A cottage industry of sorts has developed in West Virginia. Several judges have taken it upon themselves to appoint guardians ad litem in annuity transfer cases. We believe that the appointment of the guardian in those cases was improper, or, at the very least, premature.
West Virginia Code Chapter 46A (West Virginia Consumer Credit and Protection Act), Article 6H provides the statutory mechanism for the transfer of rights to receive future structured settlement payments. West Virginia Code §46A-6H-3(d) provides for the appointment of a guardian ad litem in very limited circumstances where the consumer is an infant, an incompetent or a ward of the Court:
The court shall appoint a guardian
ad litem in cases were the structured settlement payment rights belong to an infant, an incompetent person or a ward of the court. The guardian
ad litem shall review the requisite disclosures and make an independent inquiry to determine whether the proposed transfer is fair, reasonable and in the best interests of the consumer. Such information shall be reported to the court during the hearing on the matter.
1In each of the cases with which we have been involved, the guardian was appointed before the Court had any reason to suspect that the consumer may require a guardian. None of the cases involved consumers who were infants or wards of the Court. Each guardian was appointed before the hearing on the Petition to Transfer was entertained by the Court and before the Court could have known or even suspected that the consumer may have been incompetent and in need of the appointment of a guardian ad litem. The appointment of guardians ad litem may be appropriate in some cases, but judges should not appoint guardians ad litem routinely and before they have any reason to believe or suspect that one is necessary for the protection of the consumer, which is what is happening.
We have appeared in about half of the counties in West Virginia and have not found the appointment of guardians ad litem to be prevalent, at least yet. In fact, such appointments are rare. We are convinced the appointment of guardians ad litem is inappropriate and unnecessary in annuity transfer cases unless the consumer is an infant, an incompetent or a ward of the Court.2 This is in general conformity with the common law bases for the appointment of guardians ad litem and other West Virginia statutes.
When a Court goes beyond the statutory requirements and appoints a guardian ad litem where one is not required, we believe that the Court abdicates its duty as a fact finder and delegates that duty to a third-party. In such instances, the Court has granted the guardian ad litem the power, by virtue of the guardian’s recommendation to the Court, to decide whether a transfer should and will be approved, even though the legislature vested that authority and power in the Court. We submit that this is not what the legislature intended in drafting the transfer act that requires transfers be approved by the Court, not a guardian ad litem.3 See: W. Va. Code §46A-6H-3(f)(1) ("After a hearing or upon its own motion, the court may approve the transfer if the court finds. . ." [emphasis added]).
For further information on this issue, please contact John P. Davis, III at John P. Davis, III at jpd@jgcg.com or Robert L. Monks at rlm@jpcg.com.
