Case: 2:13-cv-00638-GCS-MRA Doc #: 32 Filed: 09/30/14 Page: 1 of 5 PAGEID #: 135
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF OHIO
`EASTERN DIVISION
`
`Civil Action 2:13-cv-0638
`
`Judge Smith
`
`Magistrate Judge Abel
`
`: : : : :
`
`Singer Asset Finance Company, L.L.C.,
`
`Plaintiff
`
` v.
`
`Kelly Cassidy-Elliott, et al.,
`
`Defendants
`
`Report and Recommendation
`Regarding Structured Settlement Protection Act and Settlement Agreement
`
`Counsel had reported this case settled, but plaintiff’s counsel’s August 5 status
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`report advised me that the settlement had not been finalized and requested a status con-
`
`ference. During a conference held August 14, counsel for plaintiff Singer Asset Finance
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`Company, L.L.C. (“Singer”) and defendant Kelly Cassidy-Elliott (“Elliott”) reported they
`
`had settled the law-suit during the March Settlement Week, but defendants Symetra
`
`Assigned Benefits Service Company and Symetra Life Insurance Company (collectively
`
`“Symetra”) have raised questions about whether Ohio’s Structured Settlement Protection
`
`Act (“SSPA”), Ohio Revised Code § 2323.58, et seq1 (effective October 27, 2000) requires
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`Ohio court approval of Elliott’s transfer of $90,000 of the $100,000 March 23, 2018 periodic
`
`1Section 2323.58 contains the Act’s definitions of terms. Section 2323.581 covers
`when notice of a transfer of structured settlement payment rights is required. If the Act
`applies, § 2323.582 requires a disclosure statement. Section 2323.583 requires express
`findings by a court of competent jurisdiction to approve a transfer of structured settle-
`ment payment rights. Section 2323.584 controls an application for approval in advance
`of a transfer of structured settlement payment rights by an Ohio court.
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE SOUTHERN DISTRICT OF OHIO
`EASTERN DIVISION
`
`Civil Action 2:13-cv-0638
`
`Judge Smith
`
`Magistrate Judge Abel
`
`: : : : :
`
`Singer Asset Finance Company, L.L.C.,
`
`Plaintiff
`
` v.
`
`Kelly Cassidy-Elliott, et al.,
`
`Defendants
`
`Report and Recommendation
`Regarding Structured Settlement Protection Act and Settlement Agreement
`
`Counsel had reported this case settled, but plaintiff’s counsel’s August 5 status
`
`report advised me that the settlement had not been finalized and requested a status con-
`
`ference. During a conference held August 14, counsel for plaintiff Singer Asset Finance
`
`Company, L.L.C. (“Singer”) and defendant Kelly Cassidy-Elliott (“Elliott”) reported they
`
`had settled the law-suit during the March Settlement Week, but defendants Symetra
`
`Assigned Benefits Service Company and Symetra Life Insurance Company (collectively
`
`“Symetra”) have raised questions about whether Ohio’s Structured Settlement Protection
`
`Act (“SSPA”), Ohio Revised Code § 2323.58, et seq1 (effective October 27, 2000) requires
`
`Ohio court approval of Elliott’s transfer of $90,000 of the $100,000 March 23, 2018 periodic
`
`1Section 2323.58 contains the Act’s definitions of terms. Section 2323.581 covers
`when notice of a transfer of structured settlement payment rights is required. If the Act
`applies, § 2323.582 requires a disclosure statement. Section 2323.583 requires express
`findings by a court of competent jurisdiction to approve a transfer of structured settle-
`ment payment rights. Section 2323.584 controls an application for approval in advance
`of a transfer of structured settlement payment rights by an Ohio court.
`
`
`
`Case: 2:13-cv-00638-GCS-MRA Doc #: 32 Filed: 09/30/14 Page: 2 of 5 PAGEID #: 136
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`payment due her from Symetra.
`
`Symetra’s concern is that the UCC financing statement for the loan could be read as
`
`not transferring the 2018 periodic payment to Singer. The SSPA requires that a court of
`
`competent jurisdiction give prior approval to any transfer of structured settlement pay-
`
`ment Rights. Ohio Revised Code § 2323.583. Otherwise the transfer is not effective and the
`
`annuity issuer is not required to make payment to a transferee who has not obtained court
`
`approval. Ohio Revised Code § 2323.581. The definition of a transfer includes “pledge,
`
`hypothecation, or any other form of . . . encumbrance” Ohio Revised Code § 2323.58(Q).
`
`The Internal Revenue Code imposes a tax “upon any person who acquires . . . structured
`
`settlement payment rights in a structured settlement factoring transaction” IRC § 5891(a).
`
`This tax does not apply if the transaction transferring those payment rights is approved in
`
`advance in a “qualified order”. IRC § 5891(b)(1). The Code defines a qualified order as a
`
`final order issued by a state court or responsible admin-istrative authority, which finds
`
`that the transfer does not violate federal or state law or court order and that the transfer is
`
`in the best interest of the payee. IRC § 5891(b)(2). This is the second time Cassidy-Elliott
`
`has filed suit. Symetra does not want to be subject to a third suit if Cassidy-Elliott were to
`
`be required to pay the 20% excise tax for annuity pay-ments that did not comply with the
`
`Act.
