IN RE: the Application of CBC Settlement Funding (2026)

The following numbered papers were used on this petition: NYSCEF Document Numbers 1-33.

Upon the foregoing papers, a hearing and oral argument having been held, and due deliberation having been had, the within petition for approval of a transfer of structured settlement payment rights is determined as follows.

Introduction

In the within special proceeding, petitioner CBC Settlement Funding, LLC ("CBC") has applied, pursuant to the Structured Settlement Protection Act (hereinafter "SSPA") (General Obligations Law § 5-1701 et seq.), for the approval of the transfer of 240 life-contingent payments of $999.98 beginning on March 5, 2030 through and including February 5, 2050, increasing 3% annually, due Nicole Marshall, as Trustee of the Dwayne White Supplemental Needs Trust ("Ms. Marshall"), under a structured settlement agreement. This special proceeding was commenced by CBC, having been brought on by way of an order to show cause in which Ms. Marshall, Everlake Settlement Corporation, and Wilton Reassurance Life Company of New York were named as respondents. CBC's petition states that in exchange for Marshall assigning her rights to the aforesaid settlement proceeds, CBC would pay the Dwayne White Supplemental Needs Trust $55,000.00.

Legal Background

Prior to approval or denial of an application to transfer future proceeds from a structured settlement, it is the duty of the court to analyze the details surrounding the request.

"Enacted in 2002, the purpose of the SSPA, as reflected in the legislative materials, was to establish 'procedural safeguards for those who sell settlements that are awarded as a result of litigation,' due to a recognition that '[m]any of the people who receive such settlements are being compensated for very serious, debilitating injuries, and have been unfairly taken advantage of in the past by the businesses that purchase their settlements' " (Pinnacle Capital, LLC v O'Bleanis, 214 AD3d 913, 915 [2d Dept 2023], quoting Mem in Support, Bill Jacket, L 2002, ch 537 at 5).

"Structured settlements serve strong public policy objectives in that they afford long-term financial protection for injury victims and their families. They protect against loss or premature dissipation of lump sum recoveries. They avoid the shift of responsibility for victims' care to public assistance programs. [¶] In the past several years there has been an explosion of efforts by unregulated entities, known as 'factoring companies,' to separate recipients of structured settlement payments from those payment streams. The subsequent factoring of structured settlement payments undermines the public policy objectives of structured settlements. They deprive injury victims and their families of the long-term financial security their settlements are designed to provide. The transfer can involve discounts corresponding to over 50% interest per year." (Letter from Life Ins. Council of NY, Inc., Bill Jacket, L 2002, ch 537.)

Yet, "The sale of structured settlements can serve the interest of a victim who has been awarded compensation for injuries or other damages, particularly if the victim has immediate needs that must be met. However, such persons may be particularly vulnerable to the overbearing sales tactics of structured settlement purchasers. The mandated judicial review of all such sales, coupled with the required disclosures of amounts that will be realized from the sale and the discount rate, should help ensure that the best interests of the payee[ ], and his or her family, are served." (NY Atty Gen Mem in Support, Bill Jacket, L 2002, ch 537.)

"Any purported transfer entered into after July 1, 2002 without court approval is unenforceable, and payees may not waive their rights under the Act" (Matter of Law First Fin., LLC v Jamestown Life Ins. Co., 72 Misc 3d 1207[A], 2021 NY Slip Op 50672[U] [Sup Ct, Erie County 2021], citing General Obligations Law §§ 5-1706, 5-1708 [a]).

"[L]egislative history makes clear that to avoid the victimization so prevalent in the industry, the courts are intended to examine the various statutory criteria and determine whether the proposed sale will truly serve the 'best interest' of the payee" (Matter of 321 Henderson Receivables, L.P. v Martinez, 11 Misc 3d 892, 895 [Sup Ct, NY County 2006]; see also General Obligations Law § 5-1706 [b]).

