Matter of Fortress Funding NY LLC v. Knox

BRONX COUNTY
Consumer Protection

New York Law Journal

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Justice Alexander Hunter Jr.

Payee Knox sought approval to transfer certain structured settlement payments arising from a personal injury action to Fortress Funding. Knox noted she previously transferred structured settlement payment rights in exchange for $107,400 to purchase a home in Georgia, on which she currently owed nearly $700,000 on her mortgage. She now sought to exchange over $250,000 in exchange for $104,586.73, which the court found amounted to a 14.99 percent discounted rate. Knox stated she would use $103,000 to pay down her mortgage, claiming without approval of the transfer she would likely face foreclosure and potential bankruptcy. However, counsel for the administrator of Knox's husband's estate argued for denial of the transfer claiming it would violate a prior order by Surrogate Holzman restraining and enjoining Knox from using more than her intestate share of her late husband's estate. The court found it "highly unsettling" that neither Knox nor Fortress disclosed that the annuity was the subject of a Surrogate's Court proceeding since 2005, or offered an explanation why they failed to inform the court of the surrogate's court proceeding. Thus, in light of the pending surrogate's court action and prior order, the court denied the application.

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