In re Petition Of Michelle S. JACOBS F/K/A Michelle S. Junecko to transfer Structured Settlement Payment Rights
Appeal of Michelle S. Jacobs F/K/A: Michelle S. Junecko
Superior Court of Pennsylvania
Filed Nov. 19, 2007
936 A.2d 1156
¶ 29 Order reversed. Case remanded for trial. Jurisdiction relinquished.
Argued Feb. 28, 2007.
BEFORE: MUSMANNO, BOWES, and JOHNSON, JJ.
OPINION BY JOHNSON, J.
¶ 1 We are asked to determine whether a trial judge has abused his discretion or committed an error of law where that judge denies without prejudice a petition to transfer structured settlement payment
¶ 2 Michelle Jacobs (nee Junecko) appeals from the trial court‘s order denying her Petition to Transfer Structured Settlement Payment Rights without holding an evidentiary hearing. Jacobs contends that
¶ 3 This matter arises out of Jacobs‘s second attempt to sell and transfer her right to receive future structured settlement payments to a third party by filing the required petition under the SSPA and the trial court‘s subsequent denial of that petition without holding an evidentiary hearing.
¶ 4 On May 27, 1985, when Jacobs was nineteen years old, she was injured in an automobile accident. In June 1987, Jacobs settled her claim with the alleged tortfeasor‘s insurance company and entered into a Release and Structured Settlement Agreement (“the Agreement“). The insurance company assigned its obligation to make payments to AEGON Structured Settlements, Inc. (the settlement obligor), which purchased an annuity from Monumental Life Insurance Company (the annuity issuer) to fund the settlement payments. Pursuant to the Agreement, Jacobs was to receive both monthly payments and lump sum payments every five years. The monthly payments were based on an increasing scale: $1,900 per month for the period of July 1987 to June 1992; $2,150 per month for the period of July 1992 to June 1997; $2,400 per month for the period of July 1997 to June 2002; $2,650 per month for the period of July 2002 to June 2007; $2,900 per month for the period of July 2007 until Jacobs‘s death. Additionally, the lump sum payments were scheduled to be made as follows: $10,000 in June 1992; $20,000 in June 1997; $40,000 in June 2002; $80,000 in June 2007; $120,000 in June 2012; $150,000 in June 2017. Sometime before 2000 and the enactment of the SSPA, Jacobs (the payee) entered into a purchase agreement with a different structured settlement purchase company, Stone Street Capital (the transferee), and transferred
¶ 5 On February 11, 2000, the General Assembly enacted and the Governor signed into law the SSPA. Under the SSPA, a payee must first seek court approval before transferring a structured settlement payment to a third-party transferee, by filing a petition requesting the transfer in the court of common pleas of the judicial district in which the payee is domiciled. See
¶ 6 On April 20, 2006, Jacobs filed a Petition to Transfer Structured Settlement Payment Rights (Petition) in the Court of Common Pleas of Allegheny County. The Petition sought court approval to transfer her future rights of payment to Structured Asset Funding, LLC (“SAF“). Under the proposed purchase agreement, Jacobs would assign 180 monthly payments in the amount of $1,450 per month from March 1, 2008 to February 1, 2023, $75,000 of the $120,000 lump sum payment due on June 1, 2012, and $100,000 of the $150,000 lump sum payment due on June 1, 2017 (an aggregate amount of $436,000). In exchange, SAF would pay Jacobs $143,000. The Petition averred that the parties had complied with all of the requirements of
¶ 7 On April 21, 2006, Jacobs‘s counsel presented the Petition in Motions Court to the Honorable R. Stanton Wettick, Civil Division Administrative Judge, and requested that a hearing be scheduled pursuant to ¶ 9 In explaining a trial court‘s role of making an independent determination that the transfer is in the best interest of the petitioner, Judge Wettick, in his 1925(a) Opinion, cited to his previous decision, In Re: Johnny Bush, 152 P.L.J. 207, 208 (2004), where he stated: I find to be persuasive the description of the role of the court set forth in a memorandum written by Honorable Gene D. Cohen of the Court of Common Pleas of Philadelphia County, No. 03714, September Term 2003, In Re: Petition to Transfer Structured Settlement Payment Rights of Mario Curto. In that case, the petitioner sought court approval to permit the purchase for $25,000 of an annuity valued at $38,627. The court stated that the Structured Settlement Protection Act places the burden on the petitioner to establish that the transfer is in the petitioner‘s best interests: In a sense, the Structured Settlement statute places the Court in the position of a guardian of a person who stands in the presumptive position of the defenseless recipient of a benefit. It is for the Court to determine, as a guardian would, on an independent basis, whether the transaction serves the best