Judge: Holly J. Fujie, Case: 22STCP03471, Date: 2022-12-28 Tentative Ruling

Case Number: 22STCP03471    Hearing Date: December 28, 2022    Dept: 56

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES - CENTRAL DISTRICT

MOVING PARTY:  J.G. Wentworth Originations, LLC (“Petitioner”)

The Court has considered the moving papers.  No opposition papers were filed.  Any opposition papers were required to have been filed and served at least nine court days before the hearing under California Code of Civil Procedure section 1005, subdivision (b).

BACKGROUND

            On November 30, 2022, Petitioner filed a first amended petition (the “FAP”) for approval of transfer of structured payment rights on behalf of Tereza Rosales (“Rosales”).  The FAP requests approval for Rosales to transfer to Petitioner future payments totaling $36,209.64 in exchange for $5,500.

DISCUSSION

Under Insurance Code section 10139.5, subdivision (a), the direct or indirect transfer of structured settlement payment rights is not effective unless the transfer has been approved by a court order finding:

(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; and

(6) The payee understands and does not wish to exercise the payee’s right to cancel the transfer agreement. 

(Ins. Code § 10139.5, subd. (a).)

When determining whether the transfer is fair, reasonable, and in the payee’s best interests, the Court must consider the totality of the circumstances, including but not limited to: (1) the reasonable preference and desire of the payee to complete the proposed transaction, taking into account the payee’s age, mental capacity, legal knowledge, and apparent maturity level; (2) the stated purpose of the transfer; (3) the payee’s financial and economic situation; (4) the terms of the transaction, including whether the payee is transferring monthly or lump sum payments or all or a portion of his or her future payments; (5) whether, when the settlement was completed, the future periodic payments that are the subject of the proposed transfer were intended to pay for the future medical care and treatment of the payee relating to injuries sustained by the payee in the incident that was the subject of the settlement and whether the payee still needs those future payments to pay for that future care and treatment; (6) whether, when the settlement was completed, the future periodic payments that are the subject of the proposed transfer were intended to provide for the necessary living expenses of the payee and whether the payee still needs the future structured settlement payments to pay for future necessary living expenses; (7) whether the payee is, at the time of the proposed transfer, likely to require future medical care and treatment for the injuries that the payee sustained in connection with the incident that was the subject of the settlement and whether the payee lacks other resources, including insurance, sufficient to cover those future medical expenses; (8) whether the payee has other means of income or support, aside from the structured settlement payments that are the subject of the proposed transfer, sufficient to meet the payee’s future financial obligations for maintenance and support of the payee’s dependents, specifically including, but not limited to, the payee’s child support obligations, if any; (9) whether the financial terms of the transaction, including the discount rate applied to determine the amount to be paid to the payee, the expenses and costs of the transaction for both the payee and the transferee, the size of the transaction, the available financial alternatives to the payee to achieve the payee’s stated objectives, are fair and reasonable; (10) whether the payee completed previous transactions involving the payee’s structured settlement payments and the timing and size of the previous transactions and whether the payee was satisfied with any previous transaction; (11) whether the transferee attempted previous transactions involving the payee’s structured settlement payments that were denied, or that were dismissed or withdrawn prior to a decision on the merits, within the past five years; (12) whether, to the best of the transferee’s knowledge after making inquiry with the payee, the payee has attempted structured settlement payment transfer transactions with another person or entity, other than the transferee, that were denied, or which were dismissed or withdrawn prior to a decision on the merits, within the past five years; (13) whether the payee, or his or her family or dependents, are in or are facing a hardship situation; (14) whether the payee received independent legal or financial advice regarding the transaction; and (15) any other factors or facts that the payee, the transferee, or any other interested party calls to the attention of the reviewing court or that the court determines should be considered in reviewing the transfer.  (Ins. Code. § 10139.5, subd. (b).)

The FAP includes a copy of the purchase agreement (the “Purchase Agreement”) entered into by Petitioner and Rosales and the disclosure form required by Insurance Code section 10136.  (See Exhibits A-B.)  The annuity contract is attached as Exhibit C.  The Petition provides evidence that a copy of the underlying settlement agreement could not be located.  (See Exhibit D.)  A chart detailing the future payments owed to Rosales under the structured settlement is attached as Exhibit E.  The Proof of Service attached to the FAP indicates that Rosales was served by mail but that her address would be provided at the time of the hearing.

