Advance Funding Not in Jail? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews March 2020
Sell Your Structured Settlement But You Have to Sign a Non Disclosure Agreement? - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and John Darer Reviews December 13, 2015 (How did SuttonPark underwriters miss this?)
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