Judge: Anne Richardson, Case: 24STCP02671, Date: 2024-11-07 Tentative Ruling

Case Number: 24STCP02671    Hearing Date: November 8, 2024    Dept: 40

Superior Court of California

County of Los Angeles

Department 40

I. 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 Carl Todd Jr. Specifically, J.G. Wentworth seeks the transfer of $27,186.36 in future annuity payment rights belonging to Carl Todd Jr., which span payments to be paid between November 2024 and November 2031, the present discounted value of which is $22,526.86, to be transferred in exchange for a purchase price of $13,500.00.

The Petition was filed on August 21, 2024.

On August 22, 2024, Petitioner J.G. Wentworth filed a notice of hearing for September 26, 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 Carl Todd Jr., the annuity issuer, and the annuity obligor.

On September 23, 2024, Petitioner filed a Declaration from Carl Todd Jr., a Notice of Errata to the Verified Petition, and an Amended Exhibit ‘A’ to the Petition.

On September 26, 2024, the Court continued the hearing on this motion in order to allow the low-numbered court in case number 24STCP01404 to rule on a Notice of Related Case that was filed in this Court and the other court on August 26, 2024. However, to date no ruling has been made on that notice of related case. Nonetheless, the Court takes notice of the file in that case, as it appears to involve a petition identical to the one filed here, which was rejected by the Court on August 16, 2024.

The Petition is now before the Court.

II. Petition to Transfer Structured Settlement Payment Rights

A.    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).)

B.    Analysis

1.     Section 10136 Requirements

a.      Relevant Law

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).)

b.     Determination

The petition satisfies the requirements of Section 10136 as follows (Ins. Code, § 10136, subds. (b)-I.)

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 Carl Todd Jr. and the disclosure contains all the statutorily required language of section 10136, subdivision (b). (See Ins. Code, § 10136, subd. (b); see also 9/23/24 Amended Exhibit A, California Purchase Contract, § 10.)

Second, the transfer agreement satisfies the transfer-agreement requirements set out in Insurance Code section 10136, subdivisiI(c) because the transfer agreement contains all the necessary language required from this statutory subdivision. (See Ins. Code, § 10136, Id. (c); 9/23/24 Amended Exhibit A, California 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 9/23/24 Amended Exhibit A, California Purchase Contract.)

Fourth, Carl Todd Jr. has not sought cancellation of the transfer agreement as of the date of this hearing. (See Ins. Code, § 10136, subd. (e); see also 9/20/24 Todd Decl., ¶ 13.)

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

2.     Section 10139.5 Requirements

a.      Relevant Law

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).)

b.     Determination

                                                              i.     Ins. Code, § 10139.5, subd. (a)

The petition must satisfy 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 transfer does not satisfy subdivision (a)(1) because it  is not fair and

reasonable in the best interest of the payee, taking into account the welfare and support of the payee’s dependents. When determining whether the transfer is fair, reasonable, and in the payee’s best interests, the Court must consider the totality of the circumstances. Carl Todd Jr. is collecting $13,500.00 for future payments of $27,186.36, the discounted present value of which is $22,526.86. Carl Todd Jr. is an unemployed twenty-two-year-old with one three-month-old child, is experiencing financial hardship, and states he would use the transfer funds to fix the engine on his vehicle and pay a few months rent upfront.  (See Ins. Code, § 10139.5, subd. (a)(1) [framed by Ins. Code, § 10139.5, subds. (b)(1)-(15)]; see also 9/23/24 Amended Exhibit A, California Purchase Contract, p. 12; 9/20/24 Todd Decl., ¶¶ 8, 11.)

            The Court notes that between May 30, 2023 and April 4, 2024, Mr. Todd has received approximately $154,000 from four separate transactions, however despite this, he states that he is still experiencing financial hardship. (Todd Decl. ¶¶ 9, 11.) To determine whether the transfer is in Mr. Todd’s best interest, more information is needed to fully understand his financial situation. Specifically, the Court requests further explanation of how the $154,000 was spent, why Mr. Todd requires additional funds to fix the engine on this vehicle and pay a few months’ rent upfront, and how much of the annuity this proposed transfer will leave him with.       As has also been requested by Department 78 in rejecting this same transfer request, the Court request the Petitioner, JG Wentworth, to provide further explanation as to why five separate petitions have been filed in five separate courtrooms in an approximately one-year period, and for JG Wentworth to provide an explanation of the calculation of the various percentages paid out or to be paid out in each transaction.

            The petition otherwise satisfies the remaining findings requirement set out in Insurance Code section 10139.5, subdivisions (a)(2) through (a)(6). These findings, which the Court expressly makes by the following language, are that:

(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 9/23/24 Amended Exhibit A, California Purchase Contract [Carl Todd Jr. was advised to obtain independent legal advice and professional tax advice about the sale of the Purchased Payments]; 9/20/24 Todd Decl., ¶ 12 [“I did not receive independent legal or financial advice regarding the proposed transaction. A copy of the waiver is attached to Exhibit ‘D’ of the petition.”].)

(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,Ibds. (b)-(e) discussion supra & Ins. Code, § 10139.5, subd. (f) discussion infra at “Second, …” & 9/23/24 Amended Exhibit A, California 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, Carl Todd Jr., 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 9/20/24 Todd Decl., ¶ 13 [“I understand the terms of the transfer agreement, including the terms set forth in the disclosure statement …”].)

(6) Carl Todd Jr. understands and does not wish to exercise the right to cancel the transfer agreement. (See Ins. Code, § 10139.5, subd. (a)(6); see also 9/20/24 Todd Decl., ¶ 13 [“I … do not wish to exercise my right to cancel the agreement”].)

