JG Wentworth Origination, LLC, Transferee, and N. Laudano, Payee (Lawyers Weekly No. 12-110-17)

COMMONWEALTH OF MASSACHUSETTS   SUFFOLK, ss                                                                                                                                    SUPERIOR COURT 17-2188-C                                                                      J.G. WENTWORTH                                                           ORIGINATIONS, LLC                                                                         Transferee                                                                             -and-   LAUDANO                                                                             Payee                                  DECISION AND ORDER ON AMENDED APPLICATION               TO AUTHORIZE AND APPROVE TRANSFER OF PAYMENT RIGHTS     Transferee JG Wentworth Originations, LLC (“Wentworth”) has purchased a $ 27,395.90 structured settlement from payee N. Laudano (“Ms. Laudano”).  The original structured settlement arose from the resolution of a personal injury lawsuit, and  contemplates 49 monthly payments of $ 559.00 from annuity issuer Prudential Assigned Settlement Services Corporation.  Wentworth has agreed to purchase these payments from Ms. Laudano for the discounted price of $ 17,165.00, and  seeks judicial approval of this transaction in accordance with the requirements of G.L. c. 231C, _ 2.  For the reasons stated in open court during the hearing held on August 11, 2017 and those set forth below, the Court cannot agree.   What Wentworth proposes is for Ms. Laudano to take a 34.2% discount on her overall settlement payout, effectively paying interest to Wentworth at a rate of 29.99% per year.  The Court agrees with Judge Salinger’s thoughtful reasoning in In Re Stone Street Capital, 31 Mass. L. Rptr. 171 ( Mass. Super. Ct. 2013), that this transaction is in function and economic substance – if not nominally in form – a loan.  Calling upon Ms. Laudano, the payee-debtor, to pay a rate of interest that far exceeds our criminal usury law’s limit of 20%, see G.L. c. 271, _ 49, the transaction cannot be considered “fair, just and reasonable.”  G.L. c. 231C, _ 2(a)(7).  See In Re Stone Street Capital, supra (holding that analogous Lottery Assignment Statute required disallowance of proposed purchase of lottery prize payments at a discount rate of 24%); Derochea v. Kane, 29 Mass. L. Rptr. 311 (Mass. Super. Ct. 2012) (Macdonald, J.) (holding that Chapter 231C, _ 2 compelled disallowance of child transferor’s assignment of structured settlement at 16% discount rate: “In this era of historically low interest rates, a 16% discount rate for determining present value borders on the unconscionable,” and is “neither fair, nor just, nor reasonable”).[1]   Further to the above, the Court finds, after giving due consideration to the testimony of Ms. Laudano at hearing, that this proposed transfer of payment rights is not “in the best interests of the payee.”  G.L. c. 231C, _ 2(a)(3).  Counsel for Wentworth has forthrightly acknowledged that 25% represents the very high end of discount rates that are applied in these transactions.  For her part, the payee testified that she did not have the benefit of either legal counsel or advice from a financial professional before entering into […]

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