interests of an unsophisticated (if not incompetent) person. pp. 2-3. The intent of the Structured Settlement Protection Act, according to this court, “is to ensure that an otherwise financially defenseless and possibly injured individual would receive a regular, sustaining source of income. Unless the factual record sufficiently supports a compelling and reasonably informed necessity that the plaintiff receive a lump sum discounted payment, this Court is reluctant to approve any petition akin to the one before it on the thin record offered in support” (p. 4). Using this standard, the court ruled that the proposed transfer would operate against the best interests of the petitioner because it would be hazardous to the petitioner‘s future to entrust him with a lump sum payment rather than receipt of regular payments. T.C.O., 7/20/06, at 2. At another point in the Opinion, Judge Wettick elaborated on the procedure he employs to review an SSPA petition: I require a petition to transfer structured settlement payment rights to contain the information that a court needs to consider in making a determination as to whether the proposed transfer is in the best interests of the payee. I review the petition before scheduling a hearing. If the petition contains insuffi- Id. at 3. In concluding his Opinion, Judge Wettick stated: Since the Act requires a showing that the transfer is in the best interests of petitioner, it is the obligation of counsel to set forth information that is clearly required in order for the court to make this determination of whether the proposed transfer is in the best interests of petitioner and her dependents. Id. at 10. ¶ 10 Jacobs now appeals to this Court, raising the following questions for our review: Brief for Appellant at 4. The National Association of Settlement Purchasers and Peachtree Settlement Funding have filed amicus curiae briefs in support of Jacobs‘s position. ¶ 11 Initially, we note that Jacobs‘s first two questions on appeal are essentially duplicative, as they both claim that ¶ 12 In her first and second questions, Jacobs contends that the trial court erred by denying her Petition and finding that the transfer was not in her best interest without first holding an evidentiary hearing, which she argues is required by the plain and unambiguous language of ¶ 13 We now address Jacobs‘s claim insofar as it involves the statutory interpretation of § 4004. Jurisdiction; procedure for approval of transfers The court of common pleas of the judicial district in which the payee is domiciled shall have jurisdiction over any petition as required under section 3 for a transfer of structured settlement payment rights. Not less than 20 days prior to the scheduled hearing on any petition for authorization of a transfer of structured settlement payment rights under section 3, the payee shall file with the court and serve on the transferee a notice of the proposed transfer and the application for its authorization, including in such notice a copy of the payee‘s petition to the court, a copy of the transfer agreement, a copy of the disclosure statement required under section 3, notification that the transferee, the structured settlement obligor or the annuity issuer is entitled to support, oppose or otherwise respond to the payee‘s petition, either in person or by counsel, by submitting written comments to the court or by participating in the hearing and notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the petition must be filed, which shall be not less than 20 days after service of the payee‘s notice, in order to be considered by the court. § 4003. Conditions to transfers of structured settlement payment rights (a) PETITION.—No transfer of structured settlement payment rights shall be effective and no structured settlement obligor or annuity issuer shall be required to make any payment to any transferee of structured settlement payment rights unless the payee has filed a petition requesting such transfer and the petition has been granted by final order or decree of a court of competent jurisdiction based on such court‘s express written findings that: * * * * (3) The payee has established that the transfer is in the best interests of the payee or his dependents. ¶ 14 Issues involving statutory interpretation present questions of law for which our standard of review is de novo and our scope of review is plenary. See Kopko v. Miller, 586 Pa. 170, 892 A.2d 766, 770 (2006). “In construing a statute to determine its meaning, courts must first determine whether the issue may be resolved by reference to the express language of the statute, which is to be read according to the plain meaning of the words.” Commonwealth v. Lopez, 444 Pa.Super. 