                                                            ii.     Ins. Code, § 10139.5, subd. (c)

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 9/20/24 Todd Decl., p. 1:19-20 [Carl Todd Jr.] & [22 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 9/20/24 Todd Decl., ¶ 8 [“not married”].)

(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 9/20/24 Todd Decl., ¶ 8 [“one minor child”; “C.W.”; “3 months old”].)

(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 9/20/24 Todd Decl., ¶¶ 8 [“I am currently 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); see also 9/20/24 Todd Decl., ¶ 8 [“I am not married”; “I do not have any court-ordered child support obligations”].)

However, the Court notes that there is nothing in the declaration specifying that Mr. Todd was never married, or more to the point, that he has no obligation for spousal support. The Court would accept sworn testimony to that effect at the time of the hearing.

(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 9/20/24 Todd Decl., ¶ 9 [five prior petitions since 2023, four approved, with case numbers and transfer information provided].)

                                                          iii.     Ins. Code, § 10139.5, subd. (f)

The amended petition satisfies the requirements of Section 10139.5, subdivision (f) as follows (see Ins. Code, § 10139.5, subd. (f)):

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, Carl Todd Jr., resides. (See Ins. Code, § 10139.5, subd. (f)(1); see 8/21/24 Petition, p. 1 [showing Petitioner J.G. Wentworth brings this Petition]; 9/20/24 Todd Decl., ¶ 1 [“I reside in Los Angeles County, California”].)

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 J.G. Wentworth with the Court and served on all interested parties no later than September 6, 2024—i.e., original petition, notice, first amended petition, payee declaration, notice of case assignment, and proof of service were served on Carl Todd Jr., the annuity issuer, and the annuity obligor,. (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 within 20 days of hearing]; see also 8/22/24 Proof of Service.) While the Notice of Errata and Amended Exhibit A and proof of service were not filed with the Court until September 23, 2024—i.e., three days prior to this hearing—The Amended Exhibit A makes a minor correction to align with Carl Todd Jr.’s declaration regarding how he intends to use the transfer funds. No opposition appears in the record. Based on these circumstances, the Court proceeds with a determination on the merits.

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 about petitions in last five years]; see also 9/20/24 Todd Decl., ¶ 9 [five prior petitions since 2023, four approved, with case numbers and transfer information provided].)

(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 9/23/24 Amended Exhibit A, California Purchase Contract & 8/21/24 Petition, Ex. B, California DisclosuIStatement.)

(C) Include information regarding Carl Todd Jr.’s dependents and their ages. (See Ins. Code, § 10139.5, subd. (f)(2)(C); see also 9/10/24 Todd Decl., ¶ 8 [not married; one minor child, age three months].)

(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 8/21/24 Petition, Ex. B, California DisclIre 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 8/21/24 Petition, Ex. C.

(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 8/22/24 and 9/23/24 Proofs 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 8/21/24 Petition, p. 5; 8/22/24 Proof of Service.)

(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 8/21/24 Petition, p. 5; 8/22/24 Proof of Service.)

(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 following 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.

Here, Carl Todd Jr. entered into the Settlement Agreement on August 21, 2019, and the Transfer Agreement on August 21, 2024. However, proofs of service on file with the Court do not indicate that notice has been provided to Carl Todd Jr.’s attorney of record at the time the structured settlement agreement was created, nor has Carl Todd Jr. indicated that he cannot otherwise recall or identify his former attorney. (See Ins. Code, § 10139.5, subd. (f)(2)(L); see also 8/21/24 Petition, Ex. C, Settlement Agreement [effective date 8/21/19].)

                                                          iv.     Ins. Code, § 10139.5, subd. (g)

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 9/23/24 Amended Exhibit A, California Purchase Contract [“We have charged [Carl Todd Jr.] for the following expenses: [¶] … $0.00 [¶] for a total of $0.00 in expenses”] & 8/21/24 Petition, Ex. B, California Disclosure Statement, p. 1 [same].)

                                                            v.     Ins. Code, § 10139.5, subd. (h)

The amended petition satisfies the requirements of Section 10139.5, subdivision (h) because, when the petition was filed, Petitioner advised Carl Todd Jr. of his right to seek independent counsel and financial advice in connection with this transfer petition and advised Carl Todd Jr. of his right to a reimbursement of $1,500 for incurring such costs. (See Ins. Code, § 10139.5, subd. (h); see also 9/23/24 Amended Exhibit A, California Purchase Contract [Carl Todd Jr. was advised to receive independent representation and elected not to seek out such independent professional representation]; 9/20/24 Todd Decl., ¶ 12 [“I did not receive independent legal or financial advice regarding the proposed transaction. A copy of the waiver is attached to Exhibit ‘D’ of the petition.”].)

C.    Requirements Conclusion

The Court (1) seeks confirmation that there are no spousal support obligations and (2) requires explanation as to why notice to counsel pursuant to section 10139.5, subd. (f)(2)(L) was not provided or is not required.

The Court further requests explanation of how the $154,000 already transferred was spent, why Mr. Todd requires additional funds to fix the engine on his vehicle and pay a few months’ rent upfront, and how much of the annuity this proposed transfer will leave him with. This Court’s concern echoes that of the Court in 24STCP01404 as to whether Payee transferred away his original annuity without sufficient annuity and whether this transfer is in Payee’s best interest. The Court also requests that the Petitioner, JG Wentworth, provide further explanation as to why, according to the court’s 8/16/24 ruling in case number 24STCP01404, five separate petitions have been filed in five separate courtrooms in an approximately one-year period, and to provide an explanation of the calculation of the various percentages paid out or to be paid out in each transaction.

III. Conclusion

Petitioner J.G. Wentworth Originations, LLC’s Verified Petition for Transfer of Payment Rights is DENIED without prejudice.