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The Payment As Part Of A Structured Settlement For Injuries Sustained In An Auto Accident
Two parties claim they are entitled to the proceeds of an annuity payment from Safeco Life Insurance Co. The first, Singer Asset Finance Co., LLC, purchased an assignment of the rights to the payment from Dawna Dansby. Dansby negotiated for the payment as part of a structured settlement for injuries sustained in an auto accident. The second is John R. Fetzek. Fetzek garnished the annuity payment to satisfy a judgment he obtained against Dansby after she assigned her rights to the payment to Singer. Fetzek claims that Dansby's assignment was void because it violated an anti-assignment provision contained in the structured settlement.We conclude that Fetzek lacked standing to enforce an anti-assignment
provision in an agreement to which he is not a party and whose parties did not object to the assignment. We also conclude that Dansby's assignment was not void. Accordingly, we reverse the trial court's summary judgment order entered in favor of Fetzek.
On December 2, 1993, Dawna Dansby entered into a structured settlement agreement ('Settlement Agreement'), which provided for her to receive lump, sum payments of $63,500 on January 1, 1999, and $85,125 on January 1, 2004.
These payments were compensation for personal injuries she received in an auto accident in Georgia, her home state. The settlement was structured to receive preferential tax treatment under Section 130(c) of the Internal Revenue Code.1 26 U.S.C. sec. 130(c). Such treatment permits taxpayers to exclude settlement payments for personal injuries from their gross income.
26 U.S.C. sec. 104(a). Payors of such settlements also receive certain tax benefits. Ostensibly to preserve that treatment, the Settlement Agreement included an anti-assignment provision that prevented Dansby from selling or assigning her rights to those payments. The Settlement Agreement reserved to the settling defendant the right to discharge its liability for the payments by making a 'qualified assignment' to a named entity, SAFECO Assigned Benefits Service Company ('SABSCO'),
which was recognized by the IRS as qualified for Section 130(c) treatment. The Settlement Agreement also mentioned that SABSCO may fund the payments by purchasing an annuity from Safeco Life Insurance Co.2 As contemplated
by the Settlement Agreement, both the Qualified Assignment and Annuity Contract were executed at roughly the same time as the Settlement
Agreement.
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