SINGER ASSET FINANCE COMPANY, LLC v. Bachus

• Decision Date: 03 May 2002
• Citation: 741 N.Y.S.2d 618,294 A.D.2d 818
• Parties: SINGER ASSET FINANCE COMPANY, L.L.C., Respondent,<BR>v.<BR>JOHNNY L. BACHUS, Also Known as JOHNNY BACKUS, Defendant, and<BR>STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.
• Court: New York Supreme Court — Appellate Division

294 A.D.2d 818

741 N.Y.S.2d 618

SINGER ASSET FINANCE COMPANY, L.L.C., Respondent,

v. JOHNNY L. BACHUS, Also Known as JOHNNY BACKUS, Defendant, andSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant.

Decided May 3, 2002.

Present — Pigott, Jr., P.J., Green, Hurlbutt, Kehoe and Lawton, JJ.

It is hereby ordered that the judgment so appealed from be and the same hereby is unanimously modified on the law by deleting the second through eighth decretal paragraphs and (1) granting plaintiff's motion in part; (2) granting plaintiff judgment against defendant Johnny L. Bachus, also known as Johnny Backus, for the sum of $13,676.46, plus 9% interest from May 29, 1999 and less any payments received by plaintiff; (3) granting judgment as follows: "It is ADJUDGED and DECLARED that the prohibition against assignment in the structured settlement agreement is valid and effective to nullify the purported loan transaction between plaintiff and defendant Johnny L. Bachus, a/k/a Johnny Backus, whereby defendant Johnny L. Bachus, a/k/a Johnny Backus, attempted to assign his rights to periodic payments under the structured settlement agreement to plaintiff"; and (4) granting the cross motion of plaintiff for a turnover order pursuant to CPLR 5227, directing defendant State Farm Mutual Automobile Insurance Company to pay plaintiff the periodic payments due defendant Johnny L. Bachus, also known as Johnny Backus, under the structured settlement agreement until the judgment hereby granted in favor of plaintiff and against defendant Johnny L. Bachus, also known as Johnny Backus, is paid in full and as modified the judgment is affirmed without costs.

Memorandum:

In March 1991 Mildred Zinn, as parent and guardian of defendant Johnny L. Bachus, also known as Johnny Backus (Bachus), entered into a structured settlement agreement with defendant State Farm Mutual Automobile Insurance Company (State Farm), whereunder Bachus became entitled to monthly payments of $401.77 for the duration of his life, with payment guaranteed for 40 years. State Farm funded its periodic payment obligation by purchasing an annuity contract from The Prudential Insurance Company of America (Prudential). Pursuant to the terms of the structured settlement agreement, the monthly annuity payments under the Prudential annuity contract are sent directly to Bachus.

The structured settlement agreement provides that the periodic payments due Bachus "are not subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge or encumbrance" and that "no part of the payments called for herein * * * is to be subject to execution or any legal process for any obligation in any manner, nor shall [Bachus] have the power to sell, mortgage or encumber same, or any part thereof, nor anticipate the same, or any part thereof, by assignment or otherwise." Nevertheless, on May 29, 1998, Bachus entered into a "loan application and loan agreement" with Merrick Bank Corporation (Merrick), whereunder Merrick was to acquire Bachus's right to receive the monthly annuity payments of $401.77 under the structured settlement agreement for a period of 60 months in exchange for its payment to Bachus of $13,676.46. Subsequently, Merrick assigned its interest in that agreement to plaintiff, Singer Asset Finance Company, L.L.C. (Singer).

Not having received the annuity payments due "November 15, 1998 forward," Singer commenced this action against Bachus in February 1999 seeking both damages and declaratory relief based on, inter alia, breach of contract and unjust enrichment. Supreme Court granted Singer's motion for a default judgment, granting Singer judgment in the amount of $22,499.12 plus interest, costs and disbursements. In addition, the court granted judgment declaring that the "loan agreement" "is in all respects proper, valid, effective and enforceable." State Farm then moved for, inter alia, leave to intervene and vacatur of the default judgment, and Singer cross-moved for a turnover order directing State Farm to pay Singer the periodic payments due Bachus under the structured settlement agreement (see CPLR 5225, 5227). The court granted that part of the motion of State Farm for leave to intervene and vacatur of the default judgment, but did not address Singer's cross motion for a turnover order. After joinder of issue, both Singer and State Farm moved for summary judgment. The court denied State Farm's motion and granted Singer's motion. The court granted Singer judgment in the amount of $22,499.12 plus interest, costs and disbursements and declared, inter alia, that the "loan agreement" was valid and effective and not barred by the prohibition against assignment in the structured settlement agreement.

We conclude that the court erred in determining that the assignment by Bachus of his rights under the structured settlement agreement was valid and in granting Singer judgment against Bachus for breach of contract. "Whether a non-assignment clause renders a subsequent assignment void or the breach of a personal covenant not to assign depends upon the expressed intent of the parties, namely whether the language is sufficiently express to bar the assignment" (C.U. Annuity Serv. Corp. v Young, 281 AD2d 292, 292; see Sillman v Twentieth Century-Fox Film Corp., 3 NY2d 395, 402; Allhusen v Caristo Constr. Corp., 303 NY 446, 452). Here, Bachus expressly, clearly, and unequivocally...