Judge: Anne Richardson, Case: 23STCP04040, Date: 2024-01-17 Tentative Ruling

DEPARTMENT 40 - JUDGE ANNE RICHARDSON - LAW AND MOTION RULINGS
The Court issues tentative rulings on certain motions.The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)]. If the parties wish to submit on the tentative ruling and avoid a court appearance, all counsel must agree and choose which counsel will give notice. That counsel must 1) email Dept 40 by 8:30 a.m. on the day of the hearing (smcdept40@lacourt.org) with a copy to the other party(ies) and state that all parties will submit on the tentative ruling, and 2) serve notice of the ruling on all parties. If any party declines to submit on the tentative ruling, then no email is necessary and all parties should appear at the hearing in person or by Court Call. 

Case Number: 23STCP04040    Hearing Date: January 31, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

Background

Petitioner J.G. Wentworth Originations, LLC (J.G. Wentworth) has filed a petition for approval of the transfer of certain structured settlement rights belonging to Real Party-in-Interest Cary Chapman. Specifically, J.G. Wentworth seeks the transfer of $731,988 in future annuity payment rights belonging to Cary Chapman, which span payments to be paid between 2024 and 2070, the present discounted value of which is $150,994.85, to be transferred in exchange for a $24,901.56 lump sum payment to Cary Chapman.

The Petition was filed on October 31, 2023.

On November 2, 2023, Petitioner J.G. Wentworth filed a notice of hearing for January 17, 2024.

That same day, Petitioner filed a proof of service. The filing shows serving of the notice of hearing, verified Petition, notice of case assignment, and proof of service on Cary Cameron, the annuity issuer, the annuity obligor, and various other individuals who are not specifically identified.

On December 22, 2023, Petitioner filed an Amended Petition.

That same day, Petitioner filed a supplemental declaration from Cary Chapman.

Oral argument was held on January 17, 2024, at which time the Court indicated it needed additional information from the Petitioner, and continued the hearing to January 31, 2024. Petitioner filed an Amended Declaration on January 19, 2024.

The Amended Petition is now before the Court.

Petition for Transfer of Structured Settlement Payment Rights

I.

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).)

II.

Insurance Code Requirements

A.

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 Cary Chapman and the disclosure contains all the statutorily required language of section 10136, subdivision (b). (See Ins. Code, § 10136, subd. (b); see also 12/22/23 Amended Petition, Ex. B, 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 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract, §§ 2 [amount and due dates of payments rights to be sold], 10 [remaining requirements].)

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 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract.)

Fourth, Cary Chapman has not sought cancellation of the transfer agreement as of the date of this hearing. (See Ins. Code, § 10136, subd. (e); see also 12/22/23 Supp. Chapman Decl., ¶ 14.)

Accordingly, the Court finds that J.G. Wentworth’s proposed transfer of Cary Chapman’s settlement rights satisfies the requirements of Insurance Code section 10136, subdivisions (a) through (e).

B.

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 J.G. Wentworth made the instant petition and the petition was brought in the county in which the payee, Cary Chapman, resides. (See Ins. Code, § 10139.5, subd. (f)(1); see 12/22/23 Amended Petition, p. 1 [showing Petitioner J.G. Wentworth brings this Petition]; 12/22/23 Supp. Chapman Decl., ¶ 4 [… “I reside in Los Angeles County, California”].)

Second, the Amended 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 J.G. Wentworth with the Court and served on all interested parties no later than 20 days before this hearing—notice and original Petition served and filed on November 2, 2023, and an Amended Petition served and filed on December 22, 2023, for a hearing on January 17, 2024, with the filings to be made no later than December 28, 2023 (20 days prior to the hearing). (See Ins. Code, § 10139.5, subd. (f)(2) [notice of the proposed transfer and the petition for its authorization must be filed with the court and served on all interested parties not less than 20 days prior to hearing]; see also 11/2/23 Notice of Hearing; 11/2/23 Proof of Service; 12/22/23 Amended Petition, Proof of Service.)

Further, the notice and Amended 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 12/22/23 Supp. Chapman Decl., ¶ 9 [seven transfer transactions within last two years and identification of case numbers and amounts transferred by and paid out to Cary Chapman].)

(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 12/22/23 Amended Petition, Ex. B, California Disclosure Statement & 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract.)

(C) Include information regarding Cary Chapman’s dependents and their ages. (See Ins. Code, § 10139.5, subd. (f)(2)(C); see also 12/22/23 Amended Petition, p. 4 [child named “J.F.” is 14 years old]; 12/22/23 Supp. Chapman Decl., ¶ 8 [married with one minor child].)

(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 12/22/23 Amended Petition, Ex. B, 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, including making inquiry with the payee. (See Ins. Code, § 10139.5, subds. (f)(2)(E)-(H); see also 12/22/23 Amended Petition, Chapman Decl., ¶¶ 1-11 [background of annuity payments and efforts to locate].)

(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 11/2/23 Proof of Service; 12/22/23 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 11/2/23 Notice of Hearing, pp. 1-2.)

(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 11/2/23 Notice of Hearing, p. 1.)

(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 12/22/23 Supp. Chapman Decl., ¶ 4 [structured settlement entered into in or around 1980, i.e., not within five years of this Amended Petition or this hearing].)

