Judge: Anne Richardson, Case: 23STCP02448, Date: 2023-09-12 Tentative Ruling

Case Number: 23STCP02448    Hearing Date: September 26, 2023    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

MOVING PARTY:               Petitioner Robin Hood Funding, LLC.

RESPONDING PARTY:      Los Angeles Child Support Services Department.

Background

In exchange for a one-time payment of $541,475, Petitioner Robin Hood Funding, LLC (RH Funding) seeks a transfer of $1,836,596.97 in structured settlement payment rights belonging to Real Party in Interest J.T., where the discounted present value of the structured settlement is $873,267.18.

A response to the Petition was filed on August 29, 2023 by the County of Los Angeles Child Support Services Department, noting child support arrearages in three cases.

A supplemental declaration was filed by J.T. who stated that “with the proceeds of this transaction, I will pay off the arrearages totaling $30,353.07 for all three cases.” (Trulove Dec. at ¶ 5.)

RH Funding’s Petition came before the Court on September 12, 2023, at which time the Court continued the hearing to September 26, 2023 to give RH Funding time to correct deficiencies in its Petition.

The Petition is now before the Court again.

Petition to Transfer Structured Settlement Rights

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 her 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 Ins. Code, § 10137, subds. (a)-(b).)

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 of the Insurance Code are satisfied. (Ins. Code, § 10136, subd. (a).)

First, the transfer agreement satisfies the disclosure form requirements set out in Insurance Code section 10136, subdivision (b) because the transfer agreement is accompanied by a disclosure addressed to J.T. and the disclosure contains all the statutorily required language of section 10136, subdivision (b). (See Ins. Code, § 10136, subd. (b); see also 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement.)

Second, the transfer agreement satisfies the transfer-agreement requirements set out in Insurance Code section 10136, subdivision (c) because the transfer agreement contains all the necessary language required from this statutory subdivision. (See Ins. Code, § 10136, subd. (c); see also 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement, pp. 1-3 at §§ B.1-B.12 and 8 [right to cancel].)

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 Ins. Code, § 10136, subd. (d); see also 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement.)

Fourth, J.T. has not sought cancellation of the transfer agreement as of the date of this hearing. (See Ins. Code, § 10136, subd. (e); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 14.)

Accordingly, the Court finds that RH Funding’s proposed transfer of J.T.’s settlement rights satisfies the requirements of Insurance Code section 10136, subdivisions (a) through (e).

Section 10139.5 Requirements

A direct or indirect transfer of structured settlement payment rights is not effective and a structured settlement obligor or annuity issuer is not required to make any payment directly or indirectly to any transferee of structured settlement payment rights unless the transfer has been approved in advance in a final court order based on express written findings by the court subject to Section 10139.5. (See Ins. Code, § 10139.5, subd. (a).)

First, the transfer agreement satisfies the requirements of Section 10139.5, subdivision (f)(1), because Petitioner RH Funding made the instant petition and the petition was brought in the county in which the payee, J.T., resides. (See Ins. Code, § 10139.5, subd. (f)(1); see 8/21/23 Amended Petition, p. 1 [showing Petitioner RH Funding brings this Petition]; 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 4 [“I [J.T.] live at … Los Angeles, CA …”].)

Second, the petition satisfies the requirements of Section 10139.5, subdivision (f)(2).

Formal notice of this transfer and a copy of the petition itself was filed by RH Funding with the Court and served on all interested parties more than 20 days before this hearing. (See Ins. Code, § 10139.5, subd. (f)(2) [notice of the proposed transfer and the petition for its authorization to be filed with the court and served on all interested parties no less than 20 days prior to hearing]; see also 7/20/23 Motion for Order Approving Transfer, Notice, pp. 1-2; 7/20/23 Proof of Service [service on 7/15/23]; 8/21/23 Amended Petition, Proof of Service [service on 8/21/23].)

Further, the notice and petition have attached all the necessary documents required from this subdivision. (See Ins. Code, § 10139.5, subds. (f)(2)(A)-(L).) The notice and petition:

(A) Include a copy of the instant petition and need not attach prior petitions made outside of five years from the date of this petition. (See Ins. Code, § 10139.5, subd. (f)(2)(A) [framed by Ins. Code, § 10139.5, subd. (c)(6), which in turn is framed by Ins. Code, § 10139.5, subds. (b)(11)-(13), requiring information only for petitions in last five years]; see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 3, 8 [J.T. has “never assigned a portion of [his] structured settlement payment rights,” which he acquired in 2019].)

(B) Include a copy of the proposed transfer agreement and disclosure form required by paragraph (3) of subdivision (a). (See Ins. Code, § 10139.5, subd. (f)(2)(B); see also 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement & 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement.)

(C) Include information regarding J.T.’s dependents and their ages. (See Ins. Code, § 10139.5, subd. (f)(2)(C); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶¶ 5-5(c) [single with children and names and age of children].)

