Legal Asset Funding, LLC v. Travelers Cas. & Sur.

• Decision Date: 08 May 2001
• Docket Number: No. 99-5254 (NHP).,99-5254 (NHP).
• Citation: 155 F.Supp.2d 90
• Parties: LEGAL ASSET FUNDING, LLC, et al., v. TRAVELERS CASUALTY & SURETY COMPANY, et al.
• Court: New Jersey Supreme Court

155 F.Supp.2d 90

LEGAL ASSET FUNDING, LLC, et al., v. TRAVELERS CASUALTY & SURETY COMPANY, et al.

No. 99-5254 (NHP).

United States District Court, D. New Jersey.

May 8, 2001.

COPYRIGHT MATERIAL OMITTED

Michael R. Perle, New York, NJ, Thomas A. DeClemente, DeClemente & Associates, Glen Rock, NJ, for Plaintiffs Legal Asset Funding, LLC and Wayne G. Kirkpatrick.

Thomas G. Rohback, Elizabeth J. Gorman, LeBoeuf Lamb Greene & MaCrae, Newark, NJ, for Defendants Aetna Life Insurance and Annuity Company, Travelers Property & Casualty Corp., Travelers Life and Annuity Company and Travelers Casualty and Surety Company.

POLITAN, District Judge.

Dear Counsel:

This matter comes before the Court on the motion of defendants Travelers Casualty & Surety Company, Travelers Property & Casualty Corp., Travelers Life and Annuity Company, and Aetna Life Insurance and Annuity Company to dismiss, or in the alternative for summary judgment, and the plaintiffs Wayne G. Kirkpatrick and Legal Asset Funding, LLC's motion for summary judgment. This Court heard oral argument on October 23, 2000. For the following reasons, the plaintiffs' motion for summary judgment is DENIED and the defendants' motion for summary judgment is GRANTED.

BACKGROUND

Plaintiff, Wayne G. Kirkpatrick ("Kirkpatrick"), was injured in a motorcycle accident on February 21, 1987, in the State of New York.¹ As a result of his accident, he entered into a structured settlement with Connecticut insurer Aetna Casualty & Surety Company ("Aetna Casualty") on November 13, 1991. Pursuant to that structured settlement agreement (hereinafter the "Structured Settlement"), Kirkpatrick was to receive from Aetna Casualty at least the sum of $131,297.36, to be paid out in monthly installments over a 300 month period, coupled with a further guaranty by Aetna Casualty to pay him at least $1,000 per month until October 1, 2017. Thereafter, if he was still living, Aetna Casualty would continue making payments in such amount for the remainder of his lifetime. The structured portion of the settlement was funded through an annuity issued by Travelers Life and Annuity Company, a Connecticut corporation.² The annuity contract did not contain an anti-assignment provision.

On October 1, 1998, the Connecticut legislature enacted Conn. Gen.Stat. § 52-225f, which regulates the transfer of structured settlement payment rights.³ Section 52-225f provides that no transfer of structured settlement payment rights are effective unless several requirements are satisfied. First, § 52-225f(b) requires that the transferee provide a written disclosure statement to the payee containing material information such as the discounted present value of all structured settlement payments to be transferred. The transfer must also be approved by a court pursuant to the following subsection:

(c)(1) Prior to any transfer, the payee entitled to receive payments under such structured settlement shall commence a declaratory judgment action under section 52-29 for a determination as to whether the transfer of such structured settlement payment rights is in the best interests of the payee and is fair and reasonable to all interested parties under all of the circumstances then existing. The annuity issuer and the structured settlement obligor shall be made parties to such action. If the court determines, after hearing, that such transfer should be allowed, it shall approve such transfer upon such terms and conditions as it deems appropriate.

(2) The court in which the original action was or could have been filed or the court which has jurisdiction where the applicant resides shall have jurisdiction over any such action.

Confronted with financial adversity, Kirkpatrick agreed to transfer a portion of the Structured Settlement proceeds to Settlement Funding Inc. ("Settlement Funding") on August 11, 1999, in exchange for a lump sum payment of $20,100.00.⁴ Settlement Funding is a Georgia entity having a close business relationship with plaintiff Legal Asset Funding, LLC ("Legal Asset"). By an assignment agreement dated September 10, 1999, Settlement Funding assigned its interest in Kirkpatrick's Structured Settlement to Legal Asset. Travelers refuses to honor the transfer and pay Legal Asset pursuant to the transfer agreement unless plaintiffs comply with § 52-225f.