Third, the Amended 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 12/22/23 Supp. Chapman Decl., pp. 1 [name], 2 [at ¶ 8, 46 years of age].)

(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 12/22/23 Supp. Chapman Decl., ¶ 8 [“married” to “Andra Chapman”].)

(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 12/22/23 Amended Petition, p. 4 [child named “J.F.” is 14 years old]; 12/22/23 Supp. Chapman Decl., ¶ 8 [one minor child but no other information]; 1/19/24 Supp. Chapman Decl., ¶ 8 [minor child named Jaiden].)

(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 12/22/23 Supp. Chapman Decl., ¶ 8 [$1,500 monthly income for Cary Chapman, working 20-40 hours per week; spouse unemployed].)

(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); 12/22/23 Supp. Chapman Decl., ¶ 8 [“I do have court-ordered child support obligations”]; 1/19/24 Supp. Chapman Decl., ¶ [child support obligations for son Jaiden, with no arrears, with payments taken through Cary Chapman’s annuity through June 1, 2027]; 1/19/24 Supp. Chapman Decl., Ex. 1 [sworn declaration of Allyson Floyd, mother of Cary Chapman’s child, Jaiden, attesting to no arrears].)

(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 12/22/23 Supp. Chapman Decl., ¶ 9 [seven transfer transactions within last two years and identification of case numbers and amounts transferred by and paid out to Cary Chapman].)

Fourth, the Amended 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 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract, § 10 [“We have charged [Cary Chapman] for the following expenses: … for a total of $0.00 in expenses”]; 12/22/23 Amended Petition, Ex. B, California Disclosure Statement [same].)

Fifth, the Amended Petition satisfies the requirements of Section 10139.5, subdivision (h) because, when the petition was filed, Petitioner advised Cary Chapman of Chapman’s right to seek independent counsel and financial advice in connection with this transfer petition and advised Chapman of his right to a reimbursement of $1,500 for incurring such costs. (See Ins. Code, § 10139.5, subd. (h); see also 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract, § 10 [advised to get independent financial advice]; 12/22/23 Amended Petition, Ex. E [Statement of Professional Representation signed by Cary Chapman indicating waiver of independent representation and full understanding of transfer’s implications].)

Finally, the Court finds that the petition satisfies the entirety of the findings requirement 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 cannot determine whether 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. Cary Chapman is proposed to receive $24,901.56 for future payments of $731,988, the discounted present value of which is $150,994.85. Cary Chapman is employed 20 to 40 hours per week, has a stated monthly household income of $1,500, and states the transfer is needed to pay off a little over $5,000 in credit card debt and to purchase a 2015 Mini Cooper to ensure more reliable transportation to work. Cary Chapman has child support obligations that are withdrawn from his annuity through June 1, 2027. This transfer would be the eighth transfer approved for Plaintiff since August 2021. In that time, Cary Chapman made seven transfers to J.G. Wentworth, which transferred approximately $1,375,412 of Chapman’s future payment rights in exchange for $206,962.90 altogether. Chapman explains that since beginning to transfer his structured settlement payment rights, he has spent $10,000 in Hepatitis B and C treatments, $55,000 for to dental work, $60,000 for private school tuition for his son, Jaiden, $15,000 in emergency pet medical costs, $12,000 to purchase a vehicle that broke down and forced Cary Chapman to rent a vehicle, and $15,000 to pay off credit card debt, adding up to $167,000 in costs. Based on these representations, the Court finds that although the compensation being paid to Cary Chapman appears low, the transfer of settlement payment rights is in the best interest of Cary Chapman and his dependents, where Cary Chapman has little monthly household income, rents a vehicle to go to work, and helps pay the tuition for his son’s private school. (See Ins. Code, § 10139.5, subd. (a)(1) [framed by Ins. Code, § 10139.5, subds. (b)(1)-(15)]; see also 12/22/23 Supp. Chapman Decl., ¶¶ 4, 8-9, 11; 1/19/24 Supp. Decl., ¶¶ 4, 6-8, 11-12, Ex. 1.)

(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 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract, § 10 [advised to get independent financial advice]; 12/22/23 Amended Petition, Ex. E [Statement of Professional Representation signed by Cary Chapman indicating waiver of independent representation and full understanding of transfer’s implications].)

(3) The transferee, i.e., J.G. Wentworth, 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 & 12/22/23 Amended Petition, Ex. B, California Disclosure Statement & 12/22/23 Amended Petition, Ex. A, California Life Contingent Purchase Contract.)

(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 12/22/23 Supp. Chapman Decl., ¶ 13 [“I understand the terms of the transfer agreement, including the terms set forth in the disclosure statement.”].)

(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 12/22/23 Supp. Chapman Decl., ¶ 14 [“I understand and do not wish to exercise my right to cancel the agreement”].)

III.

Requirements Conclusion

Having met all relevant statutory requirements set out in the California Insurance Code, as discussed above in Section II, the Amended Petition is GRANTED.

Conclusion

Petitioner J.G. Wentworth Originations, LLC’s First Amended Verified Petition for Approval for Transfer of Payment Rights is GRANTED.