Judge Holly J. Fujie, Case Number: 24STCP04174, Date: 2025-02-14 Tentative Ruling

DEPARTMENT 56 JUDGE HOLLY J. FUJIE, LAW AND MOTION RULINGS. The court makes every effort to post tentative rulings by 5.00 pm of the court day before the hearing. The tentative ruling will not become the final ruling until the hearing [see CRC 3.1308(a)(2)], and are also available in the courtroom on the day of the hearing [see CRC 3.1308(b)]. 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) call Dept 56 by 8:30 a.m. on the day of the hearing (213/633-0656) 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 telephone call is necessary and all parties should appear at the hearing in person or by Court Call. Court reporters are not provided, and parties who want a record of motions and other proceedings must hire a privately retained certified court reporter.

Petitioner has filed a petition for approval of transfer of certain structured settlement payment rights (the “Petition”) belonging to Real Party-in-Interest/Transferor Cristopher Johnson (“Transferor”). Specifically, Petitioner seeks the transfer of $235,072.38 in future annuity payments belonging to Transferor which include payments due and payable on January 5, 2032 and January 5, 2037, the present discounted value of which is $141,654.72, to be transferred in exchange for a $76,051.17 lump sum payment to Transferor.

The original Petition was filed on December 23, 2024. The first amended petition (the “Amended Petition”) was filed on November 21, 2024. Proof of service indicates that the Amended Petition was served via mail on Transferor, the annuity issuer and the annuity owner on January 23, 2025.

On January 23, 2025, Petitioner filed a notice of hearing for February 14, 2025. No Proof of service for the notice of hearing or Amended Petition is on file with the Court.

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 (“Ins. 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 10135 of the Insurance Code provides that “This article is only applicable to transfers of structured settlement payment rights if one of the following requirements is met:

(1) The payee is domiciled in California at the time the transfer agreement is signed by the payee. (2) The payee is not domiciled in California at the time the transfer agreement is signed and the state where the payee is domiciled does not have a structured settlement transfer statute, but either the structured settlement obligor or annuity issuer is domiciled in California.” (See Ins. Code, § 10135, subd. (c).)

The Absolute Sale and Security Agreement provides that the Transferor’s “state of residence and domicile on the date of the Agreement is the State of Philippines.” The petition includes no information as to the domicile of either the structured settlement obligor or annuity issuer. The Court requires further clarification as to the domicile of Transferor and the settlement obligor or annuity issuer before it can consider this Petition.

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).)

Except as noted below, the petition satisfies the requirements of Section 10136 as follows (Ins. Code, § 10136, subds. (b)-(e)):

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 Transferor and the disclosure contains all the statutorily required language of section 10136, subdivision (b).) (Ins. Code, § 10136, subd. (b); Amended Petition, Ex. 1, Absolute Sale and Security Agreement.)

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. (Ins. Code, § 10136, subd. (c); Amended Petition, Ex. 1, Absolute Sale and Security Agreement.)

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. (Ins. Code, § 10136, subd. (d); Ex. 1, Absolute Sale and Security Agreement.)

Fourth, there is no evidence before the Court that Transferor has sought cancellation of the transfer agreement prior to the date of this hearing. (Ins. Code, § 10136, subd. (e); Amended Petition, Ex. 3, Johnson Affidavit.)

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

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. (Ins. Code, § 10139.5, subd. (a).)

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 transfer is fair and reasonable in the best interests of the payee, taking into account the welfare and support of the payee’s dependents. Transferor is collecting $76,051.17 for future payment of $235,072.38, the discounted present value of which is $141,654.72. Transferor is unmarried, has no minor children or dependents and if approved would use the funds to buy land in the Philippines. (Ins. Code, § 10139.5, subd. (a)(1) [framed by Ins. Code, § 10139.5, subds. (b)(1)-(15)]; see also Amended Petition, Exs. 3-4, Johnson Affidavit.)

(2) The payee has been advised in writing 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. (Ins. Code, § 10139.5, subd. (a)(2); Amended Petition, Ex. 5, Independent Professional Advice.) [Transferor was advised to obtain independent professional legal, tax and financial advice about the transaction and chose not to].)

(3) Petitioner has complied with the notification requirements pursuant to paragraph (2) of subdivision (f), has provided payee with a disclosure form that complies with Section 10136 and the transfer agreement complies with Sections 10136 and 10138. (Ins. Code, § 10139.5, subd. (a)(3); Ins. Code, § 10136, subds. (b)-(e) discussion supra & Ins. Code, § 10139.5, subd. (f) discussion infra at “Second, …” & Amended Petition Ex. 1, Absolute Sale and Security Agreement, Ex. 2, Disclosure Notice.)

(4) The transfer does not contravene any applicable statute or the order of any court or other government authority. (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. (Ins. Code, § 10139.5, subd. (a)(5); Johnson Affidavit, ¶¶ 5-6, 10.)

(6) The payee understands and does not wish to exercise the right to cancel the transfer agreement. (Ins. Code, § 10139.5, subd. (a)(6); Amended Petition, Exs. 2-3, Disclosure Notice and Johnson Affidavit [Payee advised that he can cancel the contract, no evidence before the Court that he has sought cancellation.)