"Clearly, the New York State Legislature in enacting SSPA and in empowering the courts with the discretion to determine whether the terms of a proposed transfer of future payments are fair and reasonable did not intend for the courts to be mere rubber stamps" (Matter of Settlement Capital Corp. (Ballos), 1 Misc 3d 446, 461 [Sup Ct, Queens County 2003]). When the original 2002 legislation enacting the SSPA was amended in 2004 to clarify that hardship was not a prerequisite for approving a sale of structured settlement proceeds, the Attorney General wrote that "we do note that there has been a very positive trend among members of the Judiciary to be sparing in approval of such sales, as was intended where the original legislation was drafted. Therefore, while hardship may not be required as a specific finding should this bill be approved, there is in our view, no reason for judges to refrain from weighing that factor, along with any other consideration they deem relevant in determining the 'best interest' criterion." (NY Atty Gen Mem in Support, Bill Jacket, L 2004, ch 480.)

Accordingly, in the present decision, the Court looks first to the statutory requirements of the SSPA, followed by an analysis of the best interest of Dwayne White, the beneficiary of the Dwayne While Supplemental Needs Trust.

Compliance with Procedural Requirements

The SSPA contains various requirements. The Court finds that the following requirements were complied with by the petitioner in the papers submitted:

• At least ten days before the structured settlement transferor  ¹ signs a transfer agreement, the transferee must provide a disclosure statement to the transferor, setting forth nine informational matters (see General Obligations Law § 5-1703). NYSCEF Doc No. 6 contains the disclosure statement provided to Ms. Marshall.

• The special proceeding seeking approval of the transfer shall be commenced by order to show cause in the Supreme Court of the county where the transferor resides or where the structured settlement was approved (see General Obligations Law § 5-1705 [a], [b]). Ms. Marshall resides in Kings County, so commencement of this special proceeding via order to show cause in Supreme Court, Kings County, by CBC, is proper.

• A copy of the order to show cause and petition must be served upon all interested parties at least twenty days before the time at which the petition is noticed to be heard (see id. § 5-1705 [c]). This was effectuated (see NYSCEF Doc Nos. 27-32).

• The transferor has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received such advice or knowingly waived such advice in writing (see General Obligations Law § 5-1706 [c]). Ms. Marshall acknowledged receipt of the advice and waived her right to seek independent professional advice (see NYSCEF Doc No. 8).

• A petition for approval of a transfer of structured settlement payment rights shall include a copy of the transfer agreement, a copy of the disclosure statement and proof of notice of that statement pursuant to General Obligations Law § 5-1703, and a listing of each of the transferor's dependents, together with each dependent's age (see General Obligations Law § 5-1705 [d] [i], [ii], [iii]). These were all complied with (see NYSCEF Doc Nos. 1, 4-8).

• The transferor is required to attend the court hearing on the petition, unless attendance is excused for good cause (see id. § 5-1705 [e]). Ms. Marshall attended the hearing; so too did Mr. White.

General Obligations Law § 5-1705 [d] [iv] requires that a petition for approval of a transfer of structured settlement payment rights include a statement setting forth whether there have been any previous transfers or applications for transfer of the structured settlement payment rights and giving details of all such transfers or applications for transfer. Mr. White and Ms. Marshall's affidavits included the following:

• Shortest Drive, LLC; Supreme Court, Kings County, Index No. 503469/2017, withdrawn.

• Shortest Drive, LLC; Supreme Court, Kings County, Index No. 521833/2016, denied.

• Seneca One, LLC; Supreme Court, Suffolk County, Index No. 8524/2016, denied.

• Seneca One, LLC; Supreme Court, Suffolk County, Index No. 4541/2016, denied.

• J.G. Wentworth Originations, LLC; Supreme Court, Kings County, Index No. 14517/2013, granted.

• Settlement Funding of New York, LLC; Supreme Court, Suffolk County, Index No. 13903/2003, withdrawn.

• G7 Crescenta, LLC; Supreme Court, Kings County, Index No. 525586/2020, granted.

• J.G. Wentworth Originations, LLC; Supreme Court, Kings County, Index No. 517509/2025, denied.

• Reliance Funding, LLC; Supreme Court, Suffolk County, Index No. 617549/2017, denied.

• Assured Management Corp., Supreme Court, Suffolk County, Index No. 600688/2025, denied.

