by Structured Settlement Watchdog
In Crystal Linton, et al. v. Access Funding LLC, et al., Case No. 1398, September Term 2020, the Plaintiffs were victims of lead paint exposure who had obtained structured settlements and the resulting stream of payments, as part of the resolution of their tort claims. Sometime after that, Plaintiffs entered into Purchase and Sale Agreements to transfer their rights to those payment streams to Access Funding, a Bethesda Maryland company, whose successor in interest is Reliance Funding, for discounted lump sums.
The Defendants moved to compel arbitration in August 2016 based on the arbitration clause in the Purchase and Sale Agreements. Compelling arbitration in the case effectively would have allowed the Defendants to circumvent the court authorization process mandated by the Maryland Structured Settlement Protection Act. The Maryland Court of Special Appeals found that the Plaintiffs' complaint sufficiently alleged grounds for revocation of arbitration agreement where the clause expressly conditioned the obligation to arbitrate on the “closing” of the transaction and where valid court authorization of the transfer was statutorily required for the transaction to close (CJ § 5-1102).
The Plaintiffs alleged that court authorization had been obtained fraudulently because the Defendants had defrauded not only the Plaintiffs but also the court in the course of obtaining its authorization.
Opinion by Nazarian, J.