Dansby v. Fetzek
| Decision Date | 21 July 2003 |
| Docket Number | NO. 51486-5-I.,51486-5-I. |
| Court | Washington Court of Appeals |
| Parties | DAWNA LEE DANSBY, Plaintiff, v. JOHN R. FETZEK, D.O. DIVISION ONE Defendant, SAFECO ASSIGNED BENEFITS SERVICE CO., Garnishee. SINGER ASSET FINANCE COMPANY, L.L.C., Appellant, v. JOHN R. FETZEK, D.O., Respondent. |
Appeal from Superior Court of King County Docket No: 01-2-11807-2 Judgment or order under review Date filed: 12/06/2002.
Steven Walter Klug, Attorney at Law, Bellevue, WA, Counsel for Appellant(s).
William Edward Gibbs, Attorney at Law, Bellevue, WA, Counsel for Respondent(s).
Jerret E. Sale, Attorney at Law, Seattle, WA, Amicus Curiae on behalf of SAFECO Assigned Benefits Service Co.
Shawn M. Yates, Bullivant Houser Bailey, Seattle, WA, Amicus Curiae on behalf of SAFECO Assigned Benefits Service Co.
Jerret E. Sale, Attorney at Law
Seattle, WA, Amicus Curiae on behalf of SAFECO Life Insurance Co.
Shawn M. Yates, Bullivant Houser Bailey, Seattle, WA, Amicus Curiae on behalf of SAFECO Life Insurance Co.
Two parties claim they are entitled to the proceeds of an annuity payment from Safeco Life Insurance Co. The first, Singer Asset Finance Co., LLC, purchased an assignment of the rights to the payment from Dawna Dansby. Dansby negotiated for the payment as part of a structured settlement for injuries sustained in an auto accident. The second is John R. Fetzek. Fetzek garnished the annuity payment to satisfy a judgment he obtained against Dansby after she assigned her rights to the payment to Singer. Fetzek claims that Dansby's assignment was void because it violated an anti-assignment provision contained in the structured settlement.
We conclude that Fetzek lacked standing to enforce an anti-assignment provision in an agreement to which he is not a party and whose parties did not object to the assignment. We also conclude that Dansby's assignment was not void. Accordingly, we reverse the trial court's summary judgment order entered in favor of Fetzek.
On December 2, 1993, Dawna Dansby entered into a structured settlement agreement (`Settlement Agreement'), which provided for her to receive lump sum payments of $63,500 on January 1, 1999, and $85,125 on January 1, 2004. These payments were compensation for personal injuries she received in an auto accident in Georgia, her home state. The settlement was structured to receive preferential tax treatment under Section 130(c) of the Internal Revenue Code.1 26 U.S.C. sec. 130(c). Such treatment permits taxpayers to exclude settlement payments for personal injuries from their gross income. 26 U.S.C. sec. 104(a). Payors of such settlements also receive certain tax benefits. Ostensibly to preserve that treatment, the Settlement Agreement included an anti-assignment provision that prevented Dansby from selling or assigning her rights to those payments.
The Settlement Agreement reserved to the settling defendant the right to discharge its liability for the payments by making a `qualified assignment' to a named entity, SAFECO Assigned Benefits Service Company (`SABSCO'), which was recognized by the IRS as qualified for Section 130(c) treatment. The Settlement Agreement also mentioned that SABSCO may fund the payments by purchasing an annuity from Safeco Life Insurance Co.2 As contemplated by the Settlement Agreement, both the Qualified Assignment and Annuity Contract were executed at roughly the same time as the Settlement Agreement. The Qualified Assignment contains an anti-assignment provision similar to the one in the Settlement Agreement.3 The Annuity Contract does not contain an anti-assignment provision, but an `Important Notice' stamp on the cover states: `The right to receive benefits may not be sold to anyone else or used as collateral for a loan.' Dansby is not a party to the Annuity Contract, but she is a named beneficiary.
In August 1997, Dansby sold her rights to the annuity payments to Singer for an immediate payment of $74,700. Singer filed a UCC-1 statement asserting its rights to the annuity payments in Fulton County, Georgia, where Dansby resided. Dansby and Singer provided notice of the sale to Safeco. There was no objection to the assignment.