`
`Underlying facts. On April 15, 1993, the Richland County, Ohio Probate Court
`
`approved the settlement of a wrongful death claim in the deaths of Elliott’s parents where-
`
`by Elliott was to receive periodic payments from an annuity purchased from Defendant
`
`Symetra. The final payment under this settlement is the periodic payment to be paid on
`
`2
`
`
`
`Case: 2:13-cv-00638-GCS-MRA Doc #: 32 Filed: 09/30/14 Page: 3 of 5 PAGEID #: 137
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`March 23, 2018 (the “2018 Periodic Payment”).
`
`On April 12, 2000, Elliott and Merck Bank Corporation2 entered the loan agreement
`
`that is the subject of this lawsuit. Merck loaned Elliott $7,000. She assigned to Merck as a
`
`lump sum payment for the loan the $63,000 structured settlement payment due her from
`
`Symetra March 23, 2013. The collateral pledged by Elliott to Merck under the loan agree-
`
`ment included the 2018 Periodic Payment.3 On May 8, 2000, Singer, which had acquired
`
`the loan agreement from Merck, filed a UCC-1 Financing Statement to secure its rights in
`
`the loan collateral. Elliott signed the UCC form indicating that the collateral was described
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`in Exhibit A, which provided that the collateral included all of her right to receive periodic
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`payments due under the structured settlement annuity. It specifically set out each of the
`
`payments due under the annuity contract, including the $100,000 payment due March 23,
`
`2018.
`
`Decision. It is undisputed by the parties that the April 2000 loan and the May 2000
`
`UCC filing pre-date the SSPA and, as such, are not subject to it. The question is whether
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`the pledge of the 2018 Periodic annuity payment as collateral under for the loan was a
`
`transfer under Ohio’s SSPA. If so, the Ohio SSPA would not apply since the lien pre-dates
`
`the SSPA. If not, the 2014 settlement agreement assignment of payment rights in the 2018
`
`periodic structured settlement annuity payment to Singer would be a transfer that is
`
`governed by the SSPA.
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`2Singer purchased the loan from Merck. May 3, 2000 Assignment Agreement.
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`3See, Terms Rider, “Collateral”.
`
`3
`
`
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`Case: 2:13-cv-00638-GCS-MRA Doc #: 32 Filed: 09/30/14 Page: 4 of 5 PAGEID #: 138
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`Symetra notes that lien rights are not the same as payment rights. The May 2000
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`UCC-1 Financing Statement placed a lien upon the 2018 periodic payment, but in the
`
`absence of a default it did not give Singer the right to receive the 2018 periodic payment.
`
`The 2014 settlement between Elliott and Singer was reached by arms-length bar-
`
`gaining. Both parties were represented by counsel and fully informed of their litigation
`
`options. While the April 2000 loan agreement pledging the 2018 periodic payment as
`
`collateral and the May 2000 UCC filing may not have transferred an immediate right to the
`
`payment, its legal purpose and effect was to give Singer the right to the payment in the
`
`event Elliott defaulted on the loan. Elliott knew then that if she later defaulted on the loan,
`
`Singer had the right to the 2018 periodic payment. Her signature on the UCC filing ack-
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`nowledges that fact. Since the parties do not dispute that she is in default on the loan, here
`
`assigning $90,000 of the $100,000 2018 periodic payment did not effect a transfer of a
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`structured settlement payment requiring Ohio court approval under the SSPA because
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`that right was transferred to Singer in May 2000 before the October 2000 effective date of
`
`Ohio’s SSPA.
`
`Singer and Cassidy-Elliott maintain that Symetra agreed to the settlement during
`
`the mediation and has no right to stand in the way of their resolution of this lawsuit. Sym-
`
`etra agrees that Singer and Cassidy-Elliott have the right to resolve their dispute and is
`
`willing to let them submit a proposed judgment order to the court asking the court to find
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`that Ohio’s Structured Settlement Protection Act does not apply to the assignment of the
`
`2018 annuity payment.
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`For the reasons set out above, the Magistrate Judge RECOMMENDS that the Court
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`4
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`
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`Case: 2:13-cv-00638-GCS-MRA Doc #: 32 Filed: 09/30/14 Page: 5 of 5 PAGEID #: 139
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`approve the settlement, finding that the UCC filing pledging the March 2018 structured
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`settlement periodic annuity payment to the lender transferred her right to that payment
`
`before the Ohio Structured Settlement Protection Act’s effective date. Consequently, the
`
`proposed settlement does not effect a transfer of a structured settlement payment requir-
`
`ing Ohio court approval under the SSPA.
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`If any party objects to this Report and Recommendation, that party may, within
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`fourteen (14) days, file and serve on all parties a motion for reconsideration by the Court,
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`specifically designating this Report and Recommendation, and the part thereof in quest-
`
`ion, as well as the basis for objection thereto. 28 U.S.C. §636(b)(1)(B); Rule 72(b), Fed. R.
`
`Civ. P.
`
`The parties are specifically advised that failure to object to the Report and Recom-
`
`mendation will result in a waiver of the right to de novo review by the District Judge and
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`waiver of the right to appeal the judgment of the District Court. Thomas v. Arn, 474 U.S.
`
`140, 150-152 (1985); United States v. Walters, 638 F.2d 947 (6th Cir. 1981); United States v.
`
`Sullivan, 431 F.3d 976, 984 (6th Cir. 2005); Miller v. Currie, 50 F.3d 373, 380 (6th Cir. 1995).
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`Even when timely objections are filed, appellate review of issues not raised in those object-
`
`ions is waived. Willis v. Sullivan, 931 F.2d 390, 401 (6th Cir. 1991).
`
`
`
`s/Mark R. Abel
`United States Magistrate Judge
`
`5
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