How have courts interpreted anti-assignment provisions in structured settlement agreements?

California, United States of America


The following excerpt is from Gold Forever Music, Inc. v. Structured Asset Sales, LLC, B221921 (Cal. App. 2012):

Mich. 683, 689 [167 N.W.2d 274, 277].) In Wonsey v. Life Ins. Co. of North America (E.D. Mich. 1998) 32 F.Supp.2d 939, which involved the purported assignment of the right to receive a structured settlement which was subject to an anti-assignment provision, the court observed that "the modern trend with respect to contractual prohibitions on assignments is to interpret these clauses narrowly, as barring only the delegation of duties, and not necessarily as precluding the assignment of rights from assignor to the assignee. The rationale behind these cases is derived from the implicit recognition that the obligor, the party obligated to perform, would not suffer any harm by a mere assignment of payments under a contract. Harm to obligor would result, however, in cases involving personal services contracts or other situations where the duties owed to the parties may change depending on the identity of the assignee. [Citation.]" (Id. at p. 943, italics omitted.) In light of this "modern trend . . . favoring the assignment of periodic payments under structured settlement agreements," the court refused to enforce the anti-assignment provision and ordered the defendant to comply with the assignment of the settlement payments. (Id. at p. 944.)

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