J.G. Wentworth L.L.C. v. Christian, 2008 Ohio 3089 (Ohio App. 6/17/2008)

• Decision Date: 17 June 2008
• Docket Number: No. 07 MA 113.,07 MA 113.
• Citation: 2008 Ohio 3089
• Parties: J.G. Wentworth Llc, Plaintiffs-Appellees, v. Otisha Christian, et al., Defendants-Appellants.
• Court: Ohio Court of Appeals

Page 1

2008 Ohio 3089

J.G. Wentworth Llc, Plaintiffs-Appellees, v.Otisha Christian, et al., Defendants-Appellants.

No. 07 MA 113.

Court of Appeals of Ohio, Seventh District, Mahoning County.

Dated: June 17, 2008.

Civil Appeal from Common Pleas Court, Case No. 05CV4623.

Reversed. Judgment entered in favor of appellants.

Attorney George Gerken, 412 14th Street, Toledo, Ohio 43604, for Plaintiff-Appellee.

Attorney Eric Johnson, 12 West Main Street, Canfield, Ohio 44406, for Defendants-Appellants.

Before: Hon. Joseph J. Vukovich, Hon. Gene Donofrio, Hon. Cheryl L. Waite.

OPINION

VUKOVICH, J.

{¶1}Defendant-appellantsOtisha Christian, et al. appeal the decision of the Mahoning County Common Pleas Court which granted summary judgment in favor of plaintiff-appelleeJ.G. Wentworth, LLC.The issue on appeal is whether the decedent's agreement to transfer his future scheduled payments from a structured settlement annuity allowed J.G. Wentworth, as the decedent's purported assignee, to bar appellants, who are the named beneficiaries on the annuity, from collecting the payments due after the decedent's death.There are multiple subissues including: whether appellants have standing to raise the anti-assignment clause in the annuity contract, whether the anti-assignment clause bars J.G. Wentworth's attempt to enforce the assignment, whether the named beneficiary has superior rights over J.G. Wentworth's claims even without the application of the anti-assignment clause, and whether appellants were properly retained as the named beneficiary on the annuity.

{¶2} For the following reasons, we hold that the anti-assignment clause is enforceable by appellants.We also and alternatively hold that appellants are the named beneficiaries with rights superior to J.G. Wentworth over payments due after the decedent's death.As such, the trial court's judgment is reversed, and summary judgment is hereby entered in favor of appellants.

STATEMENT OF THE CASE

{¶3}Otis Christian(the decedent) was injured at work.On August 13, 1993, he entered a settlement agreement with his employer, CSX Transportation, Inc., through its liability carrier Safeco Life Insurance Company(now known as Symetra Life Insurance Company and hereinafter referred to as Symetra).The settlement provided the decedent with a lump sum plus a structured settlement in the form of an annuity, which paid the following amounts on August 17 of each specified year: $13,500 in 1995 and 1997; $5,500 in 1998; $13,5000 in 1999; $8,000 in 2001, 2003, 2005, 2007, 2009, 2011 and —; and finally, $74,000 in 2015.These payments were payable to the decedent, or if he should die, to his estate or other named beneficiary.

{¶4} The settlement agreement states, "The Claimant shall have no legal or equitable interest, vested or contingent, in such annuity.The Company or Assignee shall be the sole owner of such annuity."The settlement agreement allowed the employer to assign its duties to Symetra, which it did thus transferring its obligations to Symetra as the owner.Paragraph six of the settlement agreement contains an anti-assignment clause, which states:

{¶5}"The amounts paid and to be paid to Claimant or to any other payee under this Agreement are his sole and separate property and no other person has any right or interest therein.No amount payable under this Agreement shall be subject to anticipation, assignment, sale, transfer, pledge, alienation, or encumbrance by any Claimant or by any other payee thereof, nor to attachment, seizure or legal or equitable process by any creditor of any Claimant or other payee prior to its actual receipt by such Claimant or other payee, nor may any such Claimant or other payee accelerate, defer, increase or decrease any amount payable under this Agreement."

{¶6} A separate annuity contract also contains an anti-assignment clause providing that the annuitant cannot anticipate, sell, assign or encumber any payment.The owner, however, was contractually permitted to enter an absolute assignment as did the employer to Symetra.The annuity contract also discloses that benefit payments will be made to the annuitant unless otherwise designated in the application and that if the annuitant dies, any remaining payments will be made to the beneficiary.It states that the beneficiary of the policy is as named in the attached application unless changed by the owner, who is also identified in the application.This application reveals that the decedent was the annuitant, Symetra was the owner, and the decedent's estate was the original beneficiary.

