in Re J. Rains, Annuitant
2015 Tex. App. LEXIS 8219
Tex. App.2015Background
- Jaime Rains received a structured-settlement annuity ($805/month) arising from a tort recovery after her mother’s death; she became beneficiary at age 16 and is now in her mid-30s.
- Rains agreed with J.G. Wentworth Originations, LLC to assign $405/month for 10 years (total $48,600) in exchange for an immediate $24,000 lump sum; the effective discount rate was ~17.4%.
- The trial court approved the transfer under the Texas Structured Settlement Protection Act (SSPA) over Metropolitan Life Insurance Company’s (Met) objection; Met appealed.
- Procedural facts: initial approval occurred with no evidence or testimony; on appeal-related stay hearing Rains testified pro se, but many material financial details were absent and no independent financial/legal advice was shown in the record.
- Statutory context: SSPA requires court approval and that the transfer be in the payee’s “best interest” (considering payee’s dependents), and it forbids requiring the annuity issuer to split periodic payments between payee and transferee.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the transfer was in the payee’s best interest under Tex. Civ. Prac. & Rem. Code § 141.004(1) | Wentworth/Rains: transfer served Rains’ needs (pay debts, home improvements); Rains testified it was in her best interest and she received disclosures | Met: record lacked evidence on household income, debts, dependents’ needs, justification for high discount rate; insufficient proof of independent advice or that transfer preserved payee’s long‑term security | Reversed — court held Wentworth failed to meet its burden; evidence was insufficient to show transfer was in Rains’ best interest (trial court abused its discretion) |
| Whether trial court could order Met (annuity issuer) to pay the entire $805 to Wentworth when Rains only assigned $405 | Wentworth: ordering entire payment to transferee avoids requiring issuer to split payments, consistent with statute’s spirit | Met: contract unambiguously obligated Met to pay $805 to Rains; court cannot rewrite contract to require Met to divert full payment to transferee | Reversed — trial court lacked authority to modify the annuity contract; it cannot compel issuer to forward full payments to transferee where only a portion was assigned |
Key Cases Cited
- Las Palmas Med. Ctr. v. Moore, 349 S.W.3d 57 (Tex. App. — El Paso 2010) (unsworn argument of counsel is not competent evidence)
- Southwestern Bell Tel. Co. v. Marketing on Hold, Inc., 308 S.W.3d 909 (Tex. 2010) (assignee stands in assignor's shoes; contractual rights enforceable)
- Royal Indem. Co. v. Marshall, 388 S.W.2d 176 (Tex. 1965) (courts cannot make new contracts or vary clear contractual terms)
- Wash. Square Fin. LLC v. RSL Funding, LLC, 418 S.W.3d 761 (Tex. App. — Houston [14th Dist.] 2013) (SSPA enacted to protect structured settlement payees from inadequate lump‑sum transfers)
- In re Settlement Capital Corp., 769 N.Y.S.2d 817 (N.Y. App. Div. 2003) (best‑interest review requires case‑by‑case analysis and scrutiny of discount rate justification)