The Purchase Agreement provides that Rosales will sell Petitioner 108 monthly payments of $297.02 with a three percent annual increase beginning on July 11, 2027 through and including June 11, 2036.  (See Exhibit A; Declaration of Tereza Rosales (“Rosales Decl.”) ¶ 5.)  In exchange for the sale of these payments, which total $36,209.64, Rosales will receive $5,500.00.  (Exhibit A at ¶ 10.)  The purchase price was calculated with a discount rate of 24.06 percent.  (Id.)

The underlying structured settlement agreement was entered into on or about June 4, 2002 to resolve a medical malpractice claim.  (Rosales Decl. ¶ 4; see Exhibit D.)  The payments at issue in the FAP and Purchase Agreement were intended to be solely monetary in nature and were not intended to provide for necessary living expenses or pay for future medical care.  (See Rosales Decl. ¶¶ 6-7.) 

Rosales is 24 years old, has no minor children, and lives in Los Angeles County.  (Rosales Decl. ¶ 8.)  At the time the FAP was filed, Rosales planned on beginning a new job with an hourly wage of $16 per hour on October 15, 2022.  (Id.)  Rosales declares that she is experiencing financial hardship and plans to use the money received if the FAP is granted to help pay for repairs to the transmission of her car and other living expenses.  (Rosales Decl. ¶ 11.)  Rosales declares that she understands the terms of the Purchase Agreement and that she did not receive independent legal or financial advice regarding the transaction.  (See Rosales Decl. ¶¶ 12-13.)  The FAP includes a copy a document indicating that Rosales was advised by Petitioner that she should obtain independent representation regarding the terms of the Purchase Agreement and that she waived this advice.  (See Rosales Decl. ¶ 12, Exhibit E.) 

On March 14, 2022, Rosales transferred monthly payments of $500 per month beginning on March 11, 2022 through February 11, 2028 (amounting to $39,586.64 total) in exchange for $23,750.  (Rosales Decl. ¶ 9.)  In June 2022, Rosales transferred monthly payments of $600 per month (amounting to $64,024.80 total) beginning July 11, 2028 through June 11, 2036 in exchange for $20,000.  (Id.)[1]  Rosales has not attempted other transactions that were denied, dismissed or withdrawn in the last five years.  (Rosales Decl. ¶ 10.)

Although not attached to the FAP and accompanying documents, the Court has reviewed the casefiles in Rosales’s two previous transfers.  The Rosales Declaration filed in support of the March 14, 2022 transfer (LASC Case No. 22BBCP00030) states that the proceeds from the transfer would be used to pay bills and relocate to Arizona.  The Rosales Declaration filed in support of the June 2022 transfer (LASC Case No. 22BBCP00150) states that the proceeds would be used to pay off student debt.  In addition, the order approving the June 2022 transfer includes a provision providing that Rosales agreed not to seek further orders modifying her structured settlement and that she would advise any court of this agreement in any future proceedings regarding her structured settlement.  The FAP does not refer to this provision in the June 2022 transfer order or provide information filling in the gaps between the FAP and the earlier transfers. 

Given the proximity of the FAP to the two previous transfers, the lack of information concerning the use of the proceeds from the two earlier transfers, and the omission of information regarding the circumstances of the June 2022 transfer, the Court is presently unable to determine whether the transfer contemplated by the FAP is in Rosales’s best interest.  In addition, the Court notes that it appears that the purchase price in the current Purchase Agreement was calculated at a higher discount rate than the March 2022 and June 2022 transfers. 

Based on the foregoing, the Court CONTINUES the hearing on the FAP to January 19, 2023 at 8:30 a.m. in this department so that Petitioner may file supplemental information to address the Court’s concerns.  Petitioner is to file such supplemental information by January 11, 2023.  Rosales’s attendance at the January 19, 2023 hearing is required.

Moving party is ordered to give notice of this ruling.

In consideration of the current COVID-19 pandemic situation, the Court¿strongly¿encourages that appearances on all proceedings, including this one, be made by LACourtConnect if the parties do not submit on the tentative.¿¿If you instead intend to make an appearance in person at Court on this matter, you must send an email by 2 p.m. on the last Court day before the scheduled date of the hearing to¿SMC_DEPT56@lacourt.org¿stating your intention to appear in person.¿ The Court will then inform you by close of business that day of the time your hearing will be held. The time set for the hearing may be at any time during that scheduled hearing day, or it may be necessary to schedule the hearing for another date if the Court is unable to accommodate all personal appearances set on that date.¿ This rule is necessary to ensure that adequate precautions can be taken for proper social distancing.

Parties who intend to submit on this tentative must send an email to the Court at SMC_DEPT56@lacourt.org as directed by the instructions provided on the court website at www.lacourt.org.  If the department does not receive an email and there are no appearances at the hearing, the motion will be placed off calendar. 

   Dated this 28th day of December 2022