NATURE OF PROCEEDINGS: Hearing on J.G. Wentworth’s Petition for Approval for Transfer of Payment Rights

 

J.G. Wentworth’s First Amended Petition (“FAP”) for Approval for Transfer of Payment Rights is granted.

 

BACKGROUND

By way of this FAP, Petitioner J.G. Wentworth Originations, LLC (“Petitioner”) seeks a transfer of future life contingent payments in the aggregate amount of $2,003,080.68, to which Real Party-In-Interest/Transferor Majahne Williams(“Payee”) is entitled, in exchange for a one-time payment of $10,500.00, where the discounted present value of the future payments is $135,206.89. FAP, Ex. A at p. 24.

In 2002, Payee received a structured settlement arising from wrongful death claim. Declaration of Majahne Williams (Williams Decl.) ¶ 4. The settlement agreed to by Payee provides for periodic structured payments, including, but not limited to, 180 monthly Life Contingent payments of $8,974.90 each, increasing at 3% annually, beginning on April 2, 2070, and ending on March 2, 2085. FAP at p. 2, Ex. C.

Petitioner now moves for approval of the transfer of these structured settlement payment rights by Payee to Petitioner and/or its assigns.

 

LEGAL STANDARD

A transfer of structured settlement payment rights is void unless a court reviews and approves the transfer and finds that (a) the transfer of the structured settlement payment rights is fair and reasonable and in the best interest of the payee, taking into account the welfare and support of his or his dependents, and (b) the transfer complies with the requirements of Insurance Code Sections 10134 to 10139.5, will not contravene other applicable law, and that the court has reviewed and approved the transfer as provided in Section 10139.5. See § 10137, subds. a)-(b).[1]

The court must make express written findings that “(1) The transfer is in the best interest of the payee, taking into account the welfare and support of the payee's dependents. [¶] (2) The payee has been advised in writing by the transferee to seek independent professional advice regarding the transfer and has either received that advice or knowingly waived, in writing, the opportunity to receive the advice. [¶] (3) The transferee has complied with the notification requirements pursuant to paragraph (2) of subdivision (f), the transferee has provided the payee with a disclosure form that complies with Section 10136, and the transfer agreement complies with Sections 10136 and 10138. [¶] (4) The transfer does not contravene any applicable statute or the order of any court or other government authority. [¶] (5) The payee understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136. [¶] (6) The payee understands and does not wish to exercise the payee's right to cancel the transfer agreement.” §§ 10139.5(a)(1)-(6).

Notice of hearing on the petition for approval must be filed and served at least 20 days before the hearing and include all of the following materials: (1) Prior petitions for approval (whether approved or denied); (2) Proposed transfer agreement and disclosure form; (3) Listing of payee's dependents and their ages; (4) Insurance Code section 10136(b) disclosures; (5) Annuity contract (if available); (6) Qualified assignment agreement (if available); (7) Underlying structured settlement agreement (if available); (8) Proof of service (complying with special notice requirements); (8) Notice to all interested parties; and (9) Notification to counsel obtaining structured settlement (if less than 5 years ago). §§ 10139.5(f)(2)(A)-(L).

 

ANALYSIS

Section 10139.5, subdivision (b)

In assessing whether a transfer is fair, reasonable, and in the payee’s best interest, section 10139.5, subdivision (b), requires courts to “consider the totality of the circumstances, including, but not limited to,” an enumerated list of factors. § 10139.5, subd. (b), ¶ (1)-(15). 

Applying the relevant factors, the Court concludes that the transfer is fair, reasonable, and in Payee’s best interest. 

Payee seeks to transfer 180 monthly Life Contingent payments of $8,974.90 each, increasing at 3% annually, beginning on April 2, 2070, and ending on March 2, 2085. In exchange, Payee will receive $10,500.00. 

The settlement was entirely monetary and was not intended to pay for Payee’s future medical care, treatment, or necessary living expenses. Williams Decl., ¶¶ 6, 7. Payee does not have any court-ordered child support obligations. Williams Decl., ¶ 8.

Within the past five years, Payee has had one attempted transaction involving his structured settlement payment that was denied. Williams Decl., ¶ 10.

Payee is 27 years old, unmarried, and has no minor children. Williams Decl., ¶ 8. Payee is unemployed and experiencing financial hardship. Williams Decl., ¶¶ 8, 11. If approved, he intends to use the money he receives to cover expenses incurred during his upcoming move to Chicago and to get caught up on his auto loan payments. Williams Decl., ¶ 11.

The aggregate value of the future payments is $2,003,080.68; however, payment of the full value is not guaranteed, and the full amount will only be paid if Payee is alive in 2085. FAP, at p. 2, Ex. C. Adjusting for the time-value of money, applying the IRS discount rate of 5.4, the discounted present value of all future payments is $135,206.89. FAP, Ex. B. This figure assumes that Payee will live for the full duration of the annuity. 

While the $10,500.00 Payee will receive is significantly less than the total aggregate value or even the discounted present value of the annuity, under the circumstances, the Court finds it fair, reasonable, and in Payee’s best interest. Payee is currently experiencing financial distress and needs the funds to cover moving expenses and get caught up on his auto loan payments now, not in 45 years. According to Petitioner, the purchase price reflects an effective interest rate of 10.47%. FAP, Ex. B. The Court finds the interest rate to be reasonable considering Petitioner’s assumption of risk that the annuity may not be paid out in full.

Section 10136 Requirements

No direct or indirect transfer of structured settlement payment rights by a payee to which Section 10136 applies shall be effective, and no structured settlement obligor or annuity issuer shall be required to make any payment directly or indirectly to a transferee, unless all of the provisions of Section 10136 are satisfied. §10136, subd. (a)

First, the transfer agreement satisfies the disclosure form requirements in section 10136, subdivision (b) because the transfer agreement is accompanied by a disclosure addressed to Payee containing all the statutorily required language of section 10136, subdivision (b). See FAP, Ex. B.