{¶7} On January 16, 1995, Symetra received a handwritten letter from the decedent seeking to change his beneficiary to his four daughters, Otisha, Jada, Keona and Christina Christian, appellants herein.The letter was signed by the decedent and by each of his daughters.Symetra approved the change as the owner of the annuity.In a March 3, 1995 letter, Symetra explained that the new beneficiaries are considered to have an interest in the annuity benefits upon the decedent's death and that Symetra, as the owner, would require the daughters to release their interest prior to any future beneficiary change.Symetra concluded that the decedent should contact their office and inform them if this was not his intent in which case the beneficiary would then be recognized as originally stated on the application as his estate.A telephone number was provided, and he was urged to call to discuss this "complicated" issue.However, there were no further communications for nearly two years.

{¶8} On November 15, 1996, the decedent executed a purchase agreement with J.G. Wentworth whereby the decedent agreed to sell the $13,500 annuity payment payable to him on August 17, 1997 in return for $9,500.He agreed to change his address with Symetra so J.G. Wentworth would receive the payment, and he gave J.G. Wentworth permission to sign his name on the anticipated annuity check.

{¶9} In addressing the anti-assignment clause in the annuity contract, the J.G. Wentworth purchase agreement claims that any assignability restrictions on the assigned assets were included solely at the decedent's request and at his instruction and that the decedent (on behalf of himself and his heirs, beneficiaries, executors, administrators and legal representatives) waives and releases all rights regarding such assignability restrictions.The purchase agreement also acknowledges that the annuity and/or settlement agreement may contain provisions that restrict or purport to restrict the assignability of the assets, but stated that the decedent waived any claim that the assets were not assignable and that the decedent indemnified J.G. Wentworth from any claim that the assets are not assignable.

{¶10} At this same time, the decedent also signed instructions to his estate and to all heirs and beneficiaries under his will or at law declaring that the purchase agreement is binding upon them and that they must sign over all checks received from the annuity to J.G. Wentworth as per the purchase agreement.The purchase agreement stated that the decedent was to sign such instructions and to provide to J.G. Wentworth a change of beneficiary form changing the beneficiary of the annuity to J.G. Wentworth.

{¶11} Evidently, in anticipation of executing the purchase agreement, the decedent mailed two typewritten letters to Symetra on November 11, 1996.In one, he asked Symetra to change his address to a post office box in California apparently controlled by J.G. Wentworth.Symetra did so but warned in a response that if his intent was to collateralize the payments, they are not bound by such action.

{¶12} In the other letter, the decedent asked Symetra to change its records to show his estate as the beneficiary of the annuity.On January 8, 1997, Symetra responded to the decedent that, as explained in their March 1995 letter (which they attached), he can only change the beneficiary if he receives a written release with notarized signatures from the four currently named beneficiaries.On February 5, 1997, Symetra followed up, noting that his four daughters remain as his beneficiaries and that they were closing the file on the matter of the beneficiary change.

{¶13} These response letters were sent both to the decedent's home address and to the new California post office box.Notwithstanding Symetra's refusal to change the beneficiary to the estate, J.G. Wentworth continued to provide advances on the decedent's structured settlement, entering four more purchase agreements in the next two years.

{¶14} For instance, on March 17, 1997, they agreed to provide the decedent with $7,600 in return for allowing J.G. Wentworth to retain certain portions of his annuity payments due in 1999, 2001, 2003 and 2005 totaling $20,500.Relevant here, J.G. Wentworth was to retain $4,000 of the $8,000 payment due in 2005.

{¶15} On July 29, 1997, the decedent received $5,131 in return for allowing J.G. Wentworth to retain additional sums from the 1998 and 1999 annuity payments totaling $8,400.

{¶16} On January 28, 1998, the decedent received $7,000 in return for handing over $9,100 in additional portions of his annuity payments due in 1998, 1999, 2001 and 2003.Plus, J.G. Wentworth was to retain an additional $3,000 from the 2005 payment and $7,000 from each of the $8,000 payments payable in 2007, 2009 and 2011.

{¶17} On October 28, 1998, the decedent entered his fifth and final purchase agreement whereby he received $5,597.80, thus providing the decedent with a total of $34,828.80 since the first purchase agreement in November 1996.Under the final agreement, J.G. Wentworth was to receive the remaining $1,000 from the payments due in 2001, 2005, 2007, 2009 and 2011. J.G. Wentworth was also to receive the right to the entire $8,000 annuity payment due on — and $45,000 of the $74,000 final annuity payment due on 2015.The decedent then signed a "testamentary agreement"...