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IN RE: the Petition of LAW FIRST FINANCE, LLC, for Judicial approval of Structured Settlement Annuity Sale and Assignment Agreement with Payee S.D., pursuant to Article 5, Title 17 of the New York General Obligations Law, Petitioners, v. JAMESTOWN LIFE INSURANCE COMPANY and Genworth Life and Annuity Insurance Company, Respondents.
Petitioner has applied, pursuant to the Structured Settlement Protection Act (the “Act”), General Obligations Law (“GOL”) § 5-1701 et seq., for approval of the transfer of the rights to certain structured settlement payments due and owing to Steve Dotzler, under a structured settlement agreement (the “Agreement”). The pending application marks the tenth (10th) time Mr. Dotzler has sought to invade the Agreement since 2005.
By the terms of the proposed transfer, Mr. Dotzler seeks to transfer one (1) lump sum payment in the amount of $300,000, due on December 14, 2024, in exchange for an immediate net payment of $239,000.
As a result of the structured settlement arising out of Mr. Dotzler's prior personal injury claims, he became entitled to receive future annuity payments.
The Act was enacted out of concern that structured settlement “payees,” such as Mr. Dotzler, are especially prone to being victimized, resulting in the quick dissipation of their awards (Matter of Settlement Funding of NY, 195 Misc 2d 721 [Sup. Ct. Rensselaer County 2003]). The Act protects payees from being taken advantage of by businesses seeking to acquire their structured settlement payment rights. The Act discourages such transfers by requiring would-be transferees to commence special proceedings for the purpose of seeking judicial approval of the transfer (GOL §§ 5-1705, 5-1706). Transferees bear the attendant filing fees and costs and may not recoup them if the application is denied (GOL§ 5-1704 [c]). Any purported transfer entered into after July 1, 2002 without court approval is unenforceable (GOL § 5-1706), and payees may not waive their rights under the Act (GOL§ 5-1708 [a]). Transferees are barred from incorporating certain provisions in the transfer agreements (GOL§ 5-1704), and are also required to inform the payee of the terms of the proposed transfer (GOL§ 5-1703).
The transferee must also advise the payee “in writing” “to seek independent professional advice regarding the transfer,” and the payee must either seek such advice or sign a written waiver of the opportunity to seek independent advice and that he or she declined to seek it (GOL § 5-1706[c]).
In evaluating a petition made pursuant to the Act, the court must make a two-prong inquiry as to whether the “the transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependants; 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” (GOL § 5-1706[b]).
In making such evaluation, the court is mindful that,
[t]he payment structure in all of these cases was determined by either judicial process, subject to articles 50-a and 50-b of the CPLR, or by negotiations in which the payee's interests were represented. As such, it was presumed to be the best compensation for the payee's injuries at the time of the verdict or settlement. To overcome this presumptive validity, ․ there must be a showing, by clear and convincing evidence, of an unforeseeable change in circumstances that would justify the sale of rights to future payments (Matter of Henderson Receivables Limited Partnership (DeMallie), 2 Misc 2d 463, 468 [Sup Ct Monroe County 2003]).
Turning to the Petition in the instant matter, Mr. Dotzler is forty-one (41) years old, single, and has no dependants. He earns approximately $1,200 per month as a landscaper, and also receives income in the amount of $2,000, per month from that portion of his annuity which he does not seek to sell, resulting in annual total income of approximately $38,400 (Doc. 5; ¶¶1-4).
In the event the Petition were granted, Mr. Dotzler indicates he will use the funds to invest in a business ($237,000) and pay $2,000 toward an automobile loan (Id., at ¶¶8-9).
The pending application is the tenth such application Mr. Dotzler has made, since 2005.1
Mr. Dotzler made his first four (4) applications in 2005, 2006, 2007, and 2011, all of which were granted. As a result, he received in excess of $140,000, and stated that he would use the proceeds as follows:
(i) approximately $20,000 toward the down payment and purchase of vehicles; (ii) approximately $10,000 toward personal debt and paying off family member debts; (iii) a portion toward purchasing modern/antique furniture ․, and (iv) investing as a silent partner in the capital investment industry, working with Aaron's Attic, a thrift store/gift shop, to buy and sell assets totaling of (sic) approximately $110,000 (see Index No. 805869/2019, Doc. 18, ¶4).
