by John Darer CLU ChFC MSSC CeFT RSP CLTC
Court decision specifies that a plaintiff CANNOT rely on the defense expert and claim damages
A July 9, 2010 Federal court decision in Puerto Rico styled Yanisse Adrian v Mesirow Financial Structured Settlements, LLC underscored the wisdom of a plaintiff and plaintiff attorney seeking independent consultation in the structured settlement discussion.
Plaintiff Yanisse Adrian received no “besos” from United States District Court judge Francisco Besosa as he granted the defendants’ summary judgment motion an dismissed her case against Mesirow Structured Settlements, LLC, et al.
The Yanisse Adrian case highlights the importance of timely settlement planning representation, as it seems neither the plaintiff nor her attorney had access to it. This underscores why every plaintiff, either directly or through their attorney, should consult a qualified settlement planner early in the process.
During the pendency of the case the tax laws in Puerto Rico changed. On July 4, 2006, new Act No. 117:
- Categorized payments for mental anguish as taxable income. ( P.R. Laws Ann., Tit. 13, § 8422(b)(5) and later Administrative Determination 07-01, which clarified that such payments are subject to withholding
- Payments for physical injury were not categorized as income.
Yanisse Adrian had contended that she only accepted a structured settlement as a result of her reliance on numerous representations made to her by a representative of the defendant Mesirow Financial Structured Settlements, LLC (“Mesirow”), a structured settlement broker. Adrian further alleged that she would not have agreed to the terms of the April 17, 2007 settlement were it not for her reliance on Mesirow’s advice and promises regarding Adrian’s tax immunity. Adrian alleged that she relied on Mesirow to advice her regarding Puerto Rico’s tax laws and the requirements of Puerto Rico’s Treasury Department (“Hacienda”), and that Mesirow made representations to the effect that Adrian would not owe taxes to Puerto Rico (nor would any withholding occur) related to the settlement of her suit if she opted to rely on Mesirow’s services. Mesirow was accused of (1) negligence; (2) negligent misrepresentation; (3) fraudulent inducement; (4) breach of fiduciary duty; (5) equitable estoppel; and (6) promissory estoppel.
Mesirow argued that it had no influence on the plaintiff’s settlement decisions and that it had legitimate concerns not to be exposed to potential tax liability or regulatory action against their insurance licenses or criminal prosecution for failure to follow Puerto Rico law.
The conclusions of the Court have important implications for structured settlement and settlement planning practice
A. Misrepresentation
According to Mesirow, Yanisse Adrian could not show that her reliance was reasonable because the alleged misrepresentation regarded a matter of law and regarded matters plaintiff could ascertain independently. “There is no liability for casual statements, representations as to matters of law, or matters which plaintiff could ascertain on his own in exercise of due diligence.” Id. (citing AMA Management Corp., 309 S.C. at 874. A plaintiff’s reliance is justified only if “the defendant occupies a superior position to the plaintiff with respect to knowledge of the truth of the statement made.” O.C. Gruber v. Santee Frozen Foods, Inc., 309 S.C. 13 (Ct. App. 1992).
Yanisse Adrian implied that Mesirow’s representative whom Adrian trusted to keep Adrian’s best interests in mind, held herself out as someone occupying a superior position as to the tax matters as issue. Further, Adrian argues that Mesirow rep’s promises “were made without any qualification that Plaintiff get any tax advice.” (Docket No. 147 at 19.) The court found this argument is without merit. The Court went on to state that Adrian cites no legal authority to support her contention that a plaintiff may rely upon a defendant’s statements if those statements were unqualified by a suggestion to seek outside advice.
B. Duty of Care
The Court reasoned:
- The primary broker-client or broker-buyer relationship here that would come closer to the sort of business relationship alluded to by Adrian’s analogy was not between Mesirow and Adrian, but between Mesirow and Fireman’s Fund, and perhaps with the other defendants.
- Even though Adrian may have exhibited her trust in Mesirow rep’s judgment, and even though the Mesirow rep may have intended for Adrian to trust her judgment, the fact is that she worked for the defense side of the underlying case, and she took direction ultimately from Fireman’s Fund; she was not beholden to Adrian.
C. Breach of Duty
Because the Mesirow reo’s actions and efforts were more than reasonable in the circumstances, the Court finds that neither she nor Mesirow breached any duty. The Court stated that the record shows that the Mesirow rep acted diligently to research both the possible tax consequences of a structured settlement by reading a translated version of the Puerto Rico tax code and discussing the tax issue. It reasoned that although the Mesirow rep’s efforts may not have been successful, the record shows that those efforts were made.
D. Promissory Estoppel
The Court claim of promissory estoppel was dismissed on summary judgment because the Court had already concluded that Adrian’s reliance on Mesirow rep’s alleged statements was unreasonable. The Court had already concluded that Adrian had independent knowledge regarding the facts in question.
Source: Excerpts from the Opinion and Order
ADRIAN v. MESIROW FINANCIAL STRUCTURED SETTLEMENTS, LLC
YANISSE ADRIAN, Plaintiff,
v.
MESIROW FINANCIAL STRUCTURED SETTLEMENTS, LLC, et al., Defendants.
Civil No. 08-1180 (FAB).
United States District Court, D. Puerto Rico.
July 9, 2010. Download Adrian v Mesirow Financial Structured settlements Opinion and Order15912607080
Comments
Unlike the facts and circumstances involved with a 2001 decision Lyons v MMIA 730 N.Y.S. 2d 345, privity did not come into play.
Plaintiffs’ counsel, this is the key case demonstrating why you and your client should have your own settlement specialist. It doesn’t matter if the specialist works exclusively with plaintiffs.
It does matter that:
- you have your own settlement expert;
- the settlement expert is properly credentialed;
- you retain the settlement expert early enough to have an impact
In a bizarre twist, it should be noted that a review of the record for the case shows that the Yanisse Adrian DID eventually consult with her own settlement consultants,Joe DiGangi and Tucker Ervin of Millennium Settlements, but “late in the day”. Among other things in the record is a transcript of DiGangi’s deposition, copies of communications and proposals.
Post Script: On September 14, 2011, the U.S. Court of Appeals, First Circuit dismissed the Plaintiff’s appeal. Yanisse Adrian Silva v. Mesirow Financial, et al Case10-1926
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