Wednesday, March 18, 2009

321 Henderson Receivables v. Ramos & Red Tomahawk (Cal. Ct. App. - March 18, 2009)

Today's a big day for 321 Henderson Receivables Organization, which is a huge player in the California structured settlement market. That market basically consists of entities (like 321 Henderson) who buy up structured settlements -- e.g., tort annuities -- and give the recipients a lump sum. There's a big business in this area, proof of which can be obtained merely by watching various commercials on late-night television. And 321 Henderson has obtained judicial approval for over two thousand of these settlements in California.

Lately, however, some judges up in Fresno have been denying otherwise-routine judicial approval, which prompted 321 Henderson to file multiple appeals. Thus far today, the resolution of those appeals has taken up 100% of today's published opinions by the California Court of Appeal (see here and here). And in each of these cases, 321 Henderson prevails.

So today's a big victory for those entities who make a profit on tort victims desperate for a lump sum. I'd feel better about that, quite frankly, if the margins on this business were a lot smaller than they are. However, when you've got a sophisticated business negotiating with a typically uneducated and desperate consumer over something as complex as the appropriate discount rate for a structured annuity, you can probably figure out as well as I can who gets the best of those transactions and by what margin. And why those commercials more than pay for themselves.