Tuesday, January 14, 2020

No. 349: Executive Life of New York and Its Structured Settlement Annuities Are Back in the News

A three-judge panel of a federal appellate court recently issued an important and unanimous ruling about two structured settlement annuities that Executive Life Insurance Company of New York (ELNY) had issued in 1984. The plaintiff is Trevor Langkamp, the recipient of the benefits provided in the structured settlement annuities.

The Lawsuit
In 1980, when Trevor was 17 months old, he suffered severe burns at a U.S. Army facility. In 1982, his parents filed a lawsuit under the Federal Tort Claims Act against the U.S. alleging that Trevor's injuries were caused by negligent management of the facility. In 1984, the Langkamps and the U.S. settled the case for a cash payment of about $240,000 and a structured settlement.

The settlement required the U.S. to pay, for Trevor's benefit, a structured settlement of $350 per month from January 1985 through October 1996, and then, to Trevor, $3,100 per month (at 3 percent interest compounded annually) for life, beginning in November 1996. The settlement also required several lump sum payments to Trevor: $15,000 in December 1996, $50,000 in December 2000, $100,000 in December 2008, $250,000 in December 2018, and $1,000,000 in December 2028.

In November 1984, the U.S. purchased two structured settlement annuities from ELNY to fund the monthly and lump sum payments. ELNY made the payments from January 1985 through July 2013. After ELNY's court-approved liquidation in April 2012, Trevor was informed that the structured settlement annuity payments were being reduced by more than 40 percent, beginning in August 2013.

The issue was whether the U.S. remained responsible after the failure of ELNY to meet its obligations under the structured settlement annuities. The case was assigned to Judge Lydia Kay Griggsby. The complaint is in the complimentary package offered at the end of this post. (See Langkamp v. U.S.A., U.S. Court of Federal Claims, Case No. 1:15-cv-764.)

The Dismissal Order
On December 4, 2017, Judge Griggsby issued an order dismissing the lawsuit. The order reads in part:
On March 20, 2017, the Court issued a Memorandum Opinion and Order denying plaintiff's motion for partial summary judgment on liability and granting the government's cross-motion for summary judgment on liability in the above-captioned matter, upon the grounds that the plain language of the Settlement Agreement at issue in this case demonstrates that the government has not unequivocally agreed to guarantee the monthly and periodic lump-sum payments required under the agreement. Pursuant to the March 20, 2017 Memorandum Opinion and Order, the Court ordered the parties to file a joint status report stating each party's respective view on whether this matter should be dismissed in light of the Court's ruling.
On November 29, 2017, the parties filed a joint status report, in which plaintiff requested that the Court not enter final judgment in this matter, because plaintiff intends to file a motion for reconsideration pursuant to Rule 59 of the Rules of the United States Court of Federal Claims ("RCFC") on or before December 18, 2017. The government requested that the Court enter final judgment in its favor pursuant to RCFC 58.
In light of the foregoing, the Court dismisses the complaint and DIRECTS the Clerk's Office to ENTER final judgment in the government's favor and to DISMISS the complaint.
The Appeal and Reversal
Trevor appealed the dismissal order to the U.S. Court of Appeals for the Federal Circuit. There the case was assigned to a panel consisting of Circuit Judges Haldane Robert Mayer (who wrote the opinion), Alan D. Lourie, and Richard G. Taranto. (See Langkamp v. U.S.A., U.S. Court of Appeals for the Federal Circuit, Case No. 2018-2052.)

On November 27, 2019, the panel issued a unanimous opinion reversing the dismissal order, remanding the case to the lower court for further proceedings consistent with the reversal, and granting Trevor his costs. The full opinion, which includes much of the text of the settlement, is in the complimentary package offered at the end of this post. Here are the first paragraph of the reversal and the first paragraph of the background:
Trevor Langkamp appeals the judgment of the United States Court of Federal Claims granting the government's motion for summary judgment and rejecting his claim seeking damages for breach of a tort settlement agreement. Because we conclude that the court erred in holding that the United States had no continuing liability for the future monthly and periodic lump-sum payments specified in the agreement, we reverse and remand.
In 1980, Langkamp, who was then a toddler, suffered severe burns at a property owned and operated by the United States Army. Langkamp's parents, Joseph and Christina Langkamp, subsequently brought an action against the United States under the Federal Tort Claims Act, in the U.S. District Court for the Western District of Michigan. On November 15, 1984, the parties entered into a settlement agreement.
General Observations
I agree with the appellate court that the language of the settlement does not relieve the U.S. from its obligations under the settlement. Stated another way, I think the settlement does not impose on Trevor the risk of the failure of ELNY to meet its obligations under the structured settlement annuities the U.S. purchased from ELNY.

Available Material
I am offering a complimentary 21-page PDF consisting of the complaint (5 pages), the dismissal order (2 pages), and the appellate reversal (14 pages). Email jmbelth@gmail.com and ask for the January 2020 package about Langkamp v. U.S.A.