206, 663 A.2d 746, 748 (1995). When analyzing particular words and/or phrases, we construe them according to the rules of grammar and consider the context in which they are used. See ¶ 15 Relying on ¶ 16 When viewed in their proper grammatical context, the isolated phrases, “the ¶ 17 In the absence of statutory language making a hearing mandatory, there remains an unfilled gap between the filing of a petition and a trial court‘s denial of it under ¶ 18 Ultimately, by allowing a trial court the freedom to deny SSPA petitions that lack a sufficient factual basis, we believe ¶ 19 Our esteemed colleague advocates that “[a] petitioner should have the opportunity to present his or her reasons for seeking the sale directly to the judge in order to establish the circumstances that compelled him or her to seek the sale in the first instance.” Dissenting Op. at 7. The dissent‘s position, however, does not confront basic, fundamental rules of civil practice and seemingly fails to realize that it is counsel‘s obligation to first plead these “circumstances” in an SSPA petition before proving them. For example, under the dissent‘s suggested rule of procedure, a personal injury plaintiff who filed a complaint would automatically be permitted to present testimony to a judge/jury regarding damages as a matter of right, even if such damages were not pled in the complaint, in order to “sway” the judge/jury. Dissenting Op. at 7. This, of course, is not how our civil system operates. If a complaint or amended complaint failed to allege damages, it would be dismissed for legal insufficiency, regardless of whether the plaintiff did in fact suffer damages. Sixsmith v. Martsolf, 413 Pa. 150, 196 A.2d 662, 664 (1964) (dismissing complaint for failing to plead damages since “[d]amage or legal injury is essential to a right to sue in an action at law.“). Likewise, here, if an SSPA petition fails to aver the petitioner‘s “real financial needs” and level of “sophistication,” Dissenting Op. at 7, it too should be dismissed because this information is absolutely vital to a finding that the transfer is in the petitioner‘s best interest. ¶ 20 Given the longstanding traditions of civil litigation, we believe that as the party carrying the burden of proof, it is not asking too much of the petitioner to include facts that if established would support a finding that the transfer is in his/her best interest, especially since the trial court allows the petitioner to amend an SSPA petition once as a matter of right. See T.C.O., 7/20/06, at 3 n. 2 (“The denial of a petition does not prevent the petitioner from filing an amended petition which contains additional information or a modified agreement to transfer structured settlement payment rights.“). Only when such facts are sufficiently pled should a petitioner be given the opportunity to testify and prove his/her allegations and the trial court the chance to assess credibility and accord weight to the testimony. This reading of ¶ 21 For the above-stated reasons, we conclude that ¶ 22 In her third question, Jacobs contends that “[t]he trial court‘s denial of a petition to transfer and its determination of a property owner‘s best interest without the hearing directed by the [SSPA] is a denial of a property owner‘s right to due process.” Brief for Appellant at 26. Particularly, Jacobs claims that ¶ 23 After review of Jacobs‘s brief, we are unable to decipher precisely what argument(s) she is attempting to advance. Generally, the due process clause requires reasonable notice and opportunity to be heard before governmental action may deprive an individual of a significant property interest. See United States v. James Daniel Good Real Prop., 510 U.S. 43, 53 (1993). “Property interests ... are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law[.]” Bd. of Regents of State Colleges v. Roth, 408 U.S. 564, 577 (1972). In her brief, Jacobs does not articulate the specific type of property interest of which she was deprived. Rather, Jacobs asserts that ¶ 24 Jacobs also appears to contend that she was deprived of her right to freely sell, transfer and alienate her settlement payments under the SSPA. “‘To have a property interest in a benefit, a person clearly must have more than an abstract need or desire’ and ‘more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.‘” Town of Castle Rock v. Gonzales, 545 U.S. 748, 756 (2005) (citing Roth, 408 U.S. at 577). “The hallmark of property ... is an individual entitlement grounded in state law, which cannot be removed except ‘for cause.‘” Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 (1982). “An entitlement exists when there is an unqualified right to receive the benefit [under state law] or when all qualifications necessary to its receipt are satisfied.” Miller v. W.C.A.B. (Pavex, Inc.), 918 A.2d 809, 812 (Pa.Cmwlth.2007). ¶ 26 To support her constitutional challenge, Jacobs cites numerous cases in an attempt to analogize her situation to others where the procedural safeguards of due process were held to apply. Brief for Appellant at 27-29. In this case, however, the due process clause is not implicated since Jacobs has not established that she was deprived of a constitutionally protected property interest. See Roth, 408 U.S. at 569 (“The requirements of procedural due process apply only to the deprivation of interests encompassed by the Fourteenth Amendment‘s protection of liberty and property.