The following was emailed to all NSSTA members.
In the matter of Cordero v. Transamerica: New York’s highest court - the New York State Court of Appeals - has been asked to determine whether structured settlement owners and annuity issuers have a previously unheard of common law duty to enforce the anti-assignment clauses in structured settlement agreements so as to protect payees from potentially adverse impacts of factoring transactions which they specifically sought and which courts of competent jurisdiction, after review of the evidence presented, approved. If the Court of Appeals determines this new-found duty exists, such a ruling likely would mean that structured settlement annuity owners and issuers could be required to determine whether each factoring transaction was appropriate for the payee (annuitant) and perhaps even dependents – and thereby potentially expose owners and issuers to claims they made the wrong determination. Such a ruling would be contrary to the plain language of the Structured Settlement Protections Acts (SSPAs) which dictate that the best interest determination is completely within the purview of the Courts. SSPAs place the burden on the factoring companies and protect annuity owners and issuers from any liability. A holding from New York’s highest court in support of the duty espoused by Cordero could have national repercussions, since many states look to New York for guidance on structured settlement issues. A ruling creating such a duty could also impact future structured settlements which may become more costly and less attractive to would-be settling parties.
NSSTA Filed an Amicus Curiae in the Cordero Matter: The NSSTA Board of Directors worked closely with legal counsel to draft and file an amicus curiae brief supporting the brief of the defendant structured settlement annuity owner and issuer. The NSSTA Amicus brief was filed on February 3, 2023, and focused on how the language of SSPAs puts the duty squarely on factoring companies and judges to determine whether proposed factoring transactions are appropriate for the individual annuitant, not the life companies. Moreover, separate and apart from the SSPAs, NSSTA’s amicus brief stressed that anti-assignment provisions in structured settlement agreements do not create enforceable duties on the part of annuity owners and issuers.
Oral Argument: The Cordero argument was held on March 14. The Court of Appeals was well prepared and posed difficult questions to both sides. NSSTA is closely monitoring the litigation and will keep the membership apprised of any developments.
