Judge Jill Feeney, Case 18STCV07238 2023-01-09 Tentative Ruling

The parties are encouraged to meet and confer concerning this tentative ruling to determine if there is an agreement to submit.

Regardless of whether there is any such agreement, each party who wishes to submit must send an email to the Court at SSCdept30@LACourt.org indicating the party's intention to submit.

Include the word "SUBMITS" in all caps and the case number in the subject line of the email and in the body provide the date and time of the hearing, your name, your contact information, the party you represent, whether that party is a plaintiff, defendant, cross-complainant, cross-defendant, claimant, or non-party.

If a party submits but still intends to appear at the hearing, include the words "SUBMITS BUT WILL APPEAR" in the subject line of the email.

If the Court does not receive emails from the parties indicating submission on this tentative ruling and there are no appearances at the hearing, the Court may, at its discretion, adopt the tentative as the final order or place the motion off calendar.

Unless all the parties have submitted, the Court will hear argument from any party that appears at the hearing and wishes to argue. The Court may change its tentative as a result of the argument and adopt the changed tentative as the final order at the end of that hearing, even if all the parties are not present.

Be advised that after the Court has posted/issued a tentative ruling, the Court has the inherent authority to prohibit the withdrawal of said motion and may adopt the tentative ruling as the order of the Court.

Claimant sustained a gunshot wound to the head during an attempted robbery of a marijuana dispensary while working as a security guard supervisor. Claimant suffered a traumatic brain injury and many other injuries associated with the gunshot wound. Claimant has undergone more than 10 operations, participates in physical therapy, and requires 24-hour care and assistance.

A complete accounting of costs is attached as attachment 14(b). The costs include investigative fees, filing fees, research fees, postage, photocopies, service of process, records fees, courier services, and expert fees. The investigative service was also paid for mileage and parking. These costs are allowable. However, the statement also includes costs for meals. These costs do not appear reasonable and there is no explanation of payment of the costs of meals to City National Bank. The Court also does not understand the holdback of $5,000 for additional costs.

“A petition requesting court approval and allowance of an attorney's fee under (a) must include a declaration from the attorney that addresses the factors listed in (b) that are applicable to the matter before the court.” Cal Rules of Court, Rule 7.955(c).

Counsel seeks attorney’s fees in the amount of $766,666.67 or about 33.33% of gross settlement. Counsel testifies that his firm worked on a contingency of 33.3% of gross settlement for four and one-half years. (Phillips Decl., ¶3.) Firm staff each worked between 250-400 hours on this matter. (Id., ¶4.) Counsel advanced all costs in this matter. (Id., ¶5.) Counsel also testifies that this case was complex due to the extent of Plaintiff’s injuries and the insolvency of both the gunman and Plaintiff’s employer. (Id., ¶7.) Counsel negotiated settlement with the insurers to the strip-mall where the dispensary was located, securing $2,300,000 in settlement. (Id.) Counsel also negotiated Plaintiff’s medical costs. (Id., ¶8.) Under these circumstances, these fees are reasonable.

Petitioner intends to disburse fees as described above. $25,158 of the remaining settlement will be used to purchase a single-premium deferred annuity. Petitioner properly attaches the terms and conditions of the annuity as attachment 8b(2). Petitioner intends to transfer the remaining funds to a special needs trust.

In this civil action, plaintiff Miguel Casillas is 32 years old and incapacitated. Petitioner, Jose Casillas, now brings a Petition to Approve Compromise as parent and conservator. The parties tentatively have settled the action for a gross $2.3 million and a net of $1,256,902.63 payable to plaintiff after deduction for fees, costs, etc. (Calculations of the net proceeds are in the Petition to Approve Compromise.) Petitioner now proposes to distribute the net settlement proceeds into a special need trust (SNT) for the benefit of plaintiff.

Petitioner proposes to fund $1,227,679.13 cash into the SNT, use $4,065.50 cash to initiate a Medi-Cal Set Aside trust account (MSA) for plaintiff, and use the remaining $25,158 to purchase an annuit that would pay into the SNT at $1,425.49 per year for the shorter of the life of plaintiff or 37 years. (Details regarding the annuity and annuity company are provided at Attachment 18b(3) and Article II, Section 2 of the SNT instrument (court’s pdf at p. 199 and 207). Detail regarding the need for the MSA and its operation are set forth in the briefing at Attachment 18(a)(3), court’s pdf at p. 200.) The use of an MSA appears to be appropriate under the circumstances.

A SNT is used to receive the settlement funds in these situations so that plaintiff does not lose Medi-Cal and SSI benefits eligibility. Generally, a person receiving Medi-Cal or SSI benefits may have only up to $2,000 in non-exempt assets, and any additional non-exempt assets over $2,000 will cause the loss of benefits eligibility under the relevant federal and state law. Funds held in a valid SNT, however, are exempt assets that do not count toward the $2,000 asset limit for purposes of calculating benefits eligibility. Note: On July 1, 2022, the Medi-Cal asset qualification limit was raised to $130,000 for individuals. The net settlement is greater than that amount and the $2,000 asset limit for benefits eligibility did not change for SSI, therefore there remain reasons for funding the settlement proceeds into a SNT.