Second, the transfer agreement satisfies the transfer-agreement requirements in section 10136, subdivision (c) because the transfer agreement contains all the necessary language required from this statutory subdivision. See FAP, Ex. A.

Third, the transfer agreement does not violate section 10138 as none of the contents prohibited by this statutory section are contained in the transfer agreement. See § 10136, subd. (d); see also FAP, Ex. A.

Fourth, Payee has not sought cancellation of the transfer agreement as of the date of this hearing. See § 10136, subd. (e); see also Williams Decl., ¶ 14.

Accordingly, the Court finds that Petitioner’s proposed transfer of Payee’s settlement rights satisfies the requirements of section 10136, subdivisions (a) through (e).

Section 10139.5, subdivision (c)

“Every petition for approval of a transfer of structured settlement payment rights, except as provided in subdivision (d), shall include, to the extent known after the transferee has made reasonable inquiry with the payee, all of the following: [¶] (1) The payee’s name, address, and age. [¶] (2) The payee’s marital status, and, if married or separated, the name of the payee’s spouse. [¶] (3) The names, ages, and place or places of residence of the payee’s minor children or other dependents, if any. (4) The amounts and sources of the payee’s monthly income and financial resources and, if presently married, the amounts and sources of the monthly income and financial resources of the payee’s spouse. [¶] (5) Whether the payee is currently obligated under any child support or spousal support order…[¶] (6) Information regarding previous transfers or attempted transfers…. § 10139.5, subd. (c).

“[I]nformation required to be included in every petition for approval of a transfer of structured settlement payment rights pursuant to paragraphs (2), (3), (4), (5), and (6) of subdivision (c), … shall be deemed to be included in the petition if it is provided at the scheduled hearing on the proposed transfer through oral testimony or documentary evidence filed with the court and made a part of the record consistent with the rules of evidence and procedure.” § 10139.5, subd. (d).

The Petition includes Payee’s name and age and states his address will be provided at the hearing. Payee does not have any children. Petitioner provides that Payee is unemployed but does not otherwise provide any information on his current financial resources or sources of income. At the hearing, Petitioners should clarify what sources of income Payee currently has, if any. Finally, Petitioner provides adequate information summarizing Payees' thirteen previous transfers of payment rights. FAP at p. 8 fn.1; Williams Decl., ¶ 10.

Insurance Code section 10139.5, subdivision (f)(2)

A petitioner is required to file with the court and serve on all interested parties notice of the proposed transfer at least twenty days before the scheduled hearing. § 10139.5, subdivision (f)(2). Such notice must include the documents and information specified in 10139.5, subdivision (f)(2). The requirements and Petitioner's compliance or lack of compliance with them are listed below:

(A) A copy of the transferee's current and any prior petition that Plaintiff has filed with the court. Petitioner has complied. See FAP at pp. 41-42.

(B) A copy of the transfer agreement. Petitioner has complied. FAP, Ex. A.

(C) A listing of each of the Payee's dependents, together with each dependent's age. Petitioner has complied. See Williams Decl., ¶ 8.

(D) A copy of the disclosure required in subdivision (b) of section 10136. Petitioner has complied. See FAP Ex. B.

(E) A copy of the annuity contract, if available. Petitioner has complied. FAP, Ex. C.

(F) A copy of any qualified assignment agreement, if available. There is no indication that there is any qualified assignment agreement. To the extent there was one, the Court concludes it is unavailable.  See 10139.5, subdivision (f)(2)(H) (providing in relevant part “If a copy of a document described in subparagraph (E), (F), or (G) is unavailable or cannot be located, then the transferee is not required to attach a copy of that document to the petition or notice of the proposed transfer if the transferee satisfies the court that reasonable efforts to locate and secure a copy of the document have been made…”); see also FAP, Ex. D at ¶ 9.

(G) A copy of the underlying structured settlement agreement, if available. Petitioner has complied. See 10139.5, subdivision (f)(2)(H); FAP, Ex. D at ¶ 9.

(I) Proof of service showing compliance with the notification requirements of this section. See FAP at pp. 41-42; Williams Decl., at pp. 7-8.

(J) Notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee's FAP, either in person or by counsel, by submitting written comments to the court or by participating in the hearing. Petitioner has complied. See Notice of Hearing, filed 8/21/24. 

(K) Notification of the time and place of the hearing and notification of the manner in which and the time by which written responses to the petition must be filed, which may not be less than 15 days after service of the transferee's notice, in order to be considered by the court. Petitioner has complied. See Notice of Hearing, filed 8/21/24. 

Section 10139.5(a)(1)-(6)

As required by section 10139.5(a)(1)-(6), the court makes the following express findings: 

(1) The transfer is in the best interest of Payee.

(2) Payee has been advised in writing by Petitioner to seek independent professional advice regarding the transfer and has knowingly waived, in writing, the opportunity to receive the advice. Williams Decl., ¶ 12; FAP Ex. E.

(3) Petitioner has complied with the notification requirements pursuant to paragraph (2) of subdivision (f), the transferee has provided the payee with a disclosure form that complies with Section 10136, and the transfer agreement complies with Sections 10136 and 10138. FAP Ex. A, Ex. B.

(4) The transfer does not contravene any applicable statute or the order of any court or other government authority.

(5) Payee understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136. Williams Decl., ¶ 13.

(6) Payee understands and does not wish to exercise Payee’s right to cancel the transfer agreement. Williams Decl., ¶ 14.

Accordingly, the Petition is granted. 

CONCLUSION

The Petition is granted.