Except as noted below, the Amended Petition satisfies all the payee information required from Section 10139.5, subdivision (c) as follows (Ins. Code, § 10139.5, subd. (c):

(1) Included the payee’s name, age and address. (Ins. Code, § 10139.5, subd. (c)(1); Amended Petition, Ex. 3 Johnson Affidavit) The Insurance Code requires Transferor’s age as well. The Court also reasserts that there is conflicting information in the Petition regarding Transferor’s place of domicile.

(2) Included the payee’s marital status, and, if married or separated, the name of payee’s spouse. (Ins. Code, § 10139.5, subd. (c)(2); Amended Petition, ¶ 17 (B) [“The Payee is not married”].)

(3) Included the names, ages, and place or places of residence of payee’s minor children or other dependents, if any. (Ins. Code, § 10139.5, subd. (c)(3) Amended Petition, Ex. 4 Statement of Dependents [no listed dependents].)

(4) Included the amounts and sources of the payee’s monthly income and financial resources. (Ins. Code, § 10139.5, subd. (c)(4).) Transferor has not provided any information on the amounts or sources of monthly income or financial resources.

(5) Included information permitting the determination of whether 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. (Ins. Code, § 10139.5, subd. (c)(5); Amended Petition, Ex. 4 Statement of Dependents [no listed dependents].) The Court notes that there is nothing in the declaration specifying that Transferor has no obligation for spousal support.

(6) Included information regarding previous transfers or attempted transfers, as described in paragraph (11), (12), or (13) of subdivision (b). (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]; Amended Petition ¶ 17 (B) [no prior transfers].)

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

First, the transfer agreement satisfies the requirements of Section 10139.5, subdivision (f)(1), because Petitioner made the instant Petition and the Petition was brought in the county in which the Payee resides. (Ins. Code, § 10139.5, subd. (f)(1); Amended Petition, p. 1 [showing Petitioner Ocwen First, LLC brings this Petition]; Johnson Affidavit, ¶ 1 [showing a Los Angeles County address.].)

Second, except as noted below, the Petition satisfies the requirements of Section 10139.5, subdivision (f)(2).

Petitioner has not submitted proof of service of the Petition or notice of 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 within 20 days of hearing].)

Further, except as noted below, the notice and Petition have attached all the necessary documents required from this subdivision. (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. (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]; Amended Petition ¶ 17 (B) [no prior transfers].)

(B) Include a copy of the proposed transfer agreement and disclosure form required by paragraph (3) of subdivision (a). (Ins. Code, § 10139.5, subd. (f)(2)(B); Amended Petition, Ex. 1, Absolute Sale and Security Agreement &, Ex. 2, Disclosure Notice.)

(C) Include information regarding Transferor’s dependents and their ages. (See Ins. Code, § 10139.5, subd. (f)(2)(C); Amended Petition, Ex. 4 Statement of Dependents [no listed dependents].)

(D) Include a copy of the disclosure required in subdivision (b) of Section 10136. (See Ins. Code, § 10139.5, subd. (f)(2)(D); Amended Petition, Ex. 2, Disclosure Notice.)

(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 Payee. (See Ins. Code, § 10139.5, subds. (f)(2)(E)-(H).) The petition does not include a copy of the underlying structured settlement agreement or an affidavit stating that a reasonable effort was made to locate it.

(F) Petitioner has not included copies of the proofs of service made for notice of this petition. (Ins. Code, § 10139.5, subd. (f)(2)(I).)

(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. (Ins. Code, § 10139.5, subd. (f)(2)(J); see 1/23/2025 Notice of Hearing.) No proof of service has been filed for the notice.

(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 1/23/2025 Notice of Hearing) No proof of service has been filed for the notice.

(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 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. (See Ins. Code, § 10139.5, subd. (f)(2)(L).) No information is provided as to the date the payee entered into the structured settlement at issue. Thus, the Court is unable to determine whether notice to the payee’s attorney is required.

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. (Ins. Code, § 10139.5, subd. (g); Amended Petition, Ex. 2, Disclosure Notice [“To figure the net amount we are paying, we have charged you for the following expenses: […] For a total of $0.00 in expenses.”].)

The Amended Petition satisfies the requirements of Section 10139.5, subdivision (h) because, when it was filed, Petitioner advised Transferor of his right to seek independent counsel and financial advice in connection with this transfer petition and advised Transferor of his right to a reimbursement of $1,500 for incurring such costs. (See Ins. Code, § 10139.5, subd. (h); Amended Petition, Ex. 5, Independent Professional Advice [Transferor was advised to seek independent advice].)

The Court does not have sufficient clarification on whether the Transferor is domiciled in California or whether the structured settlement obligor or annuity issuer is domiciled in California. No proof of service for the Petition or notice of hearing is on file with the Court. For these reasons, as well as the other deficiencies described above, the Petition is DENIED, without prejudice.

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.

Hon. Holly J. Fujie

Judge of the Superior Court