Both Mr. White and Ms. Marshall were not completely accurate. They failed to mention Peachtree Settlement Funding LLC v J.E., et al. (Sup Ct, Kings County, Index No. 518919/2020) and J.G. Wentworth Organizations, LLC v Nicole Marshall et al. (Sup Ct, Kings County, Index No. 525238/2023).

Although these deficiencies might be deemed minimal, nonetheless, the petition did not contain all that is required to apprise the Court of "whether there have been any previous transfers or applications for transfer of the structured settlement payment rights and giving details of all such transfers or applications for transfer" (General Obligations Law § 5-1705 [d] [iv]). In a prior case, this Court held as follows:

A petitioner under SSPA must provide complete disclosure regarding all previous attempted transfers, be they court-approved or not, and this Court concludes as a matter of law that at a minimum the following details concerning them must be provided:

• Date of agreement

• Purchaser

• Amount of structured settlement proceeds transferred or attempted to be transferred

• Purchase price of transferred or attempted-to-be-transferred structured settlement proceeds

• Discount rate and other financial details, as set forth in General Obligations Law § 5-1703

• Reason for transferor's sale of structured settlement proceeds

• Caption, court, county, and index number of special proceeding

• Justice's name

• Outcome of special proceeding and the court's reasoning

• If transfer was approved by the court, how the funds received by the transferor were used

Providing this information would comport with the legislative purpose in enacting the SSPA initially in 2002, as well as in amending it in 2010 to require that details of previous transfers and applications be set forth. The sponsor of the 2010 amendatory provisions wrote: "These changes . . . will insure that the court . . . is properly informed about the history of the structured settlement and can make inquiries of the payee to ensure compliance with the statute (Letter from Hon. Helene E. Weinstein, June 25, 2010, Bill Jacket, L 2010, ch 511). Another proponent wrote: "The additional information . . . will provide the court with the tools necessary to properly protect the plaintiff and society, who may bear the costs of an insolvent injured plaintiff, as it renders its decisions (Mem NY Consumer Protection Board in Support, Bill Jacket, L 2010, ch 511). (Matter of Sapphire Valley Group, LLC v Prudential Assigned Settlement Servs. Corp., 78 Misc 3d 1224[A], 2023 NY Slip Op 50343[U], *6-7 [Sup Ct, Kings County 2023].)

Significantly, the petition herein did not set forth with respect to the previous transfers or applications for transfer the dates of the agreements, the amounts transferred or attempted to be transferred, the purchase prices, the discounted rates and other financial details, the stated reasons for seeking the transfers, accurate information regarding two applications (discussed supra at 4), the court justices' names, the courts' reasoning, and how proceeds from transfers were used. This weighs heavily on this Court.

Background of Factors to Consider

Mr. White is willing and anxious to transfer the payments in question. However, according to one court, "the structured settlement payee's willingness to transfer the settlement proceeds has no bearing on this Court's determination of whether the transfer is fair and reasonable" (Matter of J.G. Wentworth Originations, LLC (Allstate Life Ins. Co. of NY — Kwant), 61 Misc 3d 1224[A], 2018 NY Slip Op 51730[U], *1 [Sup Ct, Dutchess County 2018]; see Matter of Settlement Funding of NY, 195 Misc 2d 721, 724 [Sup Ct, Rensselaer County 2003]). While a transferor's desires can be taken into account, a court reviewing a proposed transfer of structured settlement proceeds must assess it objectively.

Accordingly, this Court must focus on the circumstances and details surrounding the transfer. When determining the best interest of the transferor, courts have held that there exist both numerical and personal elements that should be considered. "Two distinct substantive inquiries are required of the court before transfer of a structured settlement can be approved[,] one assessing whether the proposed transfer is in the best interest of the payee and the other assessing whether the transaction is fair and reasonable" (Matter of Barr v Hartford Life Ins. Co. (4 Misc 3d 1021[A], 2004 NY Slip Op 50980[U], *1 [Sup Ct, Nassau County 2004]). Furthermore, "[w]hile considering the best interest of the payee, the court must also determine whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount are fair and reasonable" (Matter of J.G. Wentworth Originations, LLC (Allstate Life Ins. Co. of NY — Kwant), 2018 NY Slip Op 51730[U], *1).