Mr. Dotzler did not identify the amount of funds he received to purchase “modern/antique furniture.” Copies of the Orders granting the prior applications reflect that Mr. Dotzler sold the right to receive $192,000 over time 2 .
In 2016, Mr. Dotzler made a fifth application, which was also granted. As a result, he received $109,750, in exchange for transferring the right to receive a lump sum payment in the amount of $200,000 on December 14, 2024 (Index No. 804221/2016; Doc. 9).
In May 2019, Mr, Dotzler made the sixth application to invade his annuity. He sought to transfer the right to receive a lump sum payment in the amount of $300,000 on December 14, 2024, for an immediate net payment to him in the approximate amount of $174,000, and he stated that he intended to use the proceeds received from the transfer, as follows:
• $150,000 to purchase and furnish a home in the City of Buffalo, New York;
• $50,000 to purchase an investment rental property;
• $8,000 to pay off an automobile loan relative to a 2014 Dodge Charger;
• $2,500 to pay off two (2) credit cards; and
• $3,000 to pay off medical bills (see Index No. 805869/2019; Doc. 11, ¶11).
By Decision and Order dated June 26, 2019, this court denied that application (Id., at Doc. 19).
In September 2019, Mr. Dotzler made his seventh application to invade his annuity. He sought to transfer the right to receive a lump sum payment in the amount of $200,000 on December 14, 2024, for an immediate net payment to him in the approximate amount of $136,000, and he stated that he intended to use the proceeds from the transfer, as follows:
• $25,000 to purchase a truck for his landscaping business;
• $9,000 to purchase a dual axle trailer for his landscaping business;
• $17,000 to purchase a bucket truck for his landscaping business; and
• $85,000 for lawn care equipment (see Index No. 811444/2019; Doc. 13, ¶11).
By Decision and Order dated October 24, 2019, this court denied that application as well (Id., at Doc. 20).
In February 2020, Mr. Dotzler made the eighth application to invade his annuity. Such application was withdrawn on March 3, 2020 (Index No. 802703/2020; Doc. 10).
In May 2020, Mr. Dotzler made the ninth application to invade his annuity. He sought to transfer the right to receive a lump sum payment in the amount of $50,000 on December 14, 2024, for an immediate net payment to him in the approximate amount of $30,000, and he stated that he intended to use the proceeds of the transfer to pay off an automobile loan ($17,000) and to purchase, inter alia, a 16' galvanized utility trailer, lawn mowers, and leaf blowers to start a landscaping business ($13,000). This court denied that application in a Decision and Order, dated July 14, 2020 (Index No. 804526/2020; Doc. 21).
Preliminarily, the application is procedurally defective, because the Petition fails to identify the sixth, seventh, and ninth prior applications (Index Numbers 805869/2019; 811444/2019; and 804526/2020, respectively). Accordingly, the pending application is denied, because it fails to comply with GOL § 5-1705(d)(iv), which requires the disclosure of all prior applications.
Had all prior applications been disclosed, the pending application would nonetheless be denied, on the merits.
Similar to the applications made in 2019 and 2020, the manner in which Mr. Dotzler intends to use the proceeds from the proposed transfer herein does not justify what would be the sixth invasion of his settlement annuity over the course of ten applications, the last four (4) of which have either been denied (3), or withdrawn (1). The theme that is common to all of the denied applications is that Mr. Dotzler persists in making bare-bones applications that utterly fail to demonstrate, by clear and convincing evidence, the required unforeseeable change in circumstances rendering it in his best interest to transfer a portion of his annuity. The pending application suffers from the same shortcomings.
The most recent prior application (i.e., the ninth application), made in May 2020, sought $17,000 to pay off an automobile loan. The current application, made in April 2021, seeks $2,000 to pay off an automobile loan, meaning that in the past approximate twelve (12) months since Mr. Dotzler made the ninth application, he was able to satisfy $15,000 of his automobile debt. Clearly, under these circumstances, it is not necessary to invade the annuity.
In the seventh application (Index No. 811444/2019), Mr. Dotzler sought $136,000 to start a landscaping business. In the ninth application (Index No. 804526/2020), he sought $13,000 to start a landscaping business. Both applications were denied, because they failed to demonstrate how it was in his best interest to forego future annuity funds in the pursuit of purchasing lawn care equipment. In both applications, Mr. Dotzler failed to provide the court with a business plan, a customer list, or the like.