Legal Asset filed its initial Complaint in the nature of a declaratory judgment action on November 10, 1999. It filed an Amended Complaint on June 20, 2000. Pursuant to this Court's directive, Legal Asset filed a Second Amended Complaint on July 13, 2000, in order to join Wayne Kirkpatrick as a plaintiff. Legal Asset complains that Travelers refuses to recognize the transfer agreement between Kirkpatrick and Legal Asset because neither Legal Asset nor Kirkpatrick has complied with § 52-225f.

In seeking declaratory relief pursuant to 28 U.S.C. § 2201, Legal Asset's principle contentions are that Conn. Gen.Stat. § 52-225f violates the Commerce Clause, the Due Process Clause and the Contracts Clause of the United States Constitution. See Second Amended Complaint, Counts I, II & III. This is so, Legal Asset asserts, because § 52-225f unlawfully regulates out-of-state transactions concerning the transfer of structured settlement rights between nonresident parties and applies retroactively to Kirkpatrick's Structured Settlement agreement. See id. Further, Legal Asset alleges that the statute also violates the Connecticut Constitution's Due Process Clause and Conn. Gen.Stat. § 55-3. See id. at Counts IV and V.

The defendants' motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(1) and (6), or in the alternative for summary judgment, and plaintiffs' motion for summary judgment are currently before the Court.⁵

DISCUSSION

I. Summary Judgment Standard

Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is appropriate only if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Summary judgment may be granted against a party who fails to adduce facts sufficient to establish the existence of any element essential to that party's case, for which that party will bear the ultimate burden of proof at trial. See Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

The moving party bears the initial burden of identifying evidence that demonstrates the absence of a genuine issue of material fact. See id. at 323, 106 S.Ct 2548. Whether a fact is material is determined by the applicable substantive law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). An issue involving a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Healy v. New York Life Ins. Co., 860 F.2d 1209, 1219 n. 3 (3d Cir.1988), cert. denied, 490 U.S. 1098, 109 S.Ct. 2449, 104 L.Ed.2d 1004 (1989). Once that burden has been met, the nonmoving party must set forth "specific facts showing that there is a genuine issue for trial," or the factual record will be taken as presented by the moving party and judgment will be entered as a matter of law. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). In determining whether any genuine issues of material fact exist, the Court must resolve "all inferences, doubts, and issues of credibility .... against the moving party." Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n. 2 (3d Cir.1983) (citing Smith v. Pittsburgh Gage & Supply Co., 464 F.2d 870, 874 (3d Cir.1972)).

Further, the nonmovant must "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. An issue is "material" only if the dispute "might affect the outcome of the suit under the governing law." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). To defeat "a properly supported summary judgment motion, the party opposing it must present sufficient evidence for a reasonable jury to find in its favor." Groman v. Tp. of Manalapan, 47 F.3d 628, 633 (3d Cir.1995). Accordingly, the party opposing summary judgment may not merely restate the allegations of its pleadings. See Farmer v. Carlson, 685 F.Supp. 1335, 1339 (M.D.Pa.1988). Moreover, a party cannot rely upon self-serving conclusions, unsupported by specific facts in the record, see Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548, nor can one rely upon speculation and conclusory allegations, see Groman, 47 F.3d at 637. If the record, as a whole, cannot "lead a rational trier of fact to find for the nonmoving party, there is no `genuine issue for trial.'" Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.

II. Ripeness of Plaintiffs' Constitutional Claims

Travelers first insists that plaintiffs' claims are not ripe for adjudication before this Court because Legal Asset, as Settlement Funding's assignee, has yet to satisfy the condition precedent contained in the assignment agreement. That condition precedent requires Settlement Funding to obtain a final nonappealable court order conveying the assigned payment to Settlement Funding prior to paying Kirkpatrick. Travelers argues that until Legal Asset (as Settlement Funding's assignee) fulfills this condition precedent the Court cannot address the constitutional issues as presented.

Federal courts are constitutionally constrained to decide only actual cases or controversies. See U.S. CONST. art. III. The rationale behind the ripeness doctrine is to avoid premature adjudication by preventing courts from entangling themselves in abstract disagreements involving contingent future events which may not occur as anticipated, or indeed which may not occur at all. See ...