On January 1, 1999, Safeco made the first of the two payments under the Annuity Contract to Singer. On July 6, 1998, Fetzek obtained a $33,235 judgment against Dansby in state court in Georgia. Following the procedures for enforcing an out-of-state judgment, he commenced an action in King County Superior Court and garnished Safeco and SABSCO, both headquartered in Redmond, Washington. By January 1, 2004, the amount owed Fetzek will be $53,567.68. Safeco indicated by letter to Fetzek that it would withhold this amount from its payment to Singer on that date to satisfy the garnishment. Singer intervened to establish its priority to the payment from Safeco. The trial court granted summary judgment to Fetzek and denied Singer's motion for summary judgment. Singer appeals, claiming that under Washington law, Fetzek lacked standing to object to the assignment, that the anti-assignment provisions are unenforceable, and in the alternative, even if the assignment violated the agreement, Dansby's assignment to Singer is still valid and enforceable. Fetzek contends that Georgia law applies and that under Georgia law, Dansby's assignment to Singer was void at its inception.
Washington courts defer to the parties' choice of law when it is clearly expressed. Crawford v. Seattle, Renton & S. Ry. Co., 86 Wash. 628, 635, 150 P.1155 (1915). Alternatively, the law of the state with the most significant relationship to the transaction and the parties applies. West. Am. Ins. Co. v. MacDonald, 68 Wn. App. 191, 196, 841 P.2d 1313 (1992).
Singer argues that because only Dansby's right to receive the final annuity payment from Safeco is at issue, the Annuity Contract pursuant to which that payment will be made controls this dispute. The Annuity Contract's choice of law is the law of the state where the contract's owner (SABSCO) resides, which is in Washington. Fetzek argues that the Georgia choice of law provisions contained in the Settlement Agreement and the Qualified Assignment should apply.
Under Washington and Georgia law, agreements made as part of one transaction are to be read together and construed with reference to each other:
When several instruments are made as part of one transaction, they will be read together and construed with reference to each other. Boyd v. Davis, 127 Wn.2d 256, 261, 897 P.2d 1239 (1995). This is true even when the instruments do not refer to each other and when the instruments are not executed by the same parties. Id; Turner v. Wexler, 14 Wn. App. 143, 146, 538 P.2d 877, review denied, 86 Wn.2d 1004, (1975).
Kenney v. Read, 100 Wn. App. 467, 474, 997 P.2d 455 (2000). In order to understand this transaction, it is necessary to read all three agreements together.4 Dansby's right to payment arose from the Settlement Agreement, not the Annuity Contract, and the Annuity Contract is merely a funding mechanism for SABSCO's convenience, as expressly stated in the Settlement Agreement. The fact that the Annuity Contract has an integration clause, stating that, `This Contract and the application are the entire contract,' does not make the Settlement Agreement and the Qualified Assignment irrelevant. Nothing in the Annuity Contract suggests that it was intended to supercede and replace the previous agreements. The Annuity Contract constitutes only part of a larger transaction Dansby's structured settlement and Dansby's right to payment arose from those documents.5
Parties may choose to have different issues involving their contract governed by local law of different states. Restatement (Second) of Conflict of Laws sec. 187, cmt. i. (1989 ed.). When SABSCO and Safeco entered into the Annuity Contract, they agreed that any dispute between them regarding the annuity would be determined by applying Washington law. The parties to the Settlement Agreement and the Qualified Assignment agreed that Georgia law shall govern any dispute arising out of those agreements. Because this dispute concerns the effect of the anti-assignment provisions contained in the underlying Settlement Agreement and the Qualified Assignment, we shall apply the local law of the state chosen by the parties to those agreements Georgia.
Under Georgia law, a stranger to a contract has no standing to enforce that contract. See Morris v. Stillwell, 257 Ga. 3, 354 S.E.2d 133 (1987) (); Breus v. McGriff, 202 Ga. App. 216, 413 S.E.2d 538 (1991). See also Burton v. DeKalb County, 209 Ga. App. 638, 639, 434 S.E. 2d 82 (1993) ( ) (quoting Walls, Inc. v. Atl. Realty Co., 186 Ga. App. 389, 391(1), 367 S.E.2d 278 (1988). There is no dispute that Fetzek was not a party to or beneficiary of the settlement documents at issue. Thus, he has no standing to enforce the anti-assignment provisions of the Settlement Agreement and Qualified Assignment. Nevertheless, Fetzek responds to his lack of standing by arguing that if he lacks standing, then Singer also lacks standing because Singer was also not a party to the settlement documents containing the anti-assignment provision. This argument has no merit. Singer's agreement with Dansby appears valid on its face; therefore, Singer has standing as Dansby's assignee to litigate Fetzek's challenge to the validity of that agreement.
Notwithstanding Fetzek's acknowledgement that he is not a party to or...
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