Fairness and Reasonableness of the Transaction

Looking first to the numerical elements of an agreement of the type under review, it has been noted that "there has been little agreement as to what constitutes a proper discount rate or what amount of fees and costs are allowable. Courts have also reached different conclusions with regard to the fairness and reasonableness of the fees and costs associated with the transaction [citations omitted]" (Matter of Am. Farms, LLC v John Hancock Assignment Co., 61 Misc 3d 1203[A], 2018 NY Slip Op 51349[U], *3-4 [Sup Ct, Kings County 2018]). "Although what constitutes a fair and reasonable transaction is also left undefined in the statute, two factors are specifically identified for consideration: the fees and expenses and the discount rate" (Matter of Barr v Hartford Life Ins. Co., 2004 NY Slip Op 50980[U], *1). The reasonableness of the fees and expenses is not in question here as DRB has averred that it does not intend to seek any fees or expenses resulting from the instant transaction (see NYSCEF Doc No. 6 at 14).

Based on CBC's own New York Disclosure Statement, Ms. Marshall would be selling $322,438.08 of future life-contingent payments for $55,000.00, when the discounted amount applying the IRS's 4.60% applicable federal rate would be much more, $169,478.14 (see id. at 14-15). CBC disclosed that comparable annuities of the $322,438.08 to be paid could be obtained for $163,522.60 or $167,979.58 (see id. at 15), i.e., if one were to purchase a similar annuity yielding $322,438.08, the purchase price would be either $163,522.60 or $167,979.48, according to two comparables. This demonstrates that it would be eminently unfair and unreasonable to pay someone $55,000.00 in exchange for 240 life-contingent monthly payments over the period of March 5, 2030 to February 5, 2050, totaling $322,438.08.

Best Interest of the Transferor

General Obligations Law § 5-1706 (b) provides:

No direct or indirect transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been authorized in advance in a final order of a court of competent jurisdiction based upon express findings by such court that:

. . .

(b) the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents; and whether the transaction, including the discount rate used to determine the gross advance amount and the fees and expenses used to determine the net advance amount, are fair and reasonable [emphasis added].

The court in Matter of Settlement Capital Corp. (Ballos), 1 Misc 3d at 455, articulated the meaning of the phrase "best interest of the payee" in this context as follows:

After an independent analysis of decisional law in this and other jurisdictions, and consideration of the legislative history of SSPA, this court determines that the best interest prong should be assessed on a case-by-case basis, giving specific consideration to such factors as the payee's age; mental and physical capacity; maturity level; ability to show sufficient income that is independent of the payments sought for transfer; capacity to provide for the welfare and support of the payee's dependents; the need for medical treatment; the stated purpose for the transfer; and the demonstrated ability of the payee to appreciate the financial terms and consequences of the proposed transfer based upon truly independent legal and financial advice.

Additionally, courts must take into consideration "whether the proposed transfer of structured settlement payments, which were designed to preserve the injured person's long-term financial security, will provide needed financial rescue without jeopardizing or irreparably impairing the financial security afforded to the payee and his or her dependents by the periodic payments" (id.).

The Supplemental Needs Trust of Dwayne White was established on February 15, 1996, pursuant to an order of the Hon. Justice Joseph Levine of Supreme Court, Kings County. On July 5, 2023, Nicole Marshall was appointed as successor trustee pursuant to an order of Hon. Justice Gretchen Walsh of Supreme Court, Westchester County. Mr. White suffers from cerebral palsy with spastic diplegia as a result of injuries suffered at birth. As a result of a settlement of a personal injury claim, he became the beneficiary of structured settlement payments.

Mr. White has one minor dependent. Additionally, it is apparent to this Court that he possesses sufficient mental capacity. Mr. White is a 44-year-old adult who has been without a permanent residence since 2015.

Mr. White testified that he currently has no form of income besides $1,050.00 in Social Security Disability benefits and $298.00 in EBT Food Assistance.

Mr. White testified that he intends to use the $55,000.00 to be paid from CBC as follows: to purchase a vehicle for around $20,000 to $25,000, use $2,000 to $5,000 to modify the vehicle to accommodate his disability so that it can be safely used, and obtain an apartment and pre-pay one or two years of rent for himself and his family.

