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WebBank v. American General Annuity Service Corp.8/16/2002
American General Annuity Service Corporation ("American General") appeals the trial court's grant of summary judgment in favor of WebBank. We reverse and remand.
BACKGROUND
The instant case arises in connection with a financial transaction centered around a structured settlement agreement, specifically, the transfer of payments of money owing under the structured settlement agreement. A structured settlement agreement is a method for compensating an injured person. Under a structured settlement, a plaintiff becomes entitled to and receives an amount of money payable over time in the form of monthly and periodic payments ("structured settlement payments") as compensation for personal injury from a defendant or its insurer.
Structured settlements first came into common usage in the 1960s and 1970s and subsequently gained favorable tax status with a 1982 amendment to the federal Internal Revenue Code. At that time, Congress recognized that many personal injury victims were dissipating the settlements received as compensation for their tort claims, leaving them without means of support. In response to this concern, Congress amended the Internal Revenue Code to provide, among other things, tax benefits to personal injury victims and insurers that settle claims through the steady payment of settlement funds over an extended period of time. See 26 U.S.C. § 104(a)(2) (2002) (excluding such payments from the calculation of an individual's gross income for federal income tax purposes); 26 U.S.C. § 130 (2002) (providing tax benefits to certain personal injury liability assignments and qualified funding assets). Consequently, structured settlements have become a common and familiar means of settling lawsuits.
In the unrelated, yet predicate, action to this case, Susan Soliz ("Soliz"), a personal injury victim, commenced a lawsuit arising out of an injury she suffered. To resolve the lawsuit, Soliz entered into a structured settlement agreement with the defendant in that action and/or the defendant's liability insurer under which she received monthly settlement payments. As part of the settlement agreement, Soliz agreed, among other things, that the payments to which she was entitled under the structured settlement agreement would not be accelerated or assigned. The structured settlement agreement, however, did provide that American General would assume the obligation to make future settlement payments to Soliz pursuant to the structured settlement agreement. Under this arrangement, structured settlement payments were made to Soliz without incident.
At some point after the initiation of the structured settlement payments, Soliz, for reasons irrelevant to this appeal, was in need of an immediate, lump-sum payment of money instead of the periodic payments she had been receiving under her structured settlement agreement. To this end, Soliz entered into a financial transaction with WebBank, an industrial loan corporation organized under the laws of this state. Under their Loan and Security Agreement ("security agreement") and attendant promissory note, Soliz agreed to transfer her interest in her future structured settlement payments to WebBank in exchange for a purported loan. In other words, Soliz sought to exchange her structured settlement payments over a period of time for an immediate, lump-sum payment from WebBank, and WebBank offered to lend her a present sum of money and required her to secure the repayment of the purported loan with her future stream of structured settlement payments as collateral. In addition, as a condition precedent to the execution of the purported loan and the immediate payment of a lump sum to Soliz, WebBank required the receip
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