TALCOTT RESOLUTION LIFE INSURANCE COMPANY, f/k/a HARTFORD LIFE INSURANCE COMPANY, and TALCOTT RESOLUTION COMPREHENSIVE EMPLOYEE BENEFITS SERVICE COMPANY, etc. v. NOVATION CAPITAL, LLC

Citation: 261 So. 3d 580Docket: 17-3762

Court: District Court of Appeal of Florida; December 11, 2018; Florida; State Appellate Court

Original Court Document: View Document

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An appeal was filed by Talcott Resolution Life Insurance Company and Talcott Resolution Comprehensive Employee Benefit Service Company against Novation Capital LLC, Eisbock Funding LLC, and Justin Brannen regarding a declaratory judgment on the entitlement to a future payment from a structured settlement. The trial court had ruled that Novation purchased the right to the future payment and assigned it to Eisbock, granting them entitlement to the payment. This ruling was reversed on appeal because the pleadings failed to demonstrate compliance with the Structured Settlement Protection Act (SSPA), specifically that Novation had obtained prior court approval for the transfer. A factual question remained regarding whether this approval was granted. 

Structured settlements, which provide periodic payments for tort claims related to physical injuries, are often exploited by factoring companies, prompting states to enact SSPAs to protect payees. Florida's SSPA mandates that any transfer of payment rights must be court-approved and in the best interests of the payee. In the case at hand, Justin Brannen had a structured settlement from a 2005 agreement concerning a car accident, with a scheduled lump sum payment due in 2028. The insurer assigned payment obligations to Talcott, which purchased an annuity to fund the settlement. In 2012, Novation sought court approval for a transfer of Brannen's right to this future payment in exchange for $6,000. The petition included the necessary disclosures and an affidavit from Brannen citing financial need. However, the lack of established court approval led to the appeal's reversal.

Hartford and Brannen were served with a petition for approval of a transfer of structured settlement payment rights. Novation's counsel, Camacho, sent Hartford an “Agreed Final Order Approving Transfer” dated April 10, 2012, which appeared valid, was signed by a judge, and directed future payments to Novation’s assignee, Eisbock. Hartford updated its records to reflect this change. In 2016, Hartford learned that Camacho had been indicted for forgery regarding numerous court documents, raising doubts about the validity of the 2012 order. A review of court records revealed no entries for the order, and the SSPA proceeding had been dismissed in early 2013 for failure to prosecute. This uncertainty about the order's authenticity led Hartford to question its obligation to make payments to either Brannen or Novation/Eisbock, exposing it to potential double liability.

In 2017, Hartford initiated a declaratory judgment action against Novation, Eisbock, and Brannen to clarify its payment responsibilities, alleging the relevant facts and attaching supporting documents. Brannen did not respond to the complaint, while Novation and Eisbock jointly denied the order's invalidity and asserted that Brannen had no claim to the payment. They argued that Hartford had relied on the transfer, thereby claiming entitlement to the future payment based on estoppel, waiver, and reliance. Novation and Eisbock filed a motion for judgment on the pleadings, asserting that Eisbock was the only party asserting a right to the payment since Brannen did not file a pleading. In response, Hartford moved for summary judgment, arguing that Novation's acknowledgment of the potential invalidity of the 2012 order meant Brannen was entitled to the payment, citing non-waivable requirements of the SSPA that Novation failed to meet, rendering the transfer ineffectual.

The court granted Novation's motion for judgment on the pleadings, concluding that Brannen did not contest payment for the transfer or assert that he was no longer bound by the transfer agreement. Consequently, the court ordered Hartford to change the payee of future payments to Novation’s assignee, Eisbock, and prohibited Brannen from making further requests regarding the payee. Hartford appealed this decision. 

Under Florida law, a party may seek judgment on the pleadings once all pleadings are closed, with such judgments reviewed de novo by the court. This type of motion assesses the legal sufficiency of a cause of action where no factual disputes exist, resembling a motion to dismiss. When evaluating a defendant's motion, the court must assume the truth of all material allegations in the plaintiff's complaint and disregard the denials in the defendant's answer. 

The excerpt highlights that the transfer of structured settlement payment rights is subject to statutory regulation, requiring prior court approval for any authorized transfer. It points out that if Hartford's allegations were true, the 2012 order approving the transfer might be a forgery, rendering it ineffective. Since both parties acknowledged a dispute over the order's validity, this raised a factual issue that obstructed the granting of judgment on the pleadings. The SSPA aims to safeguard the interests of payees involved in transferring structured settlement rights.

The trial court ruled that Hartford was obligated to pay Novation’s assignee due to Brannen's lack of contest regarding the payments. However, under section 626.99296(5) of the Florida Statutes, Brannen could not waive the requirements of the Structured Settlement Protection Act (SSPA), which mandates prior approval for such transfers. Regardless of Brannen's consent or participation, Novation was still required to adhere to SSPA provisions. Novation and Eisbock argued that all parties relied on a 2012 order, preventing Hartford from contesting it, as estoppel bars a party from disputing an order from which they have benefited. Nonetheless, Hartford did not claim to have benefited from the order, and merely updating records to reflect Novation as the payee does not constitute a benefit. The court identified the validity of the 2012 order as a critical factual issue that could not be resolved through a motion for judgment on the pleadings. If the order was invalid, the transfer would not have been permitted under the SSPA, which cannot be waived. Consequently, the court erred in awarding payments to Eisbock without first validating the 2012 order. The decision is reversed and remanded for further proceedings regarding the declaratory judgment action, with concurrence from DAMOORGIAN and KUNTZ, JJ. The ruling is not final pending a timely filed motion for rehearing.