Conclusion

"The interest of public policy is preserved by [structured settlements to resolve tort claims] because it ensures a compensation stream to pay for future care or needs. It serves to prevent settlement funds from being dissipated, and such injuries becoming the responsibility of the public health care system" (Mem NY Consumer Protection Board in Support, Bill Jacket, L 2010, ch 511). "Consumers of one-time structured settlement payment services must be accountable to the court and provide a justifiable reason for amending the court[ ] order and seeking to liquidate their structured settlement into a lump sum payment" (id.).

As acknowledged above, the legislative purposes underpinning the SSPA were both societal and personal in nature. The public at large needed to be protected as did compensated tort victims. To approve the transfer at bar in this special proceeding, this Court would undermine the legislative priorities of avoiding having tort victims become public charges, preventing resourceful factoring companies from preying on them, enabling individuals who have serious needs for immediate cash to obtain it, requiring complete disclosure of transfer situations, and facilitating courts' informed consideration of transfers. (See supra at 1-2.)

The SSPA was created to allow courts to act as a shield preventing vulnerable individuals from being exploited by those more privileged in their knowledge of the intricacies of the financial system. The discretionary nature of the SSPA grants the courts the right to analyze applications substantively while simultaneously scrutinizing parties' adherence to procedural rules. This Court performs its review of the proposed transfer herein, bearing in mind the legislative goals in enacting the SSPA.

The Court is constrained to reject the proposed transfer based on the best interest of the transferor, taking into consideration the transferor's age, maturity level, stated purpose for the transfer, and demonstrated ability to appreciate the financial terms and consequences of the proposed transfer. This Court is of the view that Mr. White's interests would be better served by receiving the 240 life contingent monthly payments of $999.98 beginning March 5, 2030 through and including February 5, 2050, increasing 3% annually.

Mr. White stated that he would use the money from the settlement to purchase a vehicle, modify the vehicle, obtain an apartment, and pre-pay one or two years of rent. He testified that he has relied on others to provide him with a place to stay, for rides, and for small, frequent loans of money. He also testified that he has not seen his two daughters in over a year. Should he no longer have a place to stay, Mr. White predicts he will have to return to a homeless shelter, which would further impair his ability to see his children. Mr. White feels uncomfortable and unwanted in his current living situation and would prefer to be able to obtain his own housing.

Although the Supplemental Needs Trust of Dwayne White was established on February 15, 1996 pursuant to an order of the Hon. Justice Joseph Levine of Supreme Court, Kings County and Mr. White was supposed to begin receiving structure settlement proceeds on March 5, 2000, Mr. White has testified that he has not received most of the funds. Although two structured settlement transfers have been made in the past, including one for $94,500.00, Mr. White has not been able to use most of this lump sum. He testified that the previous trustee of his supplemental needs trust had grossly mismanaged his funds and he had not been able to use most of them. This deprived him of both the steady income of structured settlement payments and the proceeds of such sales, contributing to his current financial situation.

While Mr. White attests that this sale of his future payments will not affect his current or near-term income and he will continue to receive sufficient payments to meet his ongoing living expenses, the Court has reservations regarding this claim. The proposed sale amount of $55,000.00 would allow Mr. White to purchase and modify for use a vehicle, which using Mr. White's lowest estimate, would cost $22,000.00, leaving him $33,000.00 to achieve housing stability. Using Mr. White's estimate of $1,325.00 for rent, he would be able to prepay around two years of rent. After that, Mr. White will likely have to continue living off his Social Security Disability benefits of $1,050.00 until 2050, which will not permit him to continue renting the same apartment long term. Structured settlements are designed to preserve long-term financial security. Granting the sale of such structured settlement proceeds here would deprive Mr. White of a steady future income in exchange for a significantly discounted amount which has not been sufficiently demonstrated to provide for Mr. White's future needs, therefore undermining the stated purpose of structured settlements.

