In my March article, I wrote about the Cordero case, which remains well-known in the relatively small and insular structured settlement industry. Lujerio Cordero had sold, in six separate transactions, the majority of his guaranteed income streams from a structured settlement annuity to third-party factoring companies. The structured settlement payments arose from a tort action brought by the parents of Cordero, who was then a minor, against his then-landlord due to the alleged exposure to lead paint. The annuity that funds those income streams was owned and issued by an AM Best top-rated insurance company. Those factoring transactions were approved by different courts who, at that time, arguably had jurisdiction to hear each matter under the applicable state Structured Settlement Protection Act(s). Years later, a remorseful Cordero (and his sophisticated counsel) did not sue the third-party factoring companies to try and get his money back. Instead, Cordero sued the life companies who own and issue the annuity contract for which he was payee, arguing that the underlying settlement documents and the language therein prohibiting assignment give rise to some fiduciary obligation on the part of the owner/issuer to enforce that language and stop the factoring before it happens.

Although many structured settlement annuity payees before Cordero had sued the owners and issuers of their annuity contracts, the Cordero case was the first litigation in a long time that appeared to be gaining some traction in the courts. After the life companies successfully moved to dismiss the case in the Florida federal court, Cordero appealed to the U.S. Court of Appeals for the Eleventh Circuit. The Eleventh Circuit certified to the New York Court of Appeals the question as to whether there was some breach of unwritten duty (as the underlying settlement was governed by New York law). The entire industry—both structured settlement owners/issuers and third-party purchasers alike—were watching Cordero, as the implications of a decision finding such duty could have been massive in many ways. Indeed, the National Structured Settlement Trade Association (NSSTA) filed an amicus brief in support of the life companies, correctly instructing that no court or legislature across the country had ever before created or enforced such a duty upon a life company to intervene in a third-party factoring transaction. Oral argument took place before the New York Court of Appeals on March 14—just days after my last article.