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Macomber v. Travelers Property and Casualty Corp.9/3/2002
which would provide an income stream of $1015.18 annually for a minimum of thirty years.
Thus, based on these allegations, when Huaman contemplated settling her claim for $10,000, it is reasonable to infer that, as an alternative to the structured settlement, Travelers Casualty would have given her $10,000 in cash, from which she would have paid her attorneys their contingency fee of $3333. Had Huaman chosen to purchase an annuity, she would have had $6667 with which to purchase the most favorable annuity she could procure for that amount. When Huaman instead agreed to have Travelers Casualty purchase an annuity on her behalf, she believed, based on Travelers Casualty's representations, that it would spend the same $6667 that she would have had to procure an annuity. Macomber was under a similar belief. Having first agreed to settle her claim with Travelers Casualty for $85,000, Macomber later consented to having $15,000 invested in a structured settlement. Based on Travelers Casualty's representations, she believed that the annuity purchased by Travelers Casualty would cost it the same $15,000 that she could have invested herself had she chosen to receive cash rather than a structured settlement.
It is against this factual background that we evaluate the plaintiffs' claim. Critical to their theory of harm, under either the rebating or short-changing scheme, is their allegation that the ''present value'' of each of their annuities was represented to be the same as the ''cost'' of the annuity. In the case of Huaman, she alleged that she ''accepted a structured settlement that was represented to be of a value and cost of $6667.'' In Macomber's case, she alleged that Travelers Casualty executed a release ''which represented that consideration for [Macomber's] release included 'a structured settlement in accordance with Exhibit A with an estimated present value of [$15,000].' '' The plaintiffs alleged that these representations meant that the annuities would cost Travelers Casualty $6667 and $15,000, respectively.
There is authority to support the plaintiffs' factual allegations in this regard. See, e.g., Old Republic Ins. Co. v. Ashley, 722 S.W.2d 55, 58 (Ky. App. 1986) ('' he prevailing law is that a structured settlement should be valued at its present cash value''); Bonarek v. Wayne County Board of Institutions, 165 Mich. App. 346, 354, 419 N.W.2d 21 (1987) ('' he cost of the annuities are their present values''); Merendino v. FMC Corp., 181 N.J. Super. 503, 509, 438 A.2d 365 (1981) (''the cost of the annuities reflects the actual present value in the marketplace''); 3 J. Stein, Personal Injury Damages (3d Ed. 1997) ยง 16:40, p. 16-40 ('' courts have consistently held that the present value of an annuity used to fund a structured settlement is its cost''). Whether the terms ''cost'' and ''present value'' were represented to be synonymous is a question of fact to be resolved at trial. For purposes of this appeal, however, we must accept the plaintiffs' equation as accurate.
Given the foregoing, we conclude that the plaintiffs may be able to demonstrate that they were harmed in two ways. First, as set forth in the complaint, the plaintiffs alleged that: (1) Travelers Casualty represented that it would provide annuities of a certain cost and value, specifically, $6667 for Huaman's and $15,000 for Macomber's; (2) these annuities actually cost Travelers Casualty less than those amounts; (3) had the plaintiffs known of Travelers Casualty's practices, namely, its rebating and short-changing schemes, they could have negotiated for annuities that actually cost and had a present value of $6667 and $15,000 respectively; and (4) as a result, they would have received a greater inco
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