Furthermore, the proposed transfer raises serious concerns regarding Mr. White's continued eligibility for Medicaid and compliance with the requirements governing his Supplemental Needs Trust. The Departments of Social Services for New York and Suffolk, interested and statutorily recognized parties, have objected to the transaction on the ground that it may constitute a transfer for less than fair market value and thereby jeopardize Mr. White's benefits. If this does occur, Mr. White may be left without healthcare for the foreseeable future. As he has demonstrated ongoing health needs, Mr. White could potentially incur medical costs not factored into his cost-of-living calculations, further depleting the amount of the proposed sale.

The procedural history of this matter further counsels against approval. Mr. White has made numerous prior applications to transfer structured settlement payments, many of which were denied on the grounds that they were not in his best interest or that the proposed terms were unfair. The recurrence of similar applications, often supported by varying stated purposes, raises concerns regarding the sustainability of the proposed financial strategy and the adequacy of fiduciary oversight.

Ms. Marshall, acting as the trustee, has not demonstrated a sufficient understanding of the consequences of the proposed transfer. She testified that she was unaware that the proposed transfer could jeopardize Mr. White's Medicaid eligibility and that large purchases must be approved by the Department of Social Services. Furthermore, she testified that she was unfamiliar with the circumstances that brought about Mr. White's trust, Mr. White's daily needs, the details of his disability, and his financial situation. These circumstances give the Court pause as to whether the long-term financial consequences of the proposed transfer have been fully appreciated. Given that Mr. White has testified to his experience with trustee mismanagement of lump sum payments and the Court's strong interest in preserving Mr. White's long-term financial stability, the Court finds that the approval of such transfer would risk repeating the same harm and cannot conclude that his long-term financial interest will be sufficiently safeguarded by the proposed transfer.

Additionally, while it is recognized that Mr. White's stated reasons for the transfer are admirable, he seeks to accomplish them by selling his structured settlement proceeds at an unfair and unreasonable discount. In CBC's Disclosure Statement, it states that "[t]he discounted present value of the aggregate payments at 4.6% is $169,478.14[, which] is the calculation of the current value of the transferred structured settlement payments under federal standards for valuing annuities" (NYSCEF Doc No. 6 at 15). Furthermore, according to the Disclosure Statement, "If you were to purchase an annuity with comparable payments to those being purchased by us, the premium cost for such comparable would be as follows: Nassau Life Insurance Company: $163,522.60[, and] Manhattan Life Insurance Company: $167,979.48" (id.). The agreed upon price between CBC and Ms. Marshall of $55,000.00 is significantly less than these approximations.

The Court herein concludes that the proposed sale of Mr. White's structured settlement proceeds is not in his best interest.

For the foregoing reasons, it is hereby ORDERED, ADJUDGED, and DECREED as follows:

(1) The findings necessary for a court to approve a transfer of structured settlement payment rights pursuant to General Obligations Law § 5-1706 have not been established.

(2) The application by petitioner CBC Settlement Funding to approve a transfer of $322,438.08 of respondent Dwayne White's future structured settlement proceeds payments from March 5, 2030 to February 5, 2050, for $55,000.00, is denied.

(3) The within special proceeding is dismissed.

(4) Within ten days of the entry of this decision, order, and judgment, petitioner CBC Settlement Funding shall serve a copy of it upon all respondents herein (a) by first-class mail (with a certificate of mailing being obtained) to all known residence and business addresses, (b) by certified mail, return receipt requested, to all known residence and business addresses, and (c) by email to all known email addresses for them; proof of said service shall be filed on NYSCEF within ten days after service is effectuated.

(5) A copy of this decision, order, and judgment shall be annexed to any future petitions commencing proceedings in this or any other county under the Structured Settlement Protection Act seeking approval of transfers of any and all remaining payments due respondent Dwayne White pursuant to the subject structured settlement.

FOOTNOTES

1.   . "Payee" is the statutory term to refer to the one who would be selling structured settlement payments to a purchaser for immediate cash. " '[P]ayee' means an individual who is receiving tax free payments under a structured settlement and proposes to make a transfer of payment rights thereunder" (General Obligations Law § 5-1701 [h]). The Court, however, prefers to use the term "transferor" instead of "payee" inasmuch as in the context of a proposed sale of structured settlement payments, the "payee" is in actuality a "transferor."

Aaron D. Maslow, J.