CGU LIFE INSURANCE COMPANY OF AMERICA, and CGU ANNUITY SERVICE CORPORATION vs. METROPOLITAN MORTGAGE & SECURITIES CO., INC., WOODBRIDGE STERLING CAPITAL LLC, and LESTER E. LYTLE, JR., 131 F. Supp. 2d 670

Summary

Plaintiffs asserted that defendants purposely violated a valid and binding contract between plaintiffs and defendant individual by executing a purported assignment of the rights to receive periodic payments due under a structured settlement agreement in violation of an anti-assignment clause. Defendants argued that the assignment was valid. The court concluded that plaintiffs had standing to bring the action because they had been assigned the obligation to make periodic payments under the terms of the settlement agreement as the assignee of the original insurer. 13 Pa. Cons. Stat. § 9318(4)(d) of the Uniform Commercial Code did not apply because the periodic payments were not proceeds within the meaning of 13 Pa. Cons. Stat. § 9306(a). The anti-assignment provision was valid and enforceable because the favorable tax treatment plaintiffs received by including the anti-assignment provision was a sound and valid reason for the provision and under state law, the provision was enforceable. ...