Rumbin v. Utica Mutual Ins.

• Citation: 254 Conn. 259,757 A.2d 526
• Court: Supreme Court of Connecticut
• Decision Date: 15 August 2000
• Parties: (Conn. 2000) MARCO RUMBIN V. UTICA MUTUAL INSURANCE COMPANY ET AL. (SC 16213)

757 A.2d 526 (Conn. 2000)

MARCO RUMBIN

V.

UTICA MUTUAL INSURANCE COMPANY ET AL.

(SC 16213)

THE SUPREME COURT OF THE STATE OF CONNECTICUT

Argued January 11, 2000

August 15, 2000

Thomas G. Rohback, with whom were Katherine A. Scanlon and Peter J. Vodola, for the appellant (defendant Safeco Life Insurance Company).

Michael J. Walsh, with whom was Ann W. Henderson, for the appellee (intervening plaintiff).

Eliot B. Gersten filed a brief for the National Association of Structured Settlement Purchasers as amicus curiae.

Borden, Norcott, Katz, Palmer and Vertefeuille, Js.

Vertefeuille, J.

OPINION

The defendant Safeco Life Insurance Company (Safeco), appeals from the judgment of the trial court approving the transfer by the plaintiff, Marco Rumbin, of payments due to him under an annuity issued pursuant to a structured settlement agreement between the plaintiff and the named defendant, Utica Mutual Insurance Company (Utica Mutual).¹ The plaintiff proposes to sell the remaining payments to the intervening plaintiff, J. G. Wentworth.² The principal issues in this appeal are: (1) whether General Statutes §§ 52-225f³ invalidates antiassignment provisions that are included in structured settlement agreements and annuities issued pursuant to such agreements; and (2) whether the antiassignment clause contained in the annuity issued by Safeco⁴ for the plaintiff beneficiary invalidates his assignment to Wentworth. We conclude that §§ 52-225f does not invalidate such antiassignment provisions. We further conclude that, under Connecticut common law, the antiassignment provision in the annuity contract does not invalidate the plaintiff's assignment of his right to payments under the annuity to Wentworth. In accordance with case law and §§ 322 of the Restatement (Second) of Contracts, an antiassignment provision that does not limit the power to assign or expressly invalidate the assignment does not render the assignment of the annuity ineffective. Safeco, however, has the right to recover damages for the plaintiff's breach of the antiassignment provision. We therefore affirm the judgment of the trial court.

The record reveals the following facts. In April, 1998, the plaintiff and Utica Mutual entered into a structured settlement agreement to resolve a personal injury claim. Pursuant to that settlement agreement, the plaintiff was to receive from Utica Mutual a lump sum payment, followed by a series of periodic payments over the next fifteen years.⁵ The structured portion of the settlement was funded by the annuity contract issued by Safeco. The annuity contract provided under its "Assignment" provision that "[n]o payment under this annuity contract may be... assigned... in any manner by the [plaintiff]...."⁶

Approximately six months after the execution of the settlement agreement and the issuance of the annuity, the plaintiff had become unemployed and faced a mortgage foreclosure action against his home, where he lived with his family. In order to resolve his financial troubles, the plaintiff decided to sell his right to the annuity payments. In November, 1998, he filed a declaratory judgment action seeking court approval, pursuant to No. 98-238, §§ 1, of the 1998 Public Acts (P.A. 98-238), now codified at §§ 52-225f, to transfer his right to the remaining annuity payments to Wentworth in exchange for a lump sum payment and other consideration. Safeco objected to the assignment, claiming that because the annuity contract contained an antiassignment provision, P.A. 98-238 was inapplicable. Utica Mutual neither appeared at that hearing, nor provided an explanation for its failure to appear, and the trial court issued an order of default for failure to appear against Utica Mutual.⁷

The trial court, after a hearing, concluded that P.A. 98-238 invalidated antiassignment provisions and allowed payees to transfer their rights to future payments under structured settlement agreements when the statutory requirements were met. The trial court further found that, pursuant to P.A. 98-238, the proposed sale of the annuity payments was in the best interests of the plaintiff, and was fair and reasonable to all interested parties. Accordingly, the court rejected Safeco's claim concerning the applicability of the antiassignment provision, and rendered judgment approving the transfer of the plaintiff's annuity payments to Wentworth. Safeco appealed from the trial court's judgment to the Appellate Court, and we transferred the case to this court pursuant to Practice Book §§ 65-1 and General Statutes §§ 51-199 (c).