(D) Include a copy of the disclosure required in subdivision (b) of Section 10136. (See Ins. Code, § 10139.5, subd. (f)(2)(D); see also 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement.)

(E) Include copies of the annuity contract, any qualified assignment agreement, and underlying structured settlement agreement, if available, and if not available, a showing of reasonable efforts to locate and secure a copy of the document have been made, including making inquiry with the payee. (See Ins. Code, § 10139.5, subds. (f)(2)(E)-(H); see also 8/21/23 Amended Petition, Ex. A, Sub-Ex. B [Full and Final Release Payment to J.T. as Payee, but text garbled], Ex. F [Qualified Assignment and Release settlement agreement though blank and exhibit text garbled].)

(F) Include copies of the proofs of service made for notice of this petition. (See Ins. Code, § 10139.5, subd. (f)(2)(I); see also 7/20/23 Proofs of Service; 8/21/23 Amended Petition, Proof of Service.)

(G) Include a notification that any interested party is entitled to support, oppose, or otherwise respond to the transferee’s petition, either in person or by counsel, by submitting written comments to the court or by participating in the hearing. (See Ins. Code, § 10139.5, subd. (f)(2)(J); see also 7/20/23 Motion for Order Approving Transfer, 2:8-10.)

(H) Include a 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. (See Ins. Code, § 10139.5, subd. (f)(2)(K); see also 7/20/23 Motion for Order Approving Transfer, 1:23-28.)

(I) If the payee entered into the structured settlement at issue within five years prior to the date of the transfer agreement, then the transferee shall provide the specified notice to the payee’s attorney of record at the time the structured settlement was created, if the attorney is licensed to practice in California, at the attorney’s address on file with the State Bar of California. Notice to the former attorney described in this section is not required to be provided if the payee in the transaction was not a party to the original structured settlement at issue (for example, if the payee is an heir or beneficiary of the person who was a party to the original structured settlement). Also, if the payee cannot recall or identify his or her former attorney and if the identity of the former attorney cannot be ascertained from the available structured settlement documents, then the notice described in this subparagraph is not required to be provided and the transfer may proceed without the notice. (See Ins. Code, § 10139.5, subd. (f)(2)(L); see also 7/20/23 Proofs of Service; 8/21/23 Amended Petition, Proof of Service [notice to settling attorney, Nick Brustin, Esq. of New York].)

Third, the petition satisfies all the payee information required from Section 10139.5, subdivision (c) as follows (See Ins. Code, § 10139.5, subd. (c)):

(1) Included the payee’s name and age (See Ins. Code, § 10139.5, subd. (c)(1); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶¶ Intro [name is J.T.], 5 [38 years old].)

(2) Included the payee’s marital status, and, if married or separated, the name of the payee’s spouse. (See Ins. Code, § 10139.5, subd. (c)(2); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 5 [“single”].)

(3) Included the names, ages, and place or places of residence of the payee’s minor children or other dependents, if any. (See Ins. Code, § 10139.5, subd. (c)(3); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶¶ 5-5(c) [names, ages, and places of residence of J.T.’s three children].)

(4) Included 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. (See Ins. Code, § 10139.5, subd. (c)(4); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 4 [summary of J.T.’s employed status and sources of income/financial resources, with Sub.-Ex. 1 attachment showing a Net Worth Statement for J.T., a 2021 Individual Income Tax Return, K-1 for Bloomfield Ranch Estates, LLC, and a Settlement Statement from Old Republic Title Company].)

(5) Included information permitting the determination of whether the payee is currently obligated under any child support or spousal support order, and, if so, the names, addresses, and telephone numbers of any individual, entity, or agency that is receiving child or spousal support from the payee under that order or that has jurisdiction over the order or the payments in question. (See Ins. Code, § 10139.5, subd. (c)(5); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶¶ 6-6(c) [summary of child-support obligations]; accord. 8/29/23 Response to Petitioner’s Motion, ¶¶ 3-9 [Sworn declaration by Los Angles Child Support Staff Services Department Staff Attorney indicating that J.T. has child support arrears in three different California counties amounting $30,353.07 as of September 1, 2023].)

(6) Included information regarding previous transfers or attempted transfers, as described in paragraph (11), (12), or (13) of subdivision (b). (See Ins. Code, § 10139.5, subd. (c)(6) [framed by Ins. Code, § 10139.5, subds. (b)(11)-(13), requiring information only for petitions in last five years]; see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 3, 8 [J.T. has “never assigned a portion of [his] structured settlement payment rights,” which he acquired in 2019].)

Fourth, the petition satisfies the requirements of Section 10139.5, subdivision (g) requiring that transferees bear the costs of transfer petitions of structured settlement rights. (See Ins. Code, § 10139.5, subd. (g); see also 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement, p. 2 [“[W]e have charged [J.T.] for the following expenses: [None] for a total of $0.00 in expenses].)

