## Facts

- Carol Owen settled a 1983 slip-and-fall claim against a department store through a structured settlement funded/handled by the store’s liability insurer, Continental.
- The settlement provided an initial lump sum, payment of attorney’s fees, and five deferred lump-sum payments due in 1986, 1991, 1996, 2001, and 2006 in specified amounts.
- The agreement included a clause stating, “To the extent provided by law,” the deferred payments “shall not be subject to assignment, transfer, commutation or encumbrance,” along with provisions addressing changes to the contingent payee.
- In 1997, facing unrelated medical expenses, Owen executed an agreement assigning her remaining payment rights to Metropolitan Mortgage and Securities Company for a discounted lump sum.
- Owen notified Continental to redirect future payments to Metropolitan’s address; Continental refused, relying on the non-assignment clause.

## Issues

1. Whether the settlement’s non-assignment clause eliminated Owen’s legal power to assign her right to receive deferred payments, rendering the assignment ineffective.
2. Whether the assignment was nonetheless ineffective because it would materially change Continental’s duty or materially increase its burden or risk as obligor.
3. Whether asserted tax or administrative consequences supplied a basis to enforce the non-assignment clause against the assignee.

## Decision

- The Supreme Court of New Jersey reversed the Appellate Division and reinstated summary judgment for Owen.
- The Court held the non-assignment language did not clearly negate the power to assign (as opposed to creating a covenant not to assign).
- The Court held the assignment did not materially change Continental’s duty or materially increase its burden or risk because Continental’s obligation remained fixed payments on fixed dates in fixed amounts.
- The Court rejected Continental’s reliance on claimed tax advantages as a basis to invalidate the assignment, particularly where those asserted advantages were not part of the 1983 bargain.

## Legal Principles

- A contractual prohibition on assignment is construed as a covenant not to assign, not as a negation of the power to assign, unless the contract clearly manifests an intent to make assignments void or otherwise ineffective.
- Contract rights to receive money are generally assignable; restrictions on assignment are narrowly construed.
- An assignment is ineffective only if it materially changes the obligor’s duty, materially increases the obligor’s burden or risk, or materially impairs the obligor’s chance of obtaining return performance.
- A change in the identity of the payee, without alteration of the payment amounts or schedule, typically does not constitute a material change in duty, burden, or risk.
- Collateral administrative or tax consequences, without a showing of material change to contractual performance and absent proof they were bargained-for terms, do not justify invalidating an assignment.

## Conclusion

The court held that the structured-settlement non-assignment clause did not bar an effective assignment because it lacked clear language negating the power to assign and because redirecting fixed payments to an assignee did not materially increase the insurer’s contractual burden or risk.


Owen v. CNA Ins./Cont'l Cas. Co., 167 N.J. 450, 771 A.2d 1208 (2001)