I.

We first consider Safeco's claim that the trial court improperly concluded that the language of §§ 52-225f invalidates antiassignment provisions in structured settlement agreements and annuities issued pursuant to such agreements. We agree with Safeco, and conclude that the language of §§ 52-225f does not abrogate the common-law right to include an antiassignment provision in such an agreement or annuity.

It is well settled that "[i]n determining whether or not a statute abrogates or modifies a common law rule the construction must be strict, and the operation of a statute in derogation of the common law is to be limited to matters clearly brought within its scope.... Although the legislature may eliminate a common law right by statute, the presumption that the legislature does not have such a purpose can be overcome only if the legislative intent is clearly and plainly expressed.... We recognize only those alterations of the common law that are clearly expressed in the language of the statute because the traditional principles of justice upon which the common law is founded should be perpetuated." (Internal quotation marks omitted.) Alvarez v. New Haven Register, Inc., 249 Conn. 709, 715, 735 A.2d 306 (1999).

The language of §§ 52-225f contains no clear expression of legislative intent to alter the common law. There is, for example, no provision in the statute that addresses the impact of antiassignment provisions on the transfer of structured settlement rights. Nor does the statute grant the trial court the power to ignore antiassignment provisions, or the common law of contracts, if the court deems it appropriate or necessary. Rather, the statute requires the trial court to consider "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" and further provides, "[i]f 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." General Statutes §§ 52-225f (c) (1). Reading that language as a clear and plain expression of the legislature's desire to alter the common law of contracts would be an unwarranted departure from our traditional practice of presuming that "the legislature is capable of providing explicit limitations when that is its intent." Lynn v. Haybuster Mfg., Inc., 226 Conn. 282, 290, 627 A.2d 1288 (1993). In the absence of such explicit language, we adhere to our long-standing rule that "[n]o statute is to be construed as altering the common law, farther than its words import [and a statute] is not to be construed as making any innovation upon the common law which it does not fairly express." (Internal quotation marks omitted.) Gore v. People's Savings Bank, 235 Conn. 360, 382, 665 A.2d 1341 (1995).⁸

II.

The primary issue raised by this case is whether, under Connecticut common law, an antiassignment provision in an annuity contract invalidates the plaintiff payee's transfer of his right to future payments under the annuity to a third party. We conclude, in accordance with case law and §§ 322 of the Restatement (Second) of Contracts, that the antiassignment provision at issue here does not render the assignment of the annuity ineffective, but, instead, gives the annuity issuer, Safeco, the right to recover damages for breach of the antiassignment provision.

Although we previously have addressed the issue of the validity of contractual provisions prohibiting the assignment of contractual rights; see Lewin & Sons, Inc. v. Herman, 143 Conn. 146, 149, 120 A.2d 423 (1956) (upholding validity of contractual provision that prohibited assignment without consent); the law of contracts has changed considerably since our earlier decision. Accordingly, we now re-examine the basic legal principles regarding contractual antiassignment provisions.

Our analysis of the effect of the antiassignment provision begins by emphasizing that the modern approach to contracts rejects traditional common-law restrictions on the alienability of contract rights in favor of free assignability of contracts. See 3 Restatement (Second), Contracts §§ 317, p. 15 (1981) ("[a] contractual right can be assigned"); J. Murray, Jr., Contracts (3d Ed. 1990) ("the modern view is that contract rights should be freely assignable"); 3 E. Farnsworth, Contracts (2d Ed. 1998) §§ 11.2, p. 61 ("[t]oday most contract rights are freely transferable"). Common-law restrictions on assignment were abandoned when courts recognized the necessity of permitting the transfer of contract rights. "The force[s] of human convenience and business practice [were] too strong for the common-law doctrine that [intangible contract rights] are not assignable." (Internal quotation marks omitted.) J. Murray, Jr., supra, §§ 135, p. 791. "If the law were otherwise, our modern credit economy could not exist." 3 E. Farnsworth, supra, §§ 11.2, p. 61. As a result, an assignor typically can transfer his contractual right to receive future payments to an assignee. See Western United Life Assurance Co. v. Hayden, 64 F.3d 833, 841 (3d Cir. 1995); 3 E. Farnsworth, supra, §§ 11.2, pp. 61, 66.

The parties to a contract can include express language to limit assignment and courts generally uphold these contractual antiassignment clauses. See 3...