The pending application is no different. In paragraph 8 of Mr. Dotzler's affidavit, the sum total of his explanation as to why he seeks $237,000 to purchase lawn care equipment, is “INVEST IN BUSINESS,” with no further explanation or elaboration, despite that the ninth application was denied, in part, for having “not provided the court with a business plan, a customer list, or the like” (Doc. 21, p. 6).
It is also inexplicable to the court that the amount of funds Mr. Dotzler has sought to transfer for lawn care equipment over the past several applications has so widely varied; from $136,000 in connection with the seventh application, to $13,000 in connection with the ninth application, and to $237,000 in connection with the current application, further evincing the lack of, inter alia, a business plan.
In addition, and as noted in prior Decisions and Orders denying the seventh and ninth applications, Mr. Dotzler has never explained how he used the in excess of $140,000, received in connection with the first four (4) applications, all of which were approved. Most notably, he has never explained what happened to the approximate $100,000 he claimed he sought to invest in the capital investment industry.
Similarly, he has not explained how he used the $109,750 he received as recently as July 2016, in connection with the fifth application.
Finally, the Decision and Order denying the ninth application ordered, inter alia, that, having made so many prior applications,
neither Mr. Dotzler, nor anyone on his behalf, shall make any future applications, pursuant to the Act, unless they are accompanied by an affirmation or affidavit from an attorney, retained by Mr.Dotzler, which affirms or swears, under penalty of perjury, that (i) counsel has reviewed all eight (8) prior applications and related orders, and (ii) counsel opines that the new application is in Mr. Dotzler's bests interest and should be granted. All future applications made by, or on behalf of, Mr. Dotzler failing to include such an affirmation or affidavit from counsel shall be denied without consideration of the application's merits (Index No. 804526/2020; Doc. 21, p. 7).
Mr. Dotzler complied with this requirement of the most recent prior Decision and Order. Brian Valdivia, Esq., submitted an affirmation, dated April 22, 2021, in support of the pending application (Doc. 11). However, the one-page Valdivia Affirmation is as bare-bones as the pending application, providing no details in support of his conclusory statement that “[I]t is my opinion that the new application is in Mr. Dotzler's best interest and should be granted” (Id., at ¶5). The court disagrees.
Mr. Dotzler's annual income from the annuity and his employment as a landscaper is approximately $38,400. He has no dependents, and has failed to demonstrate why he does not have sufficient income to pay his auto loan off, as scheduled, and purchase equipment for his purported landscaping business - both “wants,” not “needs,” over a reasonable period of time. Nor has he demonstrated that he is capable of starting and operating a landscaping (or any) business.
Mr. Dotzler has not shown, by clear and convincing evidence, an unforeseeable change in circumstances necessitating an immediate need to invade the settlement annuity. Clearly, he has failed to meet his burden of showing that this proposed sale is in his best interest (See GOL § 5-1706[b] and Matter of Henderson Receivables Limited Partnership [DeMallie], supra).In light of the foregoing, it is hereby
ORDERED, that the application is denied and the Verified Petition is dismissed; and it is further
ORDERED, that neither Mr. Dotzler, nor anyone on his behalf, shall make any future applications, pursuant to the Act, unless they are accompanied by an affirmation or affidavit from an attorney, retained by Mr.Dotzler, which affirms or swears, under penalty of perjury, that (i) counsel has reviewed all nine (9) prior applications and related orders; (ii) counsel opines that the new application is in Mr. Dotzler's bests interest and should be granted; and (iii) counsel details the reasons why he or she believes such application would be in Mr. Dotzler's bests interest and should be granted. All future applications made by, or on behalf of, Mr. Dotzler failing to include such an affirmation or affidavit from counsel shall be denied without consideration of the application's merits.
This constitutes the Decision and Order of this court. Submission of an order by the parties is not necessary.
The delivery of a copy of this Decision and Order by this court shall not constitute notice of entry.
1. The court is mindful that the applications were actually made by funding companies, such as the Petitioner herein. However, the applications were made at Mr. Dotzler's request and for his supposed benefit.
2. The pending application does not include copies of the orders granting the first four (4) applications. However, such orders may be found at Index No. 805869/2019, Docs. 7-10, in connection with the sixth application.
Timothy J. Walker, J.
Response sent, thank you
Docket No: Index No. 804432/2021
Decided: June 30, 2021
Court: Supreme Court, Erie County, New York.
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