“); Miller, 918 A.2d at 812. Accordingly, we find it unnecessary to discuss the cases that Jacobs references in her brief because they are distinguishable on this basis alone. Moreover, we recognize that in her statement of the questions presented, Jacobs advances a separate but related substantive due process claim. Brief for Appellant at 4. In the argument section of her brief, however, Jacobs abandons this contention by not addressing it. As such, her substantive due process argument is waived for purposes of appellate review. See Estate of Lakatosh, 441 Pa.Super. 133, 656 A.2d 1378, 1380 (1995) (stating that all of the issues set forth in the statement of questions involved that are not addressed in the argument section are waived). Therefore, because Jacobs has failed to establish the deprivation of a constitutionally protected “property” interest, and did not support her substantive due process claim with appropriate discussion, we conclude that her third question lacks merit. ¶ 27 In her fourth and final question, Jacobs contends that the trial court erred by denying her the right to a hearing, “thereby precluding [her] from responding to the court‘s concerns or offering to the court any ‘explanation as to the circumstances of the prior transfer or any showing that the funds from the prior transfer were prudently used[.]‘” Brief for Appellant at 4. Although Jacobs lists this issue in her statement of the questions involved, she does not address or discuss it in the argument section of her brief. We conclude accordingly that Jacobs‘s fourth question is waived. See Estate of Lakatosh, 656 A.2d at 1380. ¶ 28 For the stated reasons, we affirm the trial court‘s order denying Jacobs‘s Petition without holding an evidentiary hearing. ¶ 29 Order AFFIRMED. ¶ 30 BOWES, J., files a Dissenting Opinion. ¶ 1 In my view, Appellant raises the meritorious position that the Structured Settlement Protection Act, ¶ 2 Moreover, I agree with Appellant that the statute, as applied to her individual case, has deprived her of due process rights. Appellant owns the right to receive a stream of income. The right to sell property is a basic component of ownership that is well-established in the common law of this country. See Perin v. Carey, 65 U.S. 465, 494-95 (1860). A seizure of property occurs when there is some meaningful interference with an individual‘s possessory interest in that property. See Soldal v. Cook County, 506 U.S. 56, 61-65 (1992). A seizure of property sufficient to implicate Fourth Amendment rights occurs where the seizure is unreasonable. Id. In determining whether a government seizure violates the Fourth Amendment, the seizure must be scrutinized for its overall reasonableness. Id.; Snead v. Society for Prevention of Cruelty to Animals, 929 A.2d 1169, 1181 (Pa.Super.2007) (quoting Wagner v. Waitlevertch, 774 A.2d 1247, 1254 (Pa.Super.2001)). ¶ 3 To determine what process is constitutionally due, the United States Supreme Court has utilized the balancing of three factors: “First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government‘s interest.” Mathews v. Eldridge, 424 U.S. 319, 335 (1976). Mathews v. Eldridge, 424 U.S. 319, 335 (1976); Gilbert v. Homar, 520 U.S. 924, 931-32 (1997). Also pertinent to the determination of what process is due are the length and finality of the deprivation. Id. Thus, in Gilbert, the Court analyzed whether a hearing was required before the government could cease a stream of income to which the recipient had a statutory right. In concluding a pre-cessation hearing was not required, the Court specifically considered the fact that the recipient received a post-cessation hearing. In that case, a state employee was suspended without pay as soon as felony drug charges were filed against him. At issue was whether the employee was constitutionally entitled to a ¶ 4 Herein, Appellant presented a petition setting forth sufficiently compelling circumstances that a hearing, as required by the Act, should have been held. Specifically, Appellant was thirty-nine years old and a married mother of two children. As a teenager, she had been injured in an automobile accident and had settled her claim against the tortfeasor in 1987 in an agreement that provided for periodic payments as follows: 1) 60 monthly payments of $1,900.00 from July 1, 1987, to June 1, 1992; 2) 60 monthly payments of $2,150.00 from July 1, 1992, to June 1, 1997; 3) 60 monthly payments of $2,400.00 from July 1, 1997, to June 1, 2002; 4) 60 monthly payments of $2,650.00 from July 1, 2002, to June 1, 2007; and 5) 240 monthly payments of $2,900.00 from July 1, 2007, to June 1, 2027, and for the rest of Petitioner‘s lifetime thereafter. The