Fifth, the petition satisfies the requirements of Section 10139.5(h) because, when the petition was filed, Petitioner advised J.T. of his right to seek independent counsel and financial advice in connection with this transfer petition and advised J.T. of his right to a reimbursement of $1,500 for incurring such costs. (See Ins. Code, § 10139.5, subd. (h); see also 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement, p. 2 [necessary disclosure]; 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement, p. 3 at § B.10 [same]; 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 11 [J.T. acknowledges receipt of admonition]; 8/21/23 Amended Petition, Ex. E [Statement of Professional Representation signed by J.T. indicating he has received independent representation and fully understands transfer’s implications].)

Finally, the Court finds that the petition satisfies the entirety of the findings requirements set out in Insurance Code section 10139.5, subdivisions (a)(1) to (a)(6). These findings, which the Court expressly makes by the following language, are that:

(1) The Court determines that the transfer is fair and reasonable in the best interest of the payee, taking into account the welfare and support of the payee’s dependents. J.T. is collecting $541,475 for future payments of $1,836,596.97, whose discounted present value is $873,267.18. J.T. is employed and seeks the transfer to “[i]nvest in high yield investment opportunities that yield higher and consistent returns.” The Petition includes a declaration from Oliver Kupe, a FINRA registered investment adviser, who supports the transfer. Admittedly, the Petition does not clarify what type of “high yield” investments will be sought by J.T. However, given the desire of J.T. to proceed with the transaction, the well-funded financial and economic situation of J.T., the fact that J.T.’s payment rights are/were not intended for future medical care relating to the incident that led to the settlement payout in his favor, and the fact that J.T. has a financial adviser that has provided a summary of J.T.’s net worth and investments, the Court finds that sufficient factors exist to determine that this transaction is fair and reasonable in the best interest of J.T. and his dependents. (See Ins. Code, § 10139.5, subd. (a)(1) [framed by Ins. Code, § 10139.5, subds. (b)(1)-(15)]; see also 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement, p. 2-3 at §§ 3, 5-6; 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶¶ 3-4, 14 & Sub. Ex. 1, Net Worth Statement; 9/25/23 Supp. Filings, Ex. L, Kupe Decl.)

(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. (See Ins. Code, § 10139.5, subd. (a)(2); see also 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement, p. 2 [necessary disclosure]; 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement, p. 3 at § B.10 [same]; 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 11 [J.T. acknowledges receipt of admonition]; 8/21/23 Amended Petition, Ex. E [Statement of Professional Representation signed by J.T. indicating he has received independent representation and fully understands transfer’s implications].)

(3) The transferee, i.e., RH Funding, has complied with the notification requirements pursuant to paragraph (2) of subdivision (f), has provided the payee with a disclosure form that complies with Section 10136, and the transfer agreement complies with Sections 10136 and 10138. (See Ins. Code, § 10139.5, subd. (a)(3); see also Ins. Code, §§ 10136, subds. (b)-(e), 10139.5, subds. (f)(2)(A)-(L) discussions supra & 9/25/23 Supp. Filings, Amended Ex. A, California Disclosure Statement & 8/21/23 Amended Petition, Ex. A, Absolute Assignment Agreement and Security Agreement.)

(4) The transfer does not contravene any applicable statute or the order of any court or other government authority. (See Ins. Code, § 10139.5, subd. (a)(4).)

(5) The payee understands the terms of the transfer agreement, including the terms set forth in the disclosure statement required by Section 10136. (See Ins. Code, § 10139.5, subd. (a)(5); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶¶ 10 [“I understand the terms of the [California] Disclosure [Statement]”], 13 [“I understand the nature and terms of the transaction”].)

(6) The Payee understands and does not wish to exercise the payee’s right to cancel the transfer agreement. (See Ins. Code, § 10139.5, subd. (a)(6); see also 9/25/23 Supp. Filings, Ex. K, J.T. Decl., ¶ 14 [“I understand that I have a right to cancel the Transfer Agreement up until the time the Judge approves the sale, and I do not wish to exercise the right to cancel”].)

Requirements Conclusion

Having met all procedural and substantive requirements to effect a transfer of structured settlement payment rights, RH Funding’s Petition is GRANTED.

Conclusion

Petitioner Robin Hood Funding, LLC’s Verified Petition for Transfer of Structured Settlement Payment Rights Pursuant to California Insurance Code § 10134 et seq. is GRANTED, on the condition that child support arrearages in the amount of $30,353.07 as of September 1, 2023 will be paid off the top by no later than September 29, 2023 by Petitioner to the California State Disbursement Unit, P.O. Box 989067, West Sacramento, CA 9578-9067 to pay off the child support liens in cases 19CWCS13283 (Los Angeles), PT1363 (Monterey), and FCS-08-343738 (San Francisco.) The subsequent funds can then be disbursed to J.T.  If the funds are not disbursed by the end of September, Petitioner shall pay any additional interest or fees that may have accrued in addition to the above noted payment, as calculated by DCSS.