Petitioner provides briefing relating to the SNT issues at Attachment 18(a)(3) (court’s pdf at p. 200) and provides a proposed SNT instrument attached thereto (court’s pdf at p. 204). The SNT instrument meets legal requirements and is ready for approval:

A cornerstone requirement of an SNT instrument is that it have a “payback provision” whereby any trust assets remaining upon termination of the SNT by death of the beneficiary (or any other reason), the remaining trust assets shall be “paid back” to the state to the extent of benefits received by the beneficiary. The idea is that the assets in a SNT are deemed to be exempt from counting toward the $2,000 asset limit for purposes of calculating benefits eligibility, but then that fiction ends upon beneficiary’s death and the state recovers those funds before they are distributed to beneficiary’s heirs. The existence of this payback provision is the most basic requirement of a SNT instrument. Without that provision, the SNT beneficiary would almost immediately lose benefits eligibility. Put another way, the SNT assets would not qualify as exempt and instead they would be counted toward beneficiary’s $2,000 asset limit. The SNT instrument here contains an adequate payback provision in Article II, Section 4 of the proposed SNT instrument (court’s pdf at p. 210).

• “The Beneficiary's father, JOSE CASILLAS, serves as the Beneficiary's primary caregiver. Petitioner requests that the Court authorize the Trustee to pay to JOSE CASILLAS the total gross of$22 per hour up to 40 hours per week for the extraordinary care that he provides to the Beneficiary. It is understood that the Trustee will engage a third party to employ JOSE CASILLAS and that the total gross sum is not inclusive of payroll taxes, insurance, and any administrative fees charged by the third party employer. It is also understood that, as the needs of MIGUEL CASILLAS change, the Trustee may arrange for a care giving assessment by a professional care manager in order to review the compensation paid to JOSE CASILLAS and determine if any adjustments should be made, subject to the approval of the court.” (Attachment 18(a)(3), Court’s pdf at p. 203.) This request is common with well-funded SNTs for plaintiffs who are incapacitated and care is provided by parents. The Court finds this request reasonable under the circumstances.

• “Petitioner furthermore requests that the Court authorize the Trustee to pay the sum of $4,500 to RANDOLPH M. SHARON, Esq. for his services rendered in connection with the establishment of the MIGUEL CASILLAS SPECIAL NEEDS TRUST.” (Attachment 18(a)(3), Court’s pdf at p. 203.) This request is common and within the usual $3,500 to $6,500 range for such requests. The Court finds this request reasonable under the circumstances.

When ultimately approving the establishment or funding of a SNT from settlement proceeds, the court must make the following findings pursuant to Probate Code section 3604(b) (there are factual allegations in the Petition to Approve Compromise and its attachments supporting the settlement that generally cover the requisite findings). Therefore, the Court makes the following findings:

The SNT instrument indicates that Wells Fargo Bank, N.A. will be the SNT trustee. Normally, bond must be required of a trustee unless the trustee is a corporate fiduciary. (California Rules of Court, Rule 7.903(c)(5), Probate Code section 2320.) The bank meets that requirement and bond therefore is not required.

When seeking approval of a SNT, notice of the hearing and service of the petition must be made upon three state agencies including the Dept. of Mental Health, Dept. of Developmental Services, and Dept. of Health Care Services. (Probate Code sections 3602(f), 3611(c).) The proof of service attached the petition indicates this service and notice is complete.

The order also should include any additional orders made, including bond requirements, and any allowed fees or rulings on special requests for relief. Generally satisfied at Attachment 13 of the proposed order (order pdf at p. 6).

When the funding of a SNT is allowed, the court order should include language requiring petitioner to file an accounting within a year, with a specific 14 month date specified to allow time for drafting and filing. Satisfied, though a 14 month calendar date needs to be added at Attachment 13, para. 2 (order pdf at p. 16).

An order establishing an SNT also should include language requiring the submission of a Notice of Commencement of Proceedings for a Court Supervised Trust on LASC Form PRO 044 within 60 days. It is that filing that will hand the case off to start the trust administration for the SNT that will host the future SNT accountings and any bond issues or other trust issues. Satisfied, though a 60 day date needs to be added at Attachment 13, second para. 3 (order pdf at p. 17). The order misnumbers multiple paragraphs 1-3, then skipping to 10 then 7 on order pdf, p. 17, then back to 1 on p. 18. The court requires correction.

The order should also state that the civil court has set an OSC in its own department in 60 days to ensure that the probate case has been opened and that any required bond has been submitted. At the OSC, if those requirements have been met then the civil court can wrap-up its case. Satisfied, though a 60 day OSC date, time, and department needs to be added at Attachment 13, para. 7 (order pdf at p. 17).