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Shaffer v. Liberty Life Assurance Co. of Boston

March 14, 2001


The opinion of the court was delivered by: Justice Burke

Appeal from the Circuit Court of Cook County. Honorable Henry A. Budzinski, Judge Presiding.

Petitioner Dennis Shaffer appeals from orders of the circuit court granting intervenors Liberty Life Assurance Company of Boston's (Liberty Life) and Keyport Life Insurance Company's (Keyport) motion to reconsider the court's previous order granting petitioner's petition to allow assignment of future periodic payments and denying petitioner's petition to allow the assignment, and denying petitioner's motion to reconsider. On appeal, petitioner contends that the trial court erred in denying his petition to allow assignment. For the reasons set forth below, we affirm.


On October 14, 1998, petitioner entered into a settlement of his personal injury lawsuit against Meccon Industries (petitioner's employer), General Mills, Inc., and their insurance carriers. Pursuant to the settlement agreement, petitioner agreed to accept a lump sum payment of $60,000 from Meccon and $110,000 from General Mills. Petitioner was also to receive future periodic payments under a structured settlement arrangement from General Mills, through its insurance carrier Liberty Mutual Insurance Company (Liberty Mutual), of $41,600 on September 30, 2001, $20,000 on September 30, 2003, and $20,000 on September 30, 2008. Paragraph 3 of the settlement agreement contained an antiassignment provision that stated:

"Payee's Rights to Payments

Plaintiff acknowledges that the Periodic Payments cannot be accelerated, deferred, increased or decreased by the Plaintiff, nor shall the Plaintiff have the power to sell, mortgage, encumber, or anticipate the Periodic Payments, or any part thereof, by assignment or otherwise."

On September 24, 1998, *fn1 pursuant to the settlement agreement, Liberty Mutual executed a qualified assignment of its liability within the meaning of section 130 *fn2 of the Internal Revenue Code of 1986 (Revenue Code) (26 U.S.C. §130 (2000)) to Keyport. Thereafter, pursuant to the settlement agreement, Keyport purchased an annuity from Liberty Life to fund its liability.

On May 7, 1999, petitioner entered into a purchase agreement with Singer Asset Finance Company (Singer) *fn3 and attempted to assign two of his future periodic payments to Singer in exchange for an immediate, discounted lump sum payment. Petitioner sought to enter into this agreement because he had been unemployed for some time and was behind on his mortgage payments. *fn4

To effectuate this agreement, on June 7, 1999, petitioner filed a petition to allow the assignment pursuant to section 155.34 of the Illinois Insurance Code (215 ILCS 5/155.34 (West 1998)), which provides:

"No person who is a beneficiary of a structured settlement of a claim for personal injury may assign in any manner the payments of the settlement without prior approval of the circuit court of the county where an action was or could have been maintained." 215 ILCS 5/155.34(b).

On October 5, 1999, the circuit court approved the assignment, holding that the antiassignment provision was ambiguous because it denied petitioner the power to assign future payments but did not deny him the right to assign future payments. According to the court, there was a distinction between the two, which created an ambiguity in the provision. Liberty Life and Keyport filed a motion to reconsider and on January 6, 2000, the trial court reversed its prior decision, holding that upon rehearing it would deny petitioner's petition to allow assignment because it "finds that the anti-assignment provision in the Settlement Agreement is unambiguous and enforceable." In the report of proceedings from this date, the trial court noted that since its original decision, the case of Henderson v. Roadway Express, 308 Ill. App. 3d 546, 720 N.E.2d 1108 (1999), had been decided, which it was bound by because it was the only appellate court decision on point. The trial court concluded that the antiassignment language was "unambiguous," "very clear," and "it prohibits the assignment." The court also stated that no matter what the inequities were in the case and that although it felt sorry for petitioner, it had no discretion in the matter and it was bound by Henderson.

Petitioner's motion to reconsider was denied on March 7, 2000. This appeal followed.


Interpretation of contract language is a question of law, which we review de novo. In re Nitz, 317 Ill. App. 3d 119, 124, 729 ...

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