agreement also provided for the following lump sum payments of: 1) $10,000.00 on June 1, 1992; 2) $20,000.00 on June 1, 1997; 3) $40,000.00 on June 1, 2002; 4) $80,000.00 on June 1, 2007; 5) $120,000.00 on June 1, 2012; and 6) $150,000.00 on June 1, 2017. The obligation to make the periodic payments was assigned to and funded by the acquisition of an annuity. ¶ 5 On March 30, 2006, Appellant executed a structured settlement payment right purchase and assignment agreement (the “Purchase Agreement“). The Purchase Agreement provided for the assignment to Structured Asset Funding, LLC (“SAF“), of Appellant‘s right and interest in receiving 180 monthly payments each in the amount of $1,450.00, beginning with the payment on March 1, 2008, through February 1, 2023, plus one lump sum payment in the amount of $75,000.00 due on June 1, 2012, and one lump sum payment in the amount of $100,000.00 due on June 1, 2017. In exchange, she was to receive the net sum of $143,000.00, for an effective annual discount rate for the transaction of 13.97%. ¶ 6 Thus, after deduction for the payments to be transferred to the SAF, Appellant would continue to receive the remaining portions of the periodic payments consisting of partial monthly payments in the amount of $1,450.00, beginning with the payment on March 1, 2008, through February 1, 2023, the entire monthly payment in the amount of $2,900.00 beginning with the payment on March 1, 2023, through June 1, 2027, and for the rest of her lifetime thereafter, and partial lump sum payments of $45,000.00 due on June 1, 2012, and $50,000.00 due on June 1, 2017. ¶ 7 On April 20, 2006, Appellant filed a petition to transfer structured settlement payment rights in the Court of Common Pleas of Allegheny County, Pennsylvania, citing the Act as enabling authority. Therein, Mrs. Jacobs alleged that all of the statutory requirements of the Act had been complied with, that the transfer was in her best interests, and that there was no adverse tax impact on the interested parties. She therefore requested the court to approve the proposed transfer. ¶ 8 In her petition, Mrs. Jacobs alleged that her husband was injured and unable to work. She had applied for consolidation and home equity loans and had been denied, and she intended to satisfy with the money from SAF outstanding bills, loans, medical and orthodontia expenses, and other debts including property taxes totaling in excess of $54,000.00. She also needed to make home repairs. ¶ 10 Appellant has been deprived of her right to alienate her property, which is a significant property interest. This deprivation may well be erroneous but as an appellate court, we have been denied an adequate record upon which to review the trial court‘s decision. Given the present circumstances, there is every indication that Appellant will never have the opportunity for such a hearing in Allegheny County. It is not unduly burdensome for the court system to devote three or four hours of its resources to allow Appellant the opportunity to be heard, and the governmental interest in this case is virtually non-existent since it is the function of the court system to be available to litigants. ¶ 11 The United States Supreme Court has consistently has held that some form of hearing is required before an individual is finally deprived of a property interest. Wolff v. McDonnell, 418 U.S. 539, 557-558 (1974). See, e.g. Phillips v. Commissioner of Internal Revenue, 283 U.S. 589, 596-597 (1931). See also Dent v. West Virginia, 129 U.S. 114, 124-125 (1889). The “right to be heard before being condemned to suffer grievous loss of any kind, even though it may not involve the stigma and hardships of a criminal conviction, is a principle basic to our society.” Joint Anti-Fascist Comm. v. McGrath, 341 U.S. 123, 168 (1951) (Frankfurter, J., concurring). The fundamental requirement of due process is the opportunity to be heard “at a meaningful time and in a meaningful manner.” Armstrong v. Manzo, 380 U.S. 545, 552 (1965). See Grannis v. Ordean, 234 U.S. 385, 394 (1914). Mathews v. Eldridge, 424 U.S. 319, 333 (1976). ¶ 12 A hearing serves the laudable purpose of permitting a petitioner to voice his or her need to sell a structured settlement to the jurist in person. A petitioner should have the opportunity to present his or her reasons for seeking the sale directly to the judge in order to establish the circumstances that compelled him or her to seek the sale in the first instance. Thus confronted by the petitioner, a jurist may be more informed by the real financial needs presented by the petitioner‘s situation and can more appropriately gauge the petitioner‘s sophistication and susceptibility to financial predators. A hearing is a superior avenue of deciding this question over a review of a cold record, especially since the judge‘s decision may impact dramatically on a person‘s life. Accordingly, I